Money in proteas
Afarmer in George recently made a claim that, hectare for hectare, protea farming is one of the most lucrative forms of agriculture.
A bold claim to make, especially considering t hat i n 2012 South Africa exported produce to the value of R55.5bn (7.8% of total exports) and imported produce to the value of R53.6bn (6.5% of total imports), making the country a net exporter of agricultural products. In the same year, Africa represented 31.2% of SA’s agricultural exports with the EU representing 29.9%.
The question is with such a huge export number in agriculture alone, could protea farming really be one of the most lucrative?
While protea farming is not very different from other forms of agriculture, it can be very expensive.
Marius Huysamer, who handles the running of Berghoff (a family farm run as a closed company) in the Porterville mountain range in the Western Cape, says: “There can be a perfect combination of the right product with the right specifications flowering at the right time going into the right market where buyers have more money than brains and you gross a few hundred thousand rand per hectare.
“But this is counter-balanced by the majority of the crop, where you’re happy to cover production and export cost and make some profit to reinvest in new plantations and your bank loan. The other side of the coin is that sometimes you’re actually spending more money than what you’re getting in. It’s a fallacy that protea growers are all creaming it – if it were the case we’d have a hell of a lot more growers in the industry and a thriving industry in George!”
The industry, however, does appear to be growing. Japie van Staden, a protea farmer based in Gauteng, says: “The industry has changed and become more lucrative and competitive. Fifteen years ago you would not have been able to f ind a protea farmer in Gauteng or basically any other province other than the Cape. The industry has grown tremendously.”
STAGNANT PRICES IN OVERSEAS MARKETS
Rand weakness is not necessarily a good thing when it comes to agriculture, Huysamer points out. “Overall the gross sales prices in euro terms have been stagnant to declining, coupled with sharp increases in production costs. This year it’s been partly offset by the weak rand.
“However, l ots of input costs are [also] heavily inf luenced by the exchange rate. Such input costs would include fuel, shipping, fertiliser and agricultural chemicals. These are specifically with reference to sensitivity to exchange rates. Labour cost needs to be added if you’re talking ‘ input costs’ in a broader context. This is not exchangerate sensitive, but one of our highest costs,” says Huysamer.
Paul Engels, a small- scale protea farmer based in Sedgefield in the Western Cape, says that there are many other aspects that should be taken into account. “Preparation of the land is expensive – ridging, and so on – and also irrigation. Protea farming is an extremely labour-intensive farming type.”
Engels also references the long ‘ lag time’ varying depending on varieties cultivated, but can be as long as four years before the f irst harvest. “So it is many years before a plant has developed to the stage of giving a good ret urn on stem numbers. Another aspect to be examined is the soil type and the microclimate of the site.
According to Van Staden, after three years of cultivation, profits will be made off a plantation for at least the next f ive years.
THE FARMERS’ TAKE
How are farmers adapting to these challenges? “There’s a definite move toward reducing the length or complexity of the value chain, with growers getting more involved in the logistics and marketing by cutting out the SA-- based exporters. The UK has become a significant buyer of SA fynbos where supermarkets are taking in significant volumes of product in the form of bouquets,” explains Huysamer.
Over the past 15 years the industry has experienced some changes. “The industry has become very cut-throat,” Huysamer observes. “Margins are tight and this is forcing smaller growers to bail out or grow to try and gain the advantage of economy of scale. Overhead costs are simply too high to be profitable on a small farm. The total production has been fairly steady at around 4m kilogrammes exported per annum, but there have been significant plantings within the last decade that are coming into production now and that will add to available stems.”
Huysamer explains that in the case of pin cushion proteas, the f lowers have been planted extensively but that there has been little market development in the EU, so there could be pressure on the sales prices once these f lowers are exported.
LOCAL VERSUS INTERNATIONAL MARKETS
Huysamer describes his operation as “export focused” but says that he does sell some of his proteas in SA. “The export market is very picky regarding quality, whereas we tend to see some very poor products in the domestic market. This is particularly the case where informal traders sell third-grade f lowers on the side of the road. The local supermarkets obviously have certain quality standards, but these are not regulated at all in the way that export f lowers are inspected for quality so it’s a bit more variable locally. There’s no doubt that proteas are starting to gain a foothold in the SA market – we have lots of queries especially for weddings.”
In Engels’ view, “Local and export markets vary to such an extent they cannot really be compared. Sales at the farmers’ market are much the same as local sales to florists, B& Bs, hotels, doctors and others reception areas. For the export market, perfect uniformity of f lower, stem and leaf is necessary and no blemishes or leaf damage of any type. For local sales, curved stems as an example can be used to effect in arrangements. However, produce that cannot be utilised for export can be used for local sales rather than being discarded.”
This means that while our best f lowers are exported, South African farmers still make money off the remaining proteas from locals.
While the revenue generated from exporting as well as from selling within the country has increased exponentially, factors such as the impact of climate needs to be taken into account. Global warming has not been a friend of the global agricultural sector.
“There are certain cultivars or species that are more suited to certain climates, such as Protea magnifica (the queen protea), which is found in the mountains and produces best at high altitudes. If we have a significant warming over the next 50 to 100 years we may find a decrease in productivity of the queens at lower altitudes where they may become borderline in terms of their propensity to f lower. The plants won’t die,” says Huysamer.
“But they may produce fewer or less suitable f lower heads. The University of Stellenbosch has investigated the effects of higher temperatures on a few cultivars grown in greenhouses under artificial warming conditions and found the proteas to be fairly adaptable, but in general I would expect a swing in selection of cultivars towards those that are adapted to warmer regions. Given that the life expectancy of a plantation of proteas is 15-20 years, we need to have medium- to long-term view on things.”
Van Staden, who is based in Gauteng, takes perhaps a rosier view. “The climate is not such a big problem as you might think. Luckily a protea prefers the hot climate rather than a cold climate.” He further points out that the methods used by farmers in other provinces differ to those used by farmers in the Western Cape due to the winter rainfall that occurs in that region.
For those farmers who would like to try their hand at protea farming, it’s hard work and initia l ly expensive. Huysamer says the costs to start up a hectare are “very variable” and “diff icult to generalise”. He adds that it costs about R125 000 to establish a hectare of proteas, which is a sizeable investment. It bears repeating that the critical factor when it comes to these beautiful varied forms is that production of f lowers only starts in the third or fourth year after planting. “So you dip quite deeply into the red before you come into production.”
If you can stand the heat, protea farming can provide a profitable alternative for some farmers, even beyond the Western Cape.
Since proteas are a protected species, a permit is needed from Cape Nature to trade in fynbos products. Since this is the case, is the farming limited to fynbos areas or can they be grown in greenhouses elsewhere, and is this viable? Huysamer says no. “As with most plants they are adaptable but generally do better in their natural environment. You can grow proteas in greenhouses [Kew Gardens in England is a good example] but this would be hellishly expensive and definitely not viable on a commercial scale. Proteas are now grown commercially in many regions. In SA, it’s predominantly the Western Cape, Southern Cape and Eastern Cape, but also in KZN and in Gauteng. Internationally, it’s RSA, Australia, New Zealand, Chile, Peru, California, Hawaii, Portugal, Spain, Azores, Canary Islands, Italy, Greece, Russia, Israel and Peoples’ Republic of China.”
The labour issues in protea farmi ng are no different, according to Huysamer, to what the other sectors of agriculture are experiencing. “It’s often down to unique situations on each farm – café owners and employers of domestic workers all have their own way of doing things and farmers are no different – you get good employers and bad employers, but in agriculture we have consumer groups and large buyers like supermarkets watching what we do, so we tend to toe the line.”
IS THERE MONEY IN PROTEAS?
Yes, if the international market keeps importing significant volumes of produce. The humble protea will be renowned for more than just being the country’s national flower if international trends continue.
Farmer Jaco van Wyk believes that, hectare by hectare, Protea farming is the most lucrative form of agriculture in South Africa