New Entrants Must Share in Growing SA Wine Industry

EXTRACTS FROM A SPEECH BY COBUS DOWRY, MINISTER OF AGRICULTURE IN THE WESTERN CAPE AT THE OFFICIAL OPENING AND WELCOME OF THE INTERNATIONAL JOINT VITICULTURAL ZONING CONFERENCE -

KIRSTENBOSCH

With some 314 million vines, the Western Cape's 4 390 primary wine producers and 388 cellars are producing 746 million litres of wine annually - and this industry is growing.

On behalf of the Government of the Western Cape and the Department of Agriculture in the Western Cape, it is an honour for us to host this conference in "Ikapa Elihlumayo", which means "the Growing Cape" and in the province where we are set to make it a Home For All.

In this Growing Cape we are constantly looking for opportunities to introduce ourselves and therefore I am always grateful for occasions like this to introduce the roll of agriculture in the development of the post apartheid South Africa.

It is important to identify the current challenges that agriculture is facing and you will allow me to name a few.

a)Land reform and Black Economic Empowerment remains a critical issue for the social, political and economic stability of South Africa, and Creative solutions, not only regarding land ownership, but also in the up in downstream activities, are being developed and implemented.

b)Food safety was in South Africa traditionally subservient to the availability of food, it is becoming increasingly clear that food safety issues are receiving mounting priority. This is not only the case for export markets but also on the domestic market.

c)It is true that many people are still going hungry every day in South Africa and in the Western Cape. It is sad that this often occurs within walking distance from full granaries and packing sheds. Or, in other words, the food is available, but people do not have the money to buy food. Thus, a food security strategy that is based on two legs is followed. The first is to enable people to have the financial measures to buy food and the second is to help people to produce their own food within their limited means.

d) The agricultural sector is one of the primary custodians of the natural resources and bio-diversity of the Western Cape. In addition to the responsible use of these resources, possible climactic change can become a major issue. In addition, increasing pressure on these resources due to population and economic growth necessitates a fresh approach.

As the minister responsible for agriculture in the province, I am proud of the contribution of viticulture, not only in South Africa, but also internationally. I am sure you will allow me to give you a little insight into the role of viticulture in South Africa.

South Africa is the world's sixth largest wine producer, accounting for 2.8% of global production. The Western Cape's favourable climatic and soil conditions make it home to most of South Africa's wineries, accounting for 90.5% of production. Viticulture contributes some 30% to the region's horticultural income and about 3% to its Gross Regional Product. The gross output value of wine-industry-related firms is R14.6 billion. In 2001, there were 4 390 primary wine producers and 388 cellars - and increase of 15% over 1999. This included 67 cooperatives, 91 estates, 219 private wine cellars and 11 producing wholesalers. The area under vines is some 106 000 hectares. About 746 million litres of wine are produced annually from 314 million vines. On average, 71% of production finds its way into good wine (for drinking) - up from 65% in 1999. Another 1% finds its way into rebate wine (for distillation of pot still brandy), 15% into distilling wine, and 13% into non-alcoholic uses such as grape juice and grape concentrate.

The late 1990s saw considerable foreign investment in Western Cape vineyards, large-scale replanting and quality improvements, leading to a boom in exports. There was an explosion in the number of wineries and wines produced - over 100 new wineries between 1999 and 2001, with quite a few more since then. There was also substantial investment in information technology, export infrastructure, and distribution facilities. Given the low production costs in the Cape (despite the high cost of imported equipment and cost escalation caused by devaluation of the Rand), Cape wineries have proven competitive - particularly those wineries producing fine a quality at a premium price.

The South African wine industry is encouraging people from previously disadvantaged communities to emerge as wine farmers/makers. To this end, the Wine Industry Trust was established in 1999, with funding of R370 million over 10 years. One of its responsibilities is investment in "wine education" to facilitate entry into the industry. A number of Cape wine farmers have established joint ventures with their workers, e.g. Spice Route, New Beginnings, Thandi Wines and Tukulu. The New Farmers' Development Corporation helps workers from disadvantaged communities to secure capital for the establishment of commercially viable farms.

South African wine exports grew to 210 million litres in 2002 - up from 50.7 million litres in 1994. Exports accounted for 33.5% of good wine production, compared to just 14.6% in 1995. In addition, 61.5 million litres of bulk wine were exported. Total export value for wines in 2001 was about R4.5 billion. In 2001 South Africa imported 2.4 million litres of natural wine, 20 787 litres of fortified wine and 151 03 litres of sparkling wine. Approximately 50% of bottled wine exports are to the UK, 21% to the Netherlands, 9% to Scandinavia and 6.5% to Germany - together accounting for more than 85% of South Africa's wine exports. Other markets currently representing less than 3% exports, but identified as growth opportunities, include the US, India, China and Japan.

Wine tourism has potential - 43% of tourists to South Africa visit the wine lands. The wine industry indirectly contributes more than R3.5 billion annually to the tourism industry.

Looking at your program and the papers that will be delivered, it is an undeniable fact that this conference is of the utmost importance to the development of the Wine industry in the Western Cape. This industry is one of the main drivers in our agricultural empowerment programs in the Western Cape.

Enquiries:

Alie van Jaarsveld
Tel: 021 483 4700
Cell: 084 604 6701