Voluntary Report - public distribution

Date: 8/2/2005

GAIN Report Number: SF5028

SF5028

South Africa, Republic of

Fishery Products

Voluntary

2005

Approved by:

![](media/image1.wmf)Rachel Bickford

#### **U.S. Embassy, South Africa**

Prepared by:

Amanda Marie Leister

Report Highlights:

Imports of fish and seafood products from the United States have
increased for the past two years due to the appreciation in the value of
the rand and decreased local catches. Domestic demand for seafood has
risen, and many consumers are looking to seafood as a healthy source of
protein. In FY2004 South Africa saw a \$3 million increase in imports
from the US from \$1.7 million in 2003 to \$4.5 million in 2004.
Categories which have shown the most growth from 2003 to 2004 are: other
seafood (0307) from \$20,922 to \$870,533; prepared or preserved fish
from \$761,980 to \$1.6 million; frozen fish from \$633,833 to \$1.3
million; and fish fillets from \$39,780 to \$551,403. Canned salmon
imports have shown consistent growth for the past five years, and this
increase is expected to continue. The Unites States enjoys a dominant
position in the canned salmon market and holds 88% market share.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Pretoria \[SF1\]

\[SF\]

**TABLE OF CONTENTS**

SECTION I: MARKET
OVERVIEW:....................................................................
3

SECTION II: MARKET SECTOR OPPORTUNITIES AND
THREATS............................ 4

SECTION III: COSTS AND
PRICES:................................................... 6

SECTION IV: MARKET
ACCESS:......................................................... 7

SECTION V: KEY CONTACTS AND FURTHER
INFORMATION:........................... 8

APPENDIX I:
STATISTICS:..............................................................................
9

# **SECTION I. MARKET OVERVIEW**

The United States is South Africa's largest trading partner and has been
the largest foreign direct investor in South Africa since 1994. South
Africa benefits from duty-free exports to the U.S. under the Generalized
System of Preferences and the African Growth and Opportunity Act (AGOA)
in the United States. A bilateral commission has been established to
strengthen relations between the two countries, and a Free Trade
Agreement is being negotiated between the United States and the Southern
Africa Customs Union, which includes South Africa. However, the
negotiations have been at a standstill for a year while the principals
agree on the modalities.

South Africa imported \$58 million of fish and seafood products in FY 04
primarily from Thailand, Philippines, Mozambique and India. Imports
mainly consisted of crustaceans \$19 million; other seafood, primarily
squid \$15 million; and fish meat \$20 million. The South African
packaged seafood market includes: Canned Fish 65.4%; Value Added Fish
14.2%; Packaged White Fish 13.8%; and Specialty Seafood 6.7%. In the
restaurant sector the products with the highest consumer demand are fish
and chips, calamari and prawns. This trend has been consistent for the
past ten years and is expected to continue for at least the next five
years. The most desired U.S. products for the restaurant sector are
Boston calamari, Pacific Salmon, Alaskan crab and tuna.

The two biggest challenges faced by the South African Seafood Industry
are the fluctuating value of the rand and the worldwide scarcity of
seafood. Seafood demand is increasing annually while catches are
decreasing, and a large majority of local high value seafood is
exported, so South African wholesalers and distributors often have
difficulty fulfilling the domestic demand for seafood. Scarcity of
seafood is expected to grow as time goes on and industry leaders believe
this will continue to be one of the largest difficulties in the
industry.

##### South Africa Market Breakdown -- Packaged Seafood

##### ![](media/image2.wmf){width="6.16875in" height="3.4680555555555554in"}

Imports of fish and seafood products from the United States have
increased for the past two years due to the appreciation in the value of
the rand and decreased local catches resulting from over fishing and
more restrictive catch quotas in South Africa. The overall demand for
seafood has risen as well because income levels in South Africa are
rising, so more people can afford to purchase seafood, and many
consumers are looking to seafood as a healthy source of protein. In
FY2004 South Africa saw a \$3 million increase in imports from the US
from \$1.7 in 2003 to \$4.5 million in 2004. Categories which have shown
the most growth from 2003 to 2004 are: other seafood (0307) from
\$20,922 to \$870,533; prepared or preserved fish from \$761,980 to
\$1.6 million; frozen fish from \$633,833 to \$1.3 million; and fish
fillets from \$39,780 to \$551,403. The demand for U.S. seafood products
is high given its superior quality and good reputation. Yet South
African importers find it difficult to contract for U.S. seafood because
it is still quite expensive, given the currency exchange rate, even with
the current strength in the value of the rand.

# Advantages and Challenges Facing Sales of U.S. Seafood Products in South Africa

+-----------------------------------+-----------------------------------+
| Advantages                        | Challenges                        |
+-----------------------------------+-----------------------------------+
| More favorable exchange rate.     | Retailers and consumers want U.S. |
| Strong rand and euro with the     | seafood products but they still   |
| weak dollar make American seafood | remain extremely costly given the |
| imports more affordable.          | currency exchange rate.           |
+-----------------------------------+-----------------------------------+
| South African consumers view U.S. | Acquired tastes and preferences   |
| products as high quality.         | for traditional, locally produced |
|                                   | products.                         |
+-----------------------------------+-----------------------------------+
| South African importers seek      | Long period of time needed to     |
| suppliers who can offer quality   | transport to South Africa and     |
| products at competitive prices.   | await import inspections.         |
|                                   |                                   |
|                                   | (6-8 weeks standard seafood       |
|                                   | shipping time)                    |
+-----------------------------------+-----------------------------------+
| Demand for seafood as a protein   | Competition from other countries  |
| source is increasing in South     | and locally packaged seafood      |
| Africa.                           | products.                         |
+-----------------------------------+-----------------------------------+
| Transparent import regulations.   | Challenging for U.S. suppliers to |
|                                   | respond to trade-lead inquiries   |
|                                   | in a timely fashion.              |
+-----------------------------------+-----------------------------------+
| U.S. exporters provide innovative |                                   |
| products.                         |                                   |
+-----------------------------------+-----------------------------------+

# **SECTION II. MARKET SECTOR OPPORTUNITIES AND THREATS**

South Africa has an established seafood market of nationally provided
products, and local competition proves to be the greatest threat to
success in the sector because of the additional costs incurred by U.S.
exporters including shipping, storage, time and tariffs. However, local
production is insufficient to meet the demand for certain items such as
shrimp, prawns, tuna, horse mackerel, snoek and pilchards; which
provides excellent trade opportunities for U.S. exporters. Suppliers in
other African countries pose the second largest threat as they have the
advantage of location allowing decreased shipping time and
transportation costs. Many African countries also receive favored nation
trade status from South Africa, which includes preferential treatment
and decreased or waived tariffs as well.

There are opportunities in South Africa to gain market share in the
seafood industry by providing a more modern, differentiated product to
consumers. Fish has traditionally been preserved and

sold by simple methods such as drying, salting and smoking. The most
commonly provided types of fish products include smoked and dried fish,
shrimp powder, fermented fish sauces, other fish and shrimp sauces,
minced fish products (cakes and fingers), fried fish and fish pates.
However, in recent years, demand has called for more value added
products, which can be provided by American companies.

Seafood consumers have begun to seek, new non-traditional seafood
products such as fish sausages and fish burgers. There has also been a
surge in demand for frozen seafood and processed fish. For shrimp and
prawns, horse mackerel and snoek, local demand has called for frozen
products rather than canned goods and this provides opportunities for
U.S. suppliers to focus on frozen items rather than canned goods, except
for salmon. Canned salmon imports have shown consistent growth for the
past five years, and this increase is expected to continue. The United
States enjoys a dominant position in the canned salmon market and holds
88% of this sector. The United Kingdom and South Korea each have 4%
market share, followed by China 3%, and Canada 1%.

South Africa is a net exporter of seafood, and the industry is quota
driven. Players in the industry are allocated fishing quotas at the
beginning of the season in order to regulate catches so that local
waters do not become depleted of stocks. The quota system came in
response to decreased catches and concerns of declining fish stocks in
the area. The greatest total allowable catches are for hake, pilchards
and anchovies, and the number of fishermen demanding permits exceeds the
current total allotment.

Fish, particularly hake, caught in local waters by South African fishing
companies are destined for the international market. The international
demand for South African hake is high due to its excellent quality, and
it is sought after in Mediterranean countries such as Spain and
Portugal. Exports of fresh fish have traditionally comprised a large
percentage of the South African seafood industry, but the international
market has become more difficult for South Africans with the
appreciation in the value of the Rand relative to U.S. Dollars and other
currencies.

The local players either catch and distribute the product themselves or
pass the item on to alternative players to distribute on their behalf.
For example, certain companies have a catch allocation but will also
purchase fish from other suppliers to supplement the supply to their
customers. Distributors supply the retail fresh fish counters, but the
largest portion of their business involves supplying the foodservice
sector. These distributors include various companies such as Blue
Marine, Blue Continent, Sea World, Breco and Lusitania. I&J and Sea
Harvest are also active in the distribution of fresh fish to the
foodservice market. Although white fish makes up the bulk of this
volume, fresh or frozen specialty seafood is harvested by the same major
fisheries and is channeled to the markets by these same larger
distributors.

The strong Rand has helped to increase U.S. imports in South Africa
because it makes imports more affordable for South African consumers.
However, the strong Rand can also create additional competition for U.S.
producers even though U.S. products become more affordable. South
African seafood loses its attractiveness in foreign markets because the
strong rand makes it more expensive, and seafood that would normally be
exported will consequently find its way inland to the South African
market. In addition, there has recently been an influx of Namibian
imports. With the local currency not being as strong against the Dollar,
Namibian fisheries have

not achieved good international prices for their stock and have
therefore channeled much of their supply into South Africa.

The fish stocks in South Africa are a natural, husbanded resource rather
than being a pure farming operation. As this stock cannot readily be
controlled, it needs to be protected and managed well. In order to
prevent the collapse of fish stocks through excessive harvesting, the
Department of Marine and Coastal Management has recently restructured
the quota allocation system, causing much controversy in the market,
particularly amongst the smaller South African players because they are
hit harder by marginal adjustments in their catch allotments. The
tightening of quotas for South African landings should prove beneficial
for U.S. producers who can make up for the resulting lost catches.

The South African Deep Sea Trawling Industry hopes for a reduction in
the 25% import tariff on white fish. The local market is complaining of
a shortage of hake due to the majority of fish caught locally being
exported at a premium above the local price. If the import tariff on
white fish was reduced, it would open up the market to cheaper imports
(lower graded fish), which could be used for processed fish products
thus increasing the availability of affordable fish products for the
local market. The lower grade imported fish would not harm the local
industry while the international demand for good quality hake remains
high, thus providing a benefit for both foreign and national producers.

The fishing industry in South Africa will continue to remain an export
driven market so long as the demand in the international market for
quality fish remains high. Locally the quota system will continue to
remain in place in order to ensure the existence of the industry in the
future.

Neighboring African countries also provide additional challenges for
U.S. exporters given their ease of entry into the market largely
resulting from their location and political ties with South Africa.
Mozambique and Namibia specifically have a strong presence in the South
African seafood market, and are working to strengthen their positions.
Namibia is preparing to set up a fish food project in the Omusati region
in the effort to increase the profitability and number of fish farms in
the country. Namibian fish farmers currently import fish food from South
Africa, and by creating their own fish food product they can increase
their competitiveness with farm-raised fish. Spain has partnered with
the Namibian government to help create the fish food program as Namibia
serves as a low cost provider of fish. By decreasing production costs
with the fish food program, Namibia is expected to be a more enticing,
lower cost supplier and could potentially become more threatening to
U.S. producers.

# **SECTION III. COSTS AND PRICES**

###### Tariffs

In general there are few tariff barriers in the fish and seafood market
with the exception of salmon, trout, tuna, caviar, mackerel and
anchovies. Most other products face zero import tariffs, thus
eliminating this potential source of increased costs for other seafood
items. Salmon and trout have an import tariff of 25%, caviar import
tariffs are 30% and the other tariffs vary by product. In addition to
tariffs, there are further import restrictions, which are detailed in
Appendix A.

There are additional taxes payable on imports, which include a
Value-added tax of 14% payable on all imports and on locally
manufactured goods, which is determined based on the value of the
customs duty plus an additional 10% to any further duties paid.

It is strongly recommended that exporters join with a South African
partner to help facilitate the details of import taxes and regulations.

Preferential Treatment: Crustaceans of Mozambique origin qualify for
preferential treatment under the terms of the trade agreement with South
Africa. Such preferences are subject to quotas. Goods of Malawian origin
are admitted to South Africa free of duty in terms of the trade
agreement with South Africa. Imports from member states of South African
Customs Union (SACU) South Africa, Botswana, Lesotho, Namibia, and
Swaziland are also admitted free of duty.

# 

# 

# **IV. MARKET ACCESS** 

According to the Foodstuffs, Cosmetics and Disinfectants Act of 1972:
Regulations Relating to Labeling and Advertising of Foodstuffs, labels
on food products must include the following points:

a.  The name of the product

b.  The name and address of the manufacturer, packer, seller, importer,
    or person on whose behalf the foodstuff is pre-packed

c.  A list of ingredients in descending order (of mass) under the
    heading "Ingredients"

d.  A label written in at least one of the official languages of South
    Africa. (This includes English)

e.  Instructions for special storage conditions, when applicable

f.  The product's country of origin

In practical terms, most U.S. products meet South African labeling
regulations. However, there are regulations regarding the usage of
certain words and expressions that imply health-giving properties.
Precise explanations of the terms and conditions for food product
labeling can be found at
[**http://www.doh.gov.za/**](http://www.doh.gov.za/). (Click on
Documents, then Regulations, then Regulations Relating to Labeling and
Advertising of Foodstuffs, August 8, 2002; #1055. Note that the annexure
section of this document provides information on required nutrition
analysis).

A useful reference is the GAIN Report SF4029, Food and Agricultural
Import Regulations and Standards for South Africa, which was written by
our office in August 2004 and can be found at the following link:
[**http://www.fas.usda.gov/gainfiles/200410/146117652.pdf**](http://www.fas.usda.gov/gainfiles/200410/146117652.pdf)

Fish and seafood products require permits to be imported into South
Africa. The permits are handled by the Director of Import and Export
Control of the following Departments in South African Government:
Department of Agriculture, Directorate of Veterinary Services;

Department of Health, Directorate of Food Control; South African Bureau
of Standards; and South African Health Officials, commonly known as Port
Health Officers. U.S. seafood exporters may find it easiest to rely on
experienced South African seafood importers to organize the details
regarding the import permits.

Various types of seafood items need permits from different departments
in the government. Fish and crustaceans, fresh, chilled or frozen,
require an import permit by the Department of Trade and Industry.
Crustaceans and mollusks (tariff code 0306 and 0307 respectively)
require a permit from the Directorate of Plant and Seed Control.

Phytosanitary certificates are required after inspection of all fishery
and seafood products at the point of entry into South Africa by the Port
Health Officer. Stringent health requirements and standards
specifications apply to all seafood imports. Import requirements along
with labeling and packaging specifications of products are enforced by
the South African Bureau of Standards (SABS). SABS should be contacted
prior to exportation of the following products to ensure that product
specific import measures are followed:

-   canned fish, canned fish products and canned marine mollusks

-   canned crustaceans

> \- frozen fish, frozen marine mollusks and frozen fish and frozen
> marine mollusks products

\- frozen rock lobster products

\- frozen shrimps (prawns), langoustines and crabs

-   smoked snoek

The SABS requires notification of all imports of fish and seafood
products entering South Africa. Each shipment must be tested for quality
assurance and it is preferred that importers work through local agents
to facilitate the testing process. The size of the sample varies
according to the size of the shipment. Samples are inspected for
bacteria, odor, uniformity, general quality, and to ensure that the
product has been kept frozen at --20 degrees Celsius. Each inspection
normally takes five working days. Meanwhile, the importer is provided an
embargo release certificate, which allows the transfer of the products
to a designated refrigeration area to await the outcome of the analysis.
Once all the tests have been passed, the Health Authorities will approve
the consignment and a certificate of compliance will be issued.

Canned crustaceans, frozen rock lobster and smoked snoek are also
subject to compulsory inspection. A potential exporter can provide the
SABS with six cans or samples of each product intended for export to
South Africa, which will then be submitted for a written report on the
suitability of the products at no charge for the first five sets of
samples.

# 

# 

# **V. KEY CONTACTS AND FURTHER INFORMATION** 

###### A. Importers and Distributors

FAS/Pretoria maintains a list of South African seafood importers.
Interested U.S. companies may contact us for the latest version.

# **B. POST CONTACT**

If you have any questions or comments regarding this report or need
further assistance, please contact AgPretoria at the following address:

####### Foreign Agricultural Service

U.S. Embassy Pretoria, South Africa

Washington, D.C., 20521 -- 9300

Tel: 011-27 12 431 4235

Fax: 011-27 12 342 2264

Email: [**agpretoria@fas.usda.gov**](mailto:agpretoria@fas.usda.gov)

For more information on exporting U.S. agricultural products to other
countries, please visit the Foreign Agricultural Service's website at:
[**http://www.fas.usda.gov**](http://www.fas.usda.gov/)

# **VI. APPENDIX I: STATISTICS**

###### 

###### PROTEIN MARKET SEGMENTS

![](media/image3.wmf){width="6.268055555555556in"
height="3.838888888888889in"}

# **B. MAJOR SEAFOOD MARKET SECTORS AND DISTRIBUTION**

###### Canned Fish Distribution in South Africa

![](media/image4.wmf){width="6.118055555555555in"
height="1.8701388888888888in"}

###### Packaged Fish Distribution in South Africa

![](media/image5.wmf){width="6.110416666666667in"
height="1.8333333333333333in"}

###### Specialty Seafood Distribution in South Africa

![](media/image6.wmf){width="6.03125in" height="1.8145833333333334in"}

###### Total Packaged Seafood Distribution in South Africa

![](media/image7.wmf){width="6.118055555555555in"
height="1.8701388888888888in"}

###### Provincial Distribution of Packaged Seafood

![](media/image8.wmf){width="5.027777777777778in"
height="3.6416666666666666in"}

# **C. SEAFOOD CONSUMPTION IN SOUTH AFRICA**

###### Aggregate Annual Retail Consumption of Packaged Seafood

![](media/image9.wmf){width="3.7534722222222223in"
height="2.884027777777778in"}

# **D. SOUTH AFRICA FOODSERVICE MARKET**

###### 

###### Aggregate Annual Foodservice Consumption of Packaged Seafood

![](media/image10.wmf){width="3.7534722222222223in"
height="2.884027777777778in"}

![](media/image11.wmf){width="6.260416666666667in" height="3.85in"}

# **E. SOUTH AFRICA SEAFOOD IMPORTS FROM THE WORLD**

# 

  --------------------------------------- ---------- ---------- ----------
  FISH & SEAFOOD PRODUCTS                                       

  Reporting: South Africa                 Import     Import     Import

  Top 15 Ranking Countries                2001       2002       2003

                                          Value      Value      Value

                                          1000\$     1000\$     1000\$

  Thailand                                7841       7261       12245

  Philippines                             8621       7039       8078

  Mozambique                              5509       5577       7112

  India                                   4929       4429       6799

  Spain                                   1370       1450       3900

  Norway                                  3831       2570       3607

  Taiwan (Estimated)                      4646       1813       3391

  New Zealand                             1888       1534       3331

  Argentina                               0          978        3190

  Japan                                   1753       1805       2017

  United States                           1105       849        1902

  China (Peoples Republic of)             1476       1762       1495

  Chile                                   599        687        1405

  Portugal                                1095       814        1332

  Canada                                  431        496        1127

  Other                                   10229      8454       9611

  World                                   55322      47524      70553
  --------------------------------------- ---------- ---------- ----------

# **F. TARIFF SPECIFICATIONS**

Import tariffs on fish and seafood products as of February 16, 2005 are
as follows:

  ------------------ --------------------------------- ----------------------
  HS Code            Description                       Rate of Duty

  03.01              Live Fish                         free

  03.02              Fish, fresh or chilled            

  0302.11            Trout                             25%

  0302.12            Pacific salmon                    25%

  0302.19            Other                             25%

  0302.20            Flat fish                         free

  0302.30            Tunas                             free

  0302.40            Herrings                          free

  0302.50            Cod                               free

  0302.60            Other fish                        free

  0302.61/65/66      Sardines, dogfish, and eels       free

  0302.70            Livers & roes                     free

  03.03              Fish, frozen                      

  0303.11            Sockeye salmon                    25%

  0303.21            Trout                             25%

  0303.22            Atlantic salmon                   25%

  0303.29            Other                             25%

  0303.40            Tunas                             free

  0303.50            Herrings                          free

  0303.60            Cod                               free

  0303.70/71/75/76   Other fish, sardines, dogfish and free
                     eels                              

  0303.80            Livers and roes                   free

  03.04              Fish fillets, fresh, frozen or    
                     chilled                           

  030410.15          Anchovies                         free

  030410.9           Other                             25%

  03.05              Fish, dried, salted or in brine,  
                     smoked, flours, meals & pellets   

  0305.10            Flours, meals and pellets of fish free

  030530.10          Anchovies                         free

  030530.90          Other                             25%

  0305.41            Pacific salmon                    25%

  03.06              Crustaceans, fresh, chilled,      free
                     frozen, salted, in brine, flours, 
                     meals & pellets                   

  03.07              Molluscs, fresh, chilled, frozen, free
                     salted, in brine, flours & meals  

  16.04              Prepared or preserved fish,       
                     caviar & caviar substitutes       

  1604.11            Salmon                            6c/kg

  1604.12.10         Frozen herrings                   25% or 200c/kg

  1604.12.90         Other                             6c/kg

  1604.13.10         Sprats in oil, in airtight metal  2,4c/kg net
                     containers                        

  1604.13.20         Sardines (pilchards), in airtight free
                     metal containers                  

  1604.13.80         Other, frozen                     25% or 200c/kg

  1604.13.90         Other                             6c/kg

  1604.14.10         Tunas, skipjack & bonito, frozen  25% or 200c/kg

  1604.14.90         Tunas, skipjack & bonito, other   6c/kg

  1604.15.10         Mackerel, frozen                  25% or 200c/kg

  1604.15.90         Mackerel, other                   6c/kg

  1604.16            Anchovies                         25%

  1604.19.10         Other, frozen                     25% or 200c/kg

  1604.19.20         Horse mackerel                    6c/kg

  1604.19.90         Other                             6c/kg

  1604.20.10         Fish paste                        16,5c/kg with a
                                                       maximum of 25%

  1604.20.20         Homogenized composite food        free
                     preparations                      

  1604.20.30         Other anchovies                   25%

  1604.20.40         Other sardines in airtight metal  6c/kg
                     containers                        

  1604.20.80         Other frozen                      25% or 200c/kg

  1604.20.90         Other                             6c/kg

  1604.30.10         Caviar                            30%

  1604.30.20         Caviar substitutes                27%

  16.05              Crustaceans & mollusks, prepared  
                     & preserved                       

  1605.10.10         Homogenized food preparations     free

  1605.20.80         Other, in airtight metal          5,5c/kg
                     containers                        

  1605.30.90         Other                             30%
  ------------------ --------------------------------- ----------------------

Source: Customs Tariff

Note: Where two rates are shown, the higher is applicable.