Abstract
The objective of this research was to examine the economic viability of commercial olive farming in the North-West Province. As Southern Africa is expected to experience an increase in temperatures and a disruption in rainfall patterns that are characteristic of extreme climate events, farmers must identify new options to manage these risks and to survive as sustainable farmers. There are several risk-reduction strategies, of which diversification is one of the most promising options. Therefore, this research aimed to investigate the viability of commercial olive farming as a diversification option in the North-West Province. The olive industry in the North-West Province is relatively underdeveloped, but it shows potential for growth. To establish whether there is a demand for olives, more background information was collected. The production of olives increased during 2005 to 2020 in non-European Mediterranean countries such as Tunisia, Turkey and Morocco. The consumption of olive oil per capita is estimated at 0,08 litres per year in South Africa. This is an insignificant amount compared to the 12–36 litres consumed by the European countries. This is also an indication of the potential for future growth in the demand for olive oil.
The global consumption of olive oil has shown growth over the past three decades, increasing by 80% in volume (IOC 2022). In 2020, South Africa exported R3 574 402’s worth of olive oil, making it the 31st-largest exporter of olive oil in the world. In the same period, South Africa imported R19 930 000’s worth of olive oil and became the 52nd-largest importer of olive oil in the world. The main destination of olive oil exports from South Africa are Yemen R1 067 379, Botswana R729 705, Somalia R714 880, Eswatini R660 523 and Lesotho R138 529 (OEC, 2022). South African farmers can fill this growing demand and improve South Africa’s economy; thus, measures must be taken to meet the ongoing need while creating additional access to a growing market. Considering these factors, the olive industry is a robust, growing industry with excellent potential that is worth exploring.
All commercial olive farmers in the North-West Province were approached to participate in the study. The population of the study consisted of commercial olive farmers in the North-West Province, who also registered with SA Olive as a member. The entire population was respondents in the study. A dual type of research methodology has been followed. Data were collected through semi-structured interviews and supplemented with financial information. The financial and operational figures collected from the literature denote the quantitative data against which the current collected quantitative data were measured. These data sets were analysed to calculate the economic viability of olive production. The remainder of the data collected through the interview questions were the qualitative data and were analysed by identifying certain themes.
After the thematic analysis, the results indicated that several stages of olive plantations were visible on different farms, with widespread conditions and farming methods. The North-West farmers used practices and guidelines in accordance with the Western Cape and Mediterranean region. The trees vary greatly in age; the youngest are only two years old and the oldest are over 20 years old. This indicates that there are indeed older and more experienced olive farmers in the province with knowledge to share with upcoming farmers. The positive themes resulting from the study were that olive production needs a relatively small piece of land, less intense operational activities and that the demand in the market has increased. On the negative side is the limited knowledge to produce olives in the North-West Province and that olive farming initially requires large capital investments.
The joint experience of these pioneering farmers was used to determine the economic viability of commercial olive farming in the province. Based on the estimated financial calculations, a profit is made from year four and then a cumulative profit from year eight. The income per hectare grows from R26 000 in year four to R104 000 in year eight. The net profit per hectare stabilises in year eight at the amount of R62 887. If the profit margins of the different crops are compared, maize has the worst profit margin of 59%, with peanuts performing better with 67%. Soybeans and sunflowers both surpassed the 100% mark with 101% and 196%, respectively. Olive oil achieved a profit margin of 152%, which places olive oil in the second-best position just after sunflower with 196%. The study will add value for South African farmers in the olive industry and prospective or new farmers who intend to enter this industry. Current farming activities and strategies are based on international research, because available information and research on South African weather conditions and soil conditions are limited. The publication of relevant research can improve and optimise farming activities in the olive industry in South Africa.
The study will help farmers to diversify their operations and thus be economically more stable. The study will promote awareness of the economic viability of olive farming. If olive farming is economically viable and farmers adopt it, it will create jobs and stimulate the economy. Olives are an excellent product and will contribute to the Gross Domestic Product (GDP) of the entire country.
Keywords: farming industry; North-West province; olives; viability
- This article’s featured image was created by Melina Kiefer and obtained from Unsplash.