TRALAC - Trade Law Centre

Namibia: New Markets for Grape Industry

Tuesday, 27 June 2006

Source: New Era (Windhoek)

Namibia's grape markets are set to increase with the likelihood that the country will start exporting grapes to the USA through the Africa Growth and Opportunity Act (AGOA) from next year.

With the oversupply of traditional grape markets, namely Europe and UK, the move will improve the prices that Namibia gets at present.

"We never had a market to the USA. If a market can open for us we will be able to get rid of excess fruit," said André Vermaak, General Manager: Group of Companies of the Grape Value Management Company in Noordoewer.

Getting a new market, he added, would be a positive thing because the prices of grapes at present are not so good due to the strength of the Namibian dollar against major currencies. The country's grapes were not allowed into the US because food products have to adhere to that country's strict sanitary and phytosanitary measures, which Namibia has been adhering to for that last four years.

The US Department of Agriculture, according to Vermaak, has for the past years been sending officials to the farms and this coming crop will be the last one to be surveyed.

The industry rakes in around N$200 million per year and employs between 4 500 to 6 000 casual workers during harvest and 1 300 permanent ones.

In a related development, Vermaak said officials from the industry will together with government officials undertake a trip to China to make presentations on the grape industry in an effort to solicit other markets.

"The development of new markets looks positive," he added.

Messag Mulunga, Ministry of Trade and Industry's Trade Promotion Officer said this was a significant achievement considering the many millions that the industry brings into the country.

"It is important as we have expanded the industry and we plan to expand it even more," he said, adding that this would also mean more employment.

Although all Namibian products are eligible to enter the AGOA market duty and quota free, lack of production capacity, shortage of regular shipping lines between the US and Namibia and lack of knowledge of the market itself have resulted in a few products being exported to that market.

There is thus a drive by Sub Saharan African (SSA) countries to diversify the region's exports to the US market to which over 6 000 products are eligible to enter duty and quota free, which the countries have not used to their advantage, Mulunga said.

At the annual AGOA forum held in the USA, SSA countries proposed to set up AGOA desks at regional organisational level to prepare themselves thoroughly for the next meeting, which will he held in Africa.

At the same meeting, countries also applied to the US government to have the third country fabric provision, which allows AGOA countries to source fabrics from non African countries up to 2015. The provision expires in 2007.

Least Developed Countries and others that are classified as such, including Namibia, jointly made application for the extension of the provision.

Mulunga said the ministers of SSA met with Congress to put forward their case as to why the provision should be extended and what it would mean if the request was rejected.

Although Namibia grows cotton in Grootfontein, Mariental, Rundu, Caprivi and areas in the north, the production is far from meeting the demand that is there.

The country also imports cotton from other African countries such as Cote d'Ivoire, Ghana, Niger and Togo. Apart from importing cotton, Ramatex, which is the country's biggest textile company, also imports fabric from Malaysia.

"They have been supplementing the cotton imports with fabric from Malaysia so they can also still benefit from the third country mechanism if it is extended," said Mulunga.