Potato and Onion Scheme to benefit local producers
An agreement is in place to provide additional marketing assurance to the local potato and onion industry. The Potato and Onion Scheme was approved by the Ministry of Agriculture,Water and Forestry in February 2012.
Potatoes and Onions are considered to be two of the most-consumed and important fresh vegetables, one as a staple and the other as a seasoner. But local production is small and subject to price fluctuations in the South African market where these commodities are grown in mass. Local producers saw the need to seek additional marketing assurance during harvesting times. “In July and September 2011, some producers who foresaw a bumper harvest wrote a letter to the Namibian Agronomic Board, a stakeholder meetings took place and resulted in the draft marketing scheme for potatoes and onions,” said Gilbert Mulonda, special horticulture commodities officer at the Namibian Agronomic Board.
According to the Namibian Horticulture Market Share Promotion (MSP) rules and regulations, the basis of restriction on imports states that all importers are obliged to source a minimum percentage of their purchases from local producers of fresh fruit and vegetables.
“Despite the MSP requirements, some importers have been persisting in importing potatoes and onions even during periods of sufficient domestic production or even over-production,” Mulonda emphasized.
Mulonda says that together potatoes and onions make up 20% of the whole basket of imported fresh produce and have the greatest potential for increased domestic production for import substitution. “Therefore special monthly import permits will be issued for the importation of potatoes and onions, separately from the basket within the permit system,” he said.
The current MSP benchmark, Mulonda says, is 37.5% which means all importers will only be allocated permits if they adhere to this rate. “Permits will be limited to those who do not reach the market share and unlimited permits will be given to importers who are above the market share,” he added.
The scheme only includes Grade 1 and 2 of “normal” potatoes distributed in the country and exclude the more expensive BP1 large, specially grown for the chips market, which make up 25% of the total market and the expensive washed white “loose sell” or “Pre-pack” types, which only make up 5% of the market.
Large, medium and small onions are included in the scheme. While the country only produces white onions, as far as the scheme is concerned, any restrictions on white onions will automatically also apply to brown onions whilst red and spring onions are excluded from the scheme.
Permits will be issued separately for “normal” potatoes and onions on a monthly basis. In months of sufficient supply, no import permits will be issued while in months of partial supply, pro-rata +10% import permits will be issued to importers. No restrictions on imports are included at this stage.
According to Mulonda, the current agreement between the Potato and Onion Producers Association and the Namibia Association of Traders in Fresh Produce consist of about 30 farmers who grow the two commodities. “Depending on the success of the potato and onion scheme, plans to include other commodities in the scheme will follow soon,” said Mulonda.