Compliance with Regulatory and Market Requirements: A Costly Affair

High compliance costs associated with regulatory and market requirements are a primary concern for the essential and vegetable oils industry in South Africa. While regulations are crucial for ensuring safety, health and quality, they often place a heavy burden on small and medium producers (SMEs), restricting their ability to compete both locally and internationally. 

A recent study delved into innovative models aimed at reducing compliance costs while also addressing gender disparities within this dynamic industry, with a focus on the project-target species (Buchu, Cape chamomile Helichrysum, Lippia and Rose geranium (essential oils); Baobab, Kalahari melon, Manketti/mongongo, Marula and Ximenia. The insights gleaned are aimed improving competitiveness and unlocking the export potential of this growing sector. 

To bolster the competitive edge of SMEs in accessing markets, the study identified four key cost-reducing models: cooperatives, out-grower schemes, incubation hubs, and contract harvesting. The hybrid model was recommended as the most suitable one as it combines elements of contract farming and cooperative structures.  The model would need to be reinforced through further policy and regulatory reforms, accessible financing and incentive programmes, capacity building, technology transfer and enhanced stakeholder collaboration. 

The study underscored significant disparities in women’s participation and advancement within the essential and vegetable oils industry value chains. While 76% of women are involved in raw material production and wild harvesting, only 23% participate in technical roles and business development. The study confirmed that training and skills development, focusing on women’s leadership remains a priority, including the role of community support, effectively addressing socio-cultural barriers and initiating relevant policy reforms. One of the SMEs remarked, “The insights gathered provide a roadmap for further empowering women, which is essential for driving innovation and growth in this sector.” 

While initial grants help producers though the start-up phase, scaling up and sustainable production require further investment. In terms of the export of the high quality indigenous oils produced, there is a great potential for South Africa on the international market. However, an enabling institutional and policy environment as well as securing investment in this sector are required in order to significantly increase production. 

“This study represents a significant step towards fostering a competitive, sustainable, and inclusive landscape in South Africa's essential and vegetable oils industry,” stated Ms. Karen Swanepoel, Executive Director, SAEOPA. 

The presentation made during a feedback webinar on the results of the study, attracted more than 100 participants from academia, public and private sectors and is available on the SAEOPA Website: 

https://www.saeopa.co.za/news/gqsp-sa-ii-study-presentation-to-stakeholders/

GQSP-South Africa II aims to strengthen the SMEs by enhancing technical compliance capacity and promoting the competitiveness of South African SMEs on the global stage by adhering to both national and international standards, regulations and quality requirements for market access.  

The United Nations Industrial Development Organization (UNIDO) Global Quality and Standards Programme – South Africa project (GQSP-SA) Phase II is funded by the Swiss State Secretariat for Economic Affairs SECO, and implemented in cooperation with the Department of Trade, Industry and Competition (the dtic) and the Southern African Essential Oil Producers’ Association (SAEOPA).

For further information, please contact GQSP-SA II Project Manager, Mr. Bernard Bau. Email: B.Bau@unido.org