SA Groundnut Forum (SAGF)
held on 19 September 2017 at 10:00 at the offices of the Oilseeds Industry, 49 River Road, Woodmead

1. Opening

   The meeting was opened at 10h00 with a prayer offered by Mr Scholtemeijer.

2. Welcome

   The Chairperson welcomed all present to the meeting of the SA Groundnut Forum.

3. Attendance

   Present
   Ms A Botha	Chairperson
   Mr G Bezuidenhout	Farmer's Weekly
   Mr G Bruwer	Grain SA
   Mr H Engelbrecht	PPECB Laboratory
   Mr N Hawkins	SAGIS
   Mr R W Higgs	Triotrade Gauteng
   Mr T Jansen	C Steinweg Bridge
   Mr C Louw	Grain SA
   Mrs DB Marabe	DAFF – Plant Production
   Mr R Mommsen	C Steinweg Bridge Procurement
   Ms L Müller	ARC-GCI
   Mr C Nortjé	GWK
   Mr T Prinsloo	ARC-GCI
   Ms M Scheepers	DAFF
   Mr G Scholtemeijer	OAC
   Mr Z Siyotula	DAFF – Plant Production
   Mr P van Heerden	PPECB
   Mr K van Huyssteen	SANSOR
   Mr P van Wyk	VGM
   Mr P Visser	Golden Peanut and Tree Nut SA
   Mr N Wegner	PPECB
   Mr G Keun	Chief Executive Officer
   Ms L Bertin	Quorum Secretarial Services
   Apologies
   Mr K Nienaber	RE Groundnuts
   Mr D Evans	RE Groundnuts
   Dr C van der Merwe	Tiger Foods
   Mr H Lazarus	LB Nuts
   Mr G van Wyk	VGM
   Mr O Msimanga	PPECB
   Mr L de Kock	Roba Foods

4. Personalia

   No items were noted.

5. Finalisation of agenda

   The Agenda was tabled and noted. The following additional items were included as part of the agenda:

   • Item 9.1 – Research: report on Producer Interest Project by Mr N Wegner
   • Item 9.1 – Research: Notice of Training Course (Mr N Wegner)
   • Item 9.1 – Research: Feedback on Cultivar Evaluation Project (Ms L Müller)
   • Item 10.7 – Plumpie Nuts Update

6. Approval of minutes

   The Minutes of the Meeting of 16 February 2017 were approved as a true reflection of the proceedings at the meeting.

   Resolved:

   1. That the minutes of the meeting of the SA Groundnut Forum held on 16 February 2017 be approved as a true reflection of the meeting.

   Chairperson
   Forum Members

7. Matters arising

   1. Strategic Industry Plan

      1. Registered Cultivars

         With regard to resolution 7.2.1 taken at the Forum meeting of 16 February 2017, it was further noted that the information in respect of the registered cultivars was provided to the Chairperson by Ms Müller. The document will be distributed to members of the forum for comments. An electronic document will be published so that it is easy to update and it remains a live document.

         Resolved:

         1. That two additional weeks be allowed for Forum members to provide comment on the draft document regarding the information in respect of registered cultivars.

            Chairperson
            Forum Members

      2. Groundnut Symposium

         A symposium had been previously discussed and a proposal that includes programme, topics, international speakers and themes as well as budget should be submitted to the Oilseeds Advisory Committee for their consideration. The Chairperson noted that funds could be made available if a viable and useful plan were presented that linked to specific industry needs or interests.

         A discussion ensued in which the following points were made:

         • Extensive planning is needed to ensure a successful event. It does not seem feasible to plan for 2018 although convening in 2019 is possible. A key consideration will be the theme of the event and the topics that will be presented. The themes or subjects that will be of interest to the sector should be discussed. For example, a recent project had focused on bulk intakes and grading;
         • With regard to possible topics, breeding cultivars were mentioned. There have been important recent shifts regarding seed and farmers would be keen to know if they are informed of new developments in other countries;
         • In countries like China, the United States, Brazil and Argentina there has been significant increase in yield in the past 5 to 10 years and high-level experts from those countries could be invited to discuss what they did to achieve this;
         • As competitors it cannot be assumed that those countries will be prepared to share their knowledge. There is already extensive knowledge available amongst those in the meeting and many people have had international exposure that can be shared. In Argentina, we know that one of the main factors was that the industry was united and created shared structures. It would be useful to draw on such knowledge and experience. Those with such contacts in other countries can in the first instance share with the Forum;
         • The Forum is cautioned that only countries with similar conditions to South Africa should be engaged. Speakers might know their topic but they should also have an understanding of the local context. Argentina would not be very similar to South Africa. Another possible topic would be expanding the consumption of peanuts and which products should be taken to the market. South Africa needs to encourage the expansion of the industry through both increased planting and stronger marketing to increase consumption;
         • There should be a clearly defined need for such an event to be convened. The industry has improved in the past few years after the challenges around aflatoxin. Internationally there are many different conferences that people are already involved with. To convene a symposium is very expensive so it is important that the Forum is clear on what it wants such an event to achieve. The more technical information can also be shared outside of a symposium or conference;
         • It may be more feasible to send experienced representatives to attend important overseas events and report back to the industry via the Forum. An international research conference two years previously had provided important information and touched on certain relevant issues. The selected representatives need to be sufficiently skilled;
         • The International Groundnut Forum conference was held in Spain and it has already picked up on research subjects. It may be possible to identify an appropriate delegate to represent the Forum at such an event and report back on relevant topics;
         • The first step is to identify the international meeting options including the International Peanut Forum which is strong on not only marketing but also current technical information, and draws on people who are highly knowledgeable;
         • A different approach would be to identify 2-3 experts who would travel to South Africa and participate in a local event. The report from the Conference in Spain can be drawn on to identify the most appropriate people who can share the knowledge that is needed for the South African context; and
         • The relationship with international experts is under discussion and relates to international peanut research. When those experts next visit South Africa this could be combined with a larger event if a relevant topic of interest for the industry is identified. Many international researchers visit South Africa periodically and could also be asked to make presentations to the industry. Promoting increased peanut butter consumption is one such important topic.

         Resolved:

         1. That the matter regarding a Groundnut Symposium be held in abeyance and discussed at the next meeting of the forum.

            Chairperson
            Forum Members

      3. Proposed Farmers' Day

         The Chairperson mentioned that this had previously been suggested and it was necessary to discuss the feasibility of such an event as well as a possible programme. The following points were made by those present:

         • Similar to the proposed symposium, the purpose of a farmers' day needs to be clearly identified as well as the content of the programme;
         • To what extent are bulk intakes now the norm in the industry and what are the changing standards being applied? Where high-level technical information is needed, it may be preferable to identify experts to invite to a specific event;
         • The basic practices need to be refreshed. Farmers prefer to hear about practical matters that can be applied to their own context and will also provide networking opportunities. A calendar of such events is already in place and can be augmented;
         • It should be clarified whether a farmers' day is aimed at motivating previous groundnut farmers, existing farmers or potential new farmers. It is generally accepted that groundnuts can be a lucrative crop if farmed correctly. Producers who can expand on information about quality and export chains will be useful. Grain SA may also wish to be involved; and
         • It is not always possible to have a dedicated day for only one crop since Grain SA is responsible for marketing a number of crops. This would be a responsibility for the SA Groundnut Forum to take on with support from Grain SA.

         The Chairperson said that it seems that there is some consensus for a one-day event to be convened that will include information on producer grading, cultivar elite trials, cultivar trials on what is already available in South Africa, ARC best practice with production guidelines. International experts would be invited to participate. Grain SA could present on marketing factors and pricing. The target audience would be producers across the industry because the topics hold broad interest.

         Resolved:

         1. That the Chairperson will make preliminary enquiries with stakeholders as to the feasibility of such an event to be held in February/March 2018.

            Chairperson

      4. School feeding schemes

         The Chairperson reported that this is a long-term project that aims to reintroduce peanut butter into school feeding programmes. This is an important project that will require extensive work to be done.

         Mr Keun noted that recent attempts to have soy products included in school feeding have proved challenging. Attempts to set up a meeting with the national department of education with the assistance of universities involved in this work have not been successful as yet. The National Department of Education is the starting point, although the feeding schemes are administered at provincial level and increasingly via local government.

         The Chairperson explained that even without a confirmed meeting, it is necessary to develop a comprehensive presentation in advance as the opportunity to promote the product is limited. The key selling points are nutrition, health, and affordability, and there must be a strong assurance of good quality on the basis of improved controls across the industry.

         The Chairperson said that although the strategy until now has been to try to engage the Department of Education at national level, this does not preclude producers attempting to engage relevant persons at the provincial and local government levels simultaneously. Previously school feeding schemes had been administered via other government departments such as health and at national level. Even though the current approach would be to delegate downwards from national to provincial, the Department will require the strongest assurance of good quality controls. Those producers who make national-level commitments on quality control can then approach provincial and local government with confidence and request to be included on the relevant supplier databases. There must be an industry standard that national government sends down to provincial government. It is necessary that a founding document on Quality Assurance is developed.

         It was noted that Dr Charl van der Merwe had recently made an excellent presentation on ground nuts and peanut butters with a focus on health benefits. This could provide a starting point to develop a two-page Concept Note that will also draw on international studies. The Forum approach to quality assurance in general should be tabled for further discussion at the next meeting.

         It will also be important to include information about approved businesses and suppliers so that the government supply chain management is informed about who to purchase from. Millions of children are provided with food every day across South Africa and they should have the best possible nutrition.

         Producers themselves need to commit to the best possible quality assurance and should also subscribe to a disclaimer to purchasers – and government in particular – that they should only buy from approved suppliers.

         Earlier contacts in other departments such as the Department of Health can also be approached for possible meetings on the basis of health benefits once the presentation has been developed.

         Resolved:

         1. That the Chairperson will draw on Forum members to compile a document by January 2018 and then request a formal meeting. Forum members to share information on current status of school feeding schemes.

            Chairperson
            Forum Members

   2. LEAF services

      (Resolutions 7.2.1 to 7.2.4)

      The Chairperson reported that the work group that was established without the involvement of LEAF is showing positive progress.

      Proposals have been made to stakeholders regarding this process, including a suggestion to do auditing per facility. DAFF has noted that according to the APS Act there is no authority for them to audit as the APS Act only provides for inspection. DAFF has further noted the need for a risk-based approach. This does not address all the industry concerns as previously stated. There are at present no inspections being done and no costs being incurred. Industry consultation will also take place.

      The next meeting of the work group, consisting of representatives of the grain and oil seed industries and DAFF is convened for 22 September 2017.

   3. Tariff codes on blanched groundnuts

      There has been little movement either in South Africa or internationally. The matter will be voted on in September 2017. The United States is keen to revert to previous codes from chapter 20 to chapter 12. WCO feedback is awaited and will be reported on. The decision is also awaited by SARS.

8. Industry information and marketing aspects

   1. Overview of crop estimates on groundnuts for 2017

      Ms M Scheepers presented current data as reflected in Annexure 1. The expected crop is 90 000 tons which is the largest crop since 2009, and an increase on 17 608 tons in 2016, which had been the smallest crop since 1985. The five-year average is 51 000 tons. Yield has also increased since last year to 1.62 tons/hectare. The five-year average is 1.13 tons/hectare. Area under cultivation is 44% in the Free State Province, 35% in North West Province, 14% in the Northern Cape and 6% in Limpopo Province.

      The North West Province has the largest area planted since 2004 and current yield is 1.4 tons/hectare which is a recovery from the previous two seasons.

      The groundnut processor survey 2017 was undertaken with a 97% response rate to the 25 questionnaires that were distributed. The questionnaire also enquired about yields, but there was only 63% feedback to this question as it was too early to have an accurate indication. It was noted with appreciation that a number of the Forum members had responded.

      Irrigation as a percentage of total planted area is approximately 25% irrigated, but the current season has only 14% irrigated. This is mainly due to irrigation patterns in the Northern Cape and in North West Province where there is more dry land planting.

      The following comments were made in response to the presentation:

      • With regard to the Free State there is a direct correlation on the timing of rainfall in the Free State and planting. However, a concern for the industry is that the planting of tree nuts is increasing.
      • Ms Scheepers responded that in the Northern Cape there is indeed a decrease in groundnut planting. On the Free State correlation with rainfall, this is correct. For example, there are 1 000 hectares irrigated in North West Province and about 1 400 hectares irrigated in the Free State.
      • The rainfall factor is not the only reason for the North West Province increasing yield – one is rainfall and the other is a conducive policy environment with financing and good markets. However, early rains will have some impact.

   2. SAGIS: General feedback and market information

      Mr Hawkins presented updated information on the groundnuts market as contained in Annexure D. Current estimate is 90 550 tons on groundnuts, and a further 5 500 tons can be added, with the expectation that this target will be met.

      Regarding the groundnut yield over time, it was explained that SAGIS deliveries should always be below the crop estimate. Imports in the 2017/18 year are 11 584 tons and exports are 2 814 tons. Most imported groundnuts come from Argentina and India. Over half of the exported groundnuts went to Japan at 52% followed by Mozambique at 16%.

      The peanut butter market has remained largely unchanged year-on-year. However, there was an increase in edible nuts and a slight decrease in the crushed oil and cake market. The number of firms operating in this sector has reduced but the reason for this is unclear. The SARS data indicates that the import value of shelled nuts is R159 million per annum.

      Regarding the oilseeds products index as provided by Statistics South Africa, a suggestion was made that there should be a comparison with all grain products with a final product price being provided as with corn or soybean. Such data will be included in the next meeting. It is also available on the SAGIS website. It is based only on companies registered in the industry.

      It was noted that according to Grain SA the predicted carryover for the current season will be 35 000 tons in February 2018, based on opening with 8 300 tons and 90 000 tons production.

      A question was posed regarding the expected surplus and how this will be consumed. This is a concern for the industry. There was general agreement that this is a problem with all commodities at present which are experiencing surplus, other than soybeans.

      Mr Scholtemeijer explained that the Crop Estimate Committee report indicated that 700 000 hectares more maize was planted in the most recent season. However, 100 000 hectares is now under sunflowers and it is unclear how many hectares of groundnuts will be planted. A key concern is whether to cut back to avoid a surplus being produced, as good rains could produce a carryover. On one hand farmers are urged to expand the industry, while on the other hand they are urged to avoid carryover.

   3. PPECB Laboratory Services Groundnut Report

      Analysis of groundnut volumes was presented. Regarding export volumes, the main month of the 2017 season thus far is August although the figures have not yet been made available. Local groundnut volumes show a large increase from 2016 to 2017 and September may be a record month. It is positive to note that, from the reports it seems aflatoxin is well managed by the South African groundnut export industry.

9. Research

   1. Research Projects: 2017/2018 Financial Year

      1. Research into drying process of groundnuts

         Mr Wegner reported on the preliminary findings of recent research into weight loss in farmer stock deliveries relating to foreign matter, shells and kernels during the drying process of pods with a declining moisture content (kernel) from 18% to 7%. The research aimed to determine the quality and physical variances of grades during different stages of the drying process, specifically at moisture levels between 10% and 7%.

         The two research questions were; 1) What are the ratios of weight loss in wet groundnut pod deliveries, relating to foreign matter, shells and kernels during the drying process with a kernel moisture content from 18% to 7%; and 2) What are the quality and physical variances during different stages of the drying process, with specific reference to kernel moisture levels between 10% and 7%?

         Based on the schedule that had been developed, a deduction of 19.1% should be made from the foreign matter weight in order to determine the foreign matter weight at 7% moisture. A deduction of 13.6% should be made from the shells weight in order to determine the shells weight at 7% moisture. A deduction of 15.4% should be made from the kernel weight in order to determine the kernel weight at 7% moisture.

         The final report will be circulated to stakeholders for acceptance and then published on the various websites of the partners.

         In responding to the second question, 41 producer samples from six different selection plants were examined and included different regional and producer samples as well as a wide range of varieties and also irrigation and dry land nuts. Percentage point determinations were then done. Where nuts come out of the dryers at 8% or 9% and not 7%, calculations should then be made to determine the value of product and what producers should be paid.

         The proposal thus is that quality and physical losses can be determined from 10% to 7% in the drying process. This was not previously known. The quality was also influenced where during the process nuts become dry and lose weight which means that the outcome can be included as part of producer grading guidelines and implemented where the grade percentages for producers are determined. The calculation as to what goes to crushing or what grades are used is not impacted in the selection plant. These percentages relate to the fact that product is at 10% moisture level and there is a need to determine future quality at 7% moisture level. The schedule was then developed from the outcomes of questions 1 and 2. This provides a current schedule of grading percentages for the grader to use at different levels.

         The merit of the research is that when added to groundnut producer guidelines it will enable producer grading on a consignment where moisture percentage is not yet dry, so would be about 7% but the producer and selection process is not delayed.

         Funding is required to continue the research work, also to ensure a greater number of samples. The Chairperson noted that when the funding was obtained, the intention was to study two seasons, and phase one had been completed.

         It was noted in the Forum that this useful research work is to be commended as it will provide a good industry tool to promote increased transparency.

         Given that Spanish and South African beans are different from the United States beans, it is important that the research was done in local conditions.

         It was agreed that suggestions or further comments may be sent to Mr Wegner for consideration for Phase 2, depending on costs and other factors.

      2. Feedback on Cultivar Evaluation Project

         Ms L Muller reported that 8 trials had been set up over most of the production areas other than the north. All trials were harvested and it was a good year. Data is being processed and reports compiled and the findings will be available early October 2017. There are already some interesting early findings. The cultivar trials for the next season are already under way. It is hoped that North West Province can be included. A point person from ARC must be identified. Mr de Kock is the current contact person.

         The Chairperson observed that while there was information about the cultivars and the impact on farming, it is important to have the data for the industry to evaluate and be aware of. The trials are the same as the previous year and no new cultivars were included. The main aim was to test already registered cultivars, along with 8 lines of ARC.

         It was explained that the trial is an industry initiative, planted by farmers and with organisation by selection facilities. The aim is to keep the process as clean and simple as possible while ensuring that it is objective and rigorous. It is important for farmers to be involved in the trials. The newly developed cultivars need to be properly and fairly assessed. The planting needs to be done soon as the timing is important. Once that is done, further processes can be discussed in detail. Conducting the trials year on year will provide improved data.

         Ms Muller emphasised that the trials aim to include further registered cultivars and would be keen to include more role-players. Anyone who is interested in participating in the future should indicate their interest to Mr de Kock.

10. Additional matters

    1. Articles and Snippets

       The articles and snippets were included in the Agenda and were taken as read. The Chairperson expressed appreciation to Mr Scholtemeijer for compiling the information.

       One important consideration is that while information from outside South Africa may not always be applicable to local conditions, it is useful to be informed of international developments. Marketing information in particular is of value. This links to a growing international trend where consumers require information about where their food has come from and how it was produced, as well as the environment impact of their consumer choices. In this regard, groundnuts have an advantage in that they are a water-friendly crop. This is a key marketing point.

       Information on China and India can provide useful insights. The English version of the article on aflatoxin in groundnuts is available electronically. There was also useful information provided on how to increase demand in South Africa and the fact that peanut butter consumption is a standard item in middle-income and high-income family diets.

    2. MRL Minutes

       The contents of the minutes included as Annexure F were noted.

    3. Draft regulations on Inspections and Fees determined by Assignees

       The document was circulated for comment to all Forum Members.

    4. MRL list

       The list was updated and will go to DAFF and Grain SA for uploading to their websites.

    5. Japanese Delegation Visit

       A delegation of Japanese buyers and processors was recently hosted, with 14 of the 16 visitors involved in the industry themselves. Selection facilities were visited and various information sessions arranged. The visit was considered a success and the Chairperson expressed appreciation to the CEO and his team for their excellent arrangements and support during the visit. This was an important occasion as the Japanese industry representatives undertake an overseas visit every two years and were last in South Africa 15 years previously. This was thus an important event in the South African groundnut industry.

       The Chairperson noted the possibility of a representative of the Forum visiting Japan as being open to consideration. It may also be useful to include a representative of the farming community so that the challenges from that perspective can be better understood. It would also be useful to leverage publicity opportunities from the visit and profile the work of the Forum and industry itself.

    6. Plumpie Nuts

       Abacus and Copper Cow Plumpie Nuts products should not be used by farmers as they are not compliant. The industry should be informed of this. The suppliers need to be asked to improve their compliance.

       Mr Louw noted that Grain SA sends out such advisories and will include the information. This is an important matter as has been previously seen, where a single negative incident can undermine the whole industry.

    7. Notice of Training Course on groundnut grading

       Mr Wegner explained that the final training course on groundnut grading will take place from 4th to 9th December 2017. Further information may be obtained from PPECB and applications close on 10 October 2017.

11. Date of next meeting

    It was agreed that the next meeting will take place on Thursday, 15 February 2018.

12. Adjournment

    There being no further business, the meeting adjourned at 13h15. The Chairperson thanked the Forum members for their attendance and valuable input to the meeting.