Rooibos: Why Prices Soar

Rooibos is farmed only in a small area in South Africa. The acreage devoted to it has doubled in the past decade and production tripled. International investors see it as one of the top opportunities in agriculture. This year’s spring rains have been favorable after a drought in 2017-18. Farm sizes have increased and management practices have improved, resulting in higher yields and quality. Consumer demand is growing and sustained. Though it is not “real” tea, it is a favorite caffeine-free choice for drinkers of herbal blends. Why, then, are prices so high and increasing? Why such wide swings that exceed that for tea and herbal crops? Over the past year, rooibos prices climbed from $2 to $3.75 for 80 tea bags. Between 2004 and 2009, they dropped even faster, from $16 a kilogram to $4. There’s no pattern. Rooibos is not typical of anything, which is why its pricing trends will not be typical. There’s no pattern; rain determines the situation. The price depends on two years from now as much as this year. Rooibos grows in scrubland – no verdant hills, mountain mists, or rows of bushes waiting for seasonal plucking. It is a hardy plant that flourishes only in a small area of South Africa’s Western Cape, an ecologically protected region with a near-Mediterranean climate that is ideal for rooibos. It generally gets double the rain of nearby farms. Tilling and ripping the soil is key in loosening it to enable the roots to grow deep and some fields are left unripped because of the high stone content. They produce a lower yield and quality. Pest management is tricky, with the buffer zones of natural veld that surround the two growing areas—natural homes for leafhoppers and clearwing moths. Rooibos farming rests on crop rotation: five years of rooibos is followed by three of oats. Oats restores soil fertility and helps break the cycle of plant disease in rooibos. Weed control is an ever-active priority. New seedlings can be planted successfully only in wet soil; weeks may be lost from weather shifts. They need to be carefully spaced in order to ensure strong, tall plants. Eastern winds blow sand across the vulnerable seedlings. Rye is planted as a protective barrier.

All these factors make rooibos different. Tea growing involves equally complex issues of management but time, rain and locale constrain rooibos to a greater degree. Expanding production takes a minimum of two years before it generates harvest yields. Today’s increase in planted acreage won’t have an impact for twenty-four months. Rain has immediate impact. The current high prices are the result of a severe local drought in 2017-2018. The recent favorable rain comes too late to affect today’s supply. Similarly, the raising of a dam height by 13 meters that will smooth out water supply won’t have any impact for years. Meanwhile, demand for rooibos grows at around 7 percent per year. Its primary market is for non-caffeinated health teas, but it is growing in popularity in such premium products as alcoholic drinks, health and beauty products and matcha food and drink blends. The demand for 2019 is estimated at around 15,000 metric tonnes but supply is likely to be 12,000. The best rooibos is harvested between February and May, with a gap until November at the earliest and only for a bumper crop. How to predict coming prices? Check recent years’ weather reports. SOURCES Reuters Africa,  Farmers Weekly