South Africa’s groundnut industry, once a strong contributor to the local edible oil and snack market, is struggling to grow because thousands of small-scale producers remain disconnected from the formal value chain.
Industry role-players say the country is losing millions in potential revenue because rural farmers cannot access transparent markets or sell directly to processors.
While the commodity is in high demand particularly for peanut butter production, roasting, and export smallholder farmers in Mpumalanga and Limpopo continue to sell at below-market prices, losing out on margins that could stabilise rural incomes.
Agricultural advisor Lindani Mthembu, based in Game near Acornhoek, said the structure of the groundnut market gives traders an outsized advantage.
“The formal processors require specific grading, moisture levels, and packaging standards. Farmers don’t receive this information in time, so they sell to whoever arrives first,” he said.
Because growers lack access to scale and quality verification, processors rely on aggregators, creating several layers of middlemen before the product reaches factories.
This layered supply chain has a direct impact on farmers’ profits. Traders typically pay between R10 and R14 per kilogram, while processors can pay R25 to R30 depending on grade. The gap is absorbed by transporters, aggregators, and brokers, not by the farmers who carry the production risks.
According to Pheladi Ndlovu, a Polokwane-based trader, South Africa’s fragmented groundnut market is preventing the commodity from reaching its export potential.
“We import groundnuts during some seasons because local supply is inconsistent. But that inconsistency is not due to low production it’s due to poor coordination and weak linkages with smallholder growers,” she said.
She added that without structured supply agreements, farmers cannot plan or invest in better seed varieties, leading to fluctuating volumes and quality.
“The sector remains stuck in a low-equilibrium trap where farmers produce enough for survival but not enough for market leverage.”
One of the biggest barriers is the lack of aggregation hubs in rural municipalities. These hubs would allow farmers to test moisture levels, receive grading feedback, and collectively negotiate prices. Without them, each grower negotiates alone, often without knowing what processors are paying that week.
Bushbuckridge farmer Gloria Khoza, who has been growing groundnuts for nearly a decade, said the absence of structured markets pushes farmers into a cycle of dependency.
“We only sell to traders because they are the ones who come. If there was a place where we could take our nuts, get them graded and sell straight, it would change everything,” she said.
Industry role-players say that digital tools could also help close the gap. Price alert services, WhatsApp-based extension support, and digital marketplaces are being tested in parts of Limpopo, but adoption remains low due to data costs and network challenges.
Ndlovu warns that without urgent intervention, South Africa risks losing competitiveness to neighbouring countries.
“In Zambia and Malawi, cooperatives have become strong players in the groundnut value chain. South Africa has the capacity, but not the coordination,” she said.
For now, thousands of rural farmers continue to feed a multi-million-rand industry while earning a fraction of what their produce is worth, a gap that experts say is not only unfair, but economically unsustainable.
