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9.1 The demand for indigenous medicines
9.2 The supply of indigenous medicines
9.3 The marketing of indigenous medicinal plant products
9.4 Institutional support for the marketing of indigenous medicinal plants
9.5 Opportunities and constraints in the medicinal plant markets
9.6 Potential future scenarios for the medicinal plant industry

9.1 The demand for indigenous medicines

The demand for indigenous medicines and services is considerable, relative to the demand for western health care services. The black population in Durban indicated that they relied on both health care systems, with 60% of the health care services demanded coming from western health care systems and 40% of the services demanded coming from indigenous medicine. As indigenous medicine is based almost entirely on the use of indigenous plants, a massive demand is generated in terms of both number and mass of plants used.

The value of raw products consumed is considerable. In KwaZulu-Natal, the value of the trade in raw products are worth US$ 13 million (R 60 million) a year, around one-third of the value of the annual maize harvest in the province (one of the largest crops in the province). Households were estimated to be spending between 4% to 8% of their annual incomes on indigenous medicine services.

The demand for medicinal plants is likely to remain buoyant in the future. Consumers indicated that indigenous medicine was not an inferior good and demand is unlikely to decline should income levels and welfare increase in the future. On the contrary, urban consumers indicated that indigenous medicine was more expensive than the subsidized western health services provided by the government, yet they reported that they would be likely to either maintain or increase the frequency of use in the future.

Consumers also indicated that western medicine was not an alternative to indigenous medicine and that irrespective of price, they would have to continue to use indigenous medicine. There are a wide range of ailments and needs which cannot be adequately addressed by western medicine. This implies that indigenous medicine is a basic consumer good, essential for the welfare of black households.

The AIDS pandemic in the region, and the growing international demand for South African medicinal products, is likely to increase the demand for indigenous medicine products in the future.

This market study has been pioneering in terms of developing a broad understanding of consumer demand, showing that there has been considerable ignorance regarding the demand for indigenous medicine and the associated plants in South Africa. This indicates that South African society has failed to openly discuss and develop a thorough understanding of the demand for indigenous medicine. Consequently, there has been little investment at a formal level in society to address any issues associated with consumer demand.

9.2 The supply of indigenous medicines

The indigenous medicine market is based on indigenous plants which are generally harvested from wild plant stocks throughout the province and within the broader region, including neighbouring provinces and other countries. The plant stocks and the harvesting of these stocks are not managed and little cultivation takes place. The combination of high demand and the lack of any significant resource management or production, has resulted in a decline in the available plant stocks.

A wide range of plant species is showing indications of unsustainable use, with the size of the products decreasing, distances to stocks increasing, supply becoming increasingly irregular, and/or some plants becoming unavailable in certain markets. Some popular plants have become extinct outside of protected areas in the province. The supply of indigenous medicinal plants is clearly not sustainable with the current harvesting strategies.

The scarcity of popular plants has led to their under-supply in the market, with considerable increases in product prices, imports into the province, and the use of substitute plants. In addition, there has been an increase in the application of destructive harvesting techniques, which aim at maximizing the harvest from the declining plant stocks in order to maintain income levels in the short term. The supply of popular plant products to the market is declining.

There are however options for sustaining the supply of plants to markets. There are extensive areas of grasslands, woodlands and thickets on private property that have not been intensively harvested in the past. With effective management, these areas could supply a range of products to the markets in the long term. However, the volumes of plant resources available and the harvesting strategies which may be applied need to be investigated. In terms of forest species, there are limited forest areas available and consequently management of existing stocks is unlikely to supply the quantities demanded by the market. In addition, the most popular plants, irrespective of their habitat, exist in such small quantities that management of existing stocks is unlikely to meet market demand.

The cultivation, management and enrichment planting of high value plants is therefore an important strategy to meet consumer demand and to reduce the impacts of the market on biodiversity. The success of cultivation trials undertaken to date have shown good potential for this strategy. Fast-growing species could be supplied in sufficient quantities within a few years. However, the slow-growing popular trees are unlikely to supply the bark quantities demanded in the short term, and alternative products from these plants need to be investigated.

9.3 The marketing of indigenous medicinal plant products

Over 400 species of plants are marketed in large quantities within KwaZulu-Natal. While the mixing and prescription of plant products is sophisticated, the processing and development of products is extremely limited. There is little processing and value-added to products, with most products sold in the raw form. The most sophisticated product form is a mixture of ground plants. There is little differentiation in product quality and packaging. The entire industry is dominated by simple technology, and by making use of available resources. Most of the value is added when medicines are prescribed by an indigenous healer.

The simple plant products are marketed to consumers, either as self-medication or through healers' prescriptions. The products are marketed within the residential areas dominated by black consumers or in transport nodes throughout urban and rural areas. The conditions in the markets are generally poor, with almost all the consumers indicating that they would prefer more modernized and hygienic conditions. The lack of storage facilities and trading infrastructure frequently results in the spoiling of raw material resulting in wastage and/or a decrease in product quality. Both the healers and consumers have indicated that they are concerned about the quality of the products purchased in these markets.

There is currently no certification of indigenous medicines traded, however, there is a legislation in place which requires the registration of products traded as medicines. The legislation is not currently applied to the indigenous medicine industry due to the informal nature of the trade. This legislation may limit investment in the formal cultivation of plants for the indigenous medicine industry. Unless the current legislation is changed, the production of plants for local markets may have to be limited.

The supply of quality plant products is not only critical for the welfare of millions of consumers, but it is also critical for the welfare of all the people employed in the industry. In KwaZulu-Natal there are between 20 000 and 30 000 people who derive an income trading indigenous plants in some form. Importantly, most of the people involved are black rural women, who are the most marginalized group in South African society. The medicinal plant industry therefore plays a critical role in empowering a large number of rural women.

Overall, the marketing of medicinal plants is poorly developed. Consumers and traders in plant products could benefit considerably through the development of both the products and markets.

9.4 Institutional support for the marketing of indigenous medicinal plants

In terms of policy support, very little policy has been developed to support the marketing of indigenous plants. Most of the policy has been developed to limit the marketing of plants. There are several regulatory mechanisms (associated with first world standards for medicines and biodiversity priorities) in place but are not being implemented at present. These regulatory mechanisms could however threaten any development emerging from within the industry that may occur with limited resources and which may not meet the required standards of existing legislation. On the other hand, wealthy corporations are unlikely to be as negatively impacted by the existing regulations due to their ability to comply with the high standards stipulated by authorities.

As a result of a largely negative policy environment, there has been insignificant education, training and extension regarding medicinal plant markets. Some efforts have been directed at training market players in the cultivation of medicinal plants but it is insignificant relative to the market size.

Furthermore, most research and development support from government and business has been directed at bio-prospecting and pharmacological investigations, with product development being pursued by major pharmaceutical companies. There are few efforts directed at developing the current markets, their associated products, infrastructure and market players. There is an imbalance in support for indigenous medicine, with most investment directed at seeking commercially useful chemicals within medicinal plants, while little or no investment is being directed to maintain or increase the benefits which the current market is already delivering to society.

The lack of development within the indigenous medicine market in South Africa has also resulted in little information being developed that is useful to the market players. Market information systems are poorly developed, resulting in considerable inefficiency within the markets. Market resources are wasted through inefficient coordination of trade activities. This is particularly problematic given the already short supply of plants and the inability of the current market players to absorb costs.

There is acute competition within the markets and this limits the sharing of knowledge between market players, especially the healers. The lack of sharing limits the development of the indigenous healing profession, with healers largely relying on their own or their mentors' experiences. There is no literature available at present which healers can use as a reference for administering indigenous medicine. One research group in South Africa is presently developing a pharmacopoeia for indigenous medicine. This will help in the development of products for the market by understanding the quantities required for various treatments. However, with over 400 plant species traded, the completion of this task is unlikely to be achieved in the short to medium term.

At the market level, there has been little development due to competition and the under-developed capacity of most market players. With high levels of illiteracy and few business skills, the industry has been unable to develop. In terms of the healers, there are numerous healers' organizations which serve the healers' interests. However, as they focus largely on healing issues, little investment is made at an industry level.

The combination of a negative policy environment and the limited capacity of market players to cooperate and promote their own development has resulted in an industry which is large but grossly underdeveloped.

9.5 Opportunities and constraints in the medicinal plant markets

There are a number of opportunities and constraints which have been identified in the market study. These are summarized below and form the basis for making recommendations for further action in the markets.

The opportunities associated with consumer demand in the indigenous medicine market include:

· strong probability of a growing demand,

· a culturally entrenched demand,

· indigenous medicine is a basic consumer good,

· demand is relatively unresponsive to price changes,

· willingness to pay high prices for more scarce items,

· there are few accepted alternatives,

· consumers prefer better quality products,

· consumers prefer more modem and hygienic packaging, dispensing locations and retail outlets,

· dynamic nature of indigenous medicine and adaptability,

· widespread demand for indigenous medicinal products in African and northern hemisphere countries, and

· different standards required by different consumer groups.

The opportunities on the supply side of the indigenous medicine market include:

· availability of scarce medicinal plants in remote locations,

· availability of medicinal plants on commercial farmlands,

· availability of bark products from logging operations in other parts of South Africa,

· availability of plant supply from changing land-use,

· availability of medicinal plants on managed communal lands,

· availability of a wide range of cultivation, processing, and marketing expertise in other sectors,

· access to international examples of medicine production for traditional markets,

· a large demand for new agricultural opportunities on commercial farms, subsistence farms, and redistributed farms,

· availability of progressive farmers with access to resources,

· robust nature of indigenous medicinal plants which require few agricultural inputs,

· wide range of sites for product distribution, ranging from the farm gate to urban processing factories,

· ability to supply specific species at times of the year when they are usually not available,

· a large number of plant gatherers with appropriate knowledge that could promote the cultivation of plants for the market,

· an established market system that could provide communication mechanisms for any proposed market developments,

· documentation and establishment of accepted guidelines for use and dosages of medicinal plants, and

· several organizations have experience in indigenous medicine markets and in the cultivation of medicinal plant species in farming and nursery systems.

The constraints facing the indigenous medicinal plant market include:

· a policy environment which is negative towards the industry,

· absence of a coherent strategy for transforming the industry into one which is sustainable,

· no government recognition of the opportunities offered by medicinal plants to promote development,

· government departments who may facilitate market development already face severe budget constraints within existing priorities,

· vested interests within existing government departments to maintain the status quo,

· common property or open access rights regimes in large areas which frequently promote resource degradation,

· bureaucratic controls concerning the formal trade of indigenous medicines, which may limit product development to only highly sophisticated operations with massive financial resources,

· a narrow perspective of indigenous medicine in academia, business and government,

· an industry with aggressive competition within and between market segments, resulting in the industry having limited lobbying ability,

· competition which is likely to increase and reduce returns for the lower end of the market,

· competition within the industry that undermines rather than develops the industry,

· an almost total reliance on wild harvested plants for the trade,

· declining plant populations which results in many high value species becoming increasingly inaccessible,

· diminishing product development opportunities due to limited access to sufficient plant stocks,

· local extinctions are resulting in a decline in the genetic variation within high value species,

· supply of plant products is irregular, in quantity and quality,

· forest resources are extremely limited and will provide few of the scarce species in the future,

· there are few production initiatives in the province,

· many high value species are slow-growing,

· literacy of a large number of market players is poor, creating limitations for developing the industry,

· business skills are poorly developed in a number of the sectors,

· there are few skills in the sustainable use of medicinal plant resources,

· there are inefficient market information sharing systems in the industry,

· there is little knowledge of the financial opportunities in cultivating and managing stocks of medicinal plant species,

· lack of information regarding financial feasibility discourages financing institutions from supplying credit,

· there is little known of the condition of plant stocks on privately owned farms,

· distances between major markets and various plant sources are large, generating large costs in the trade, and

· research funds are directed at bioprospecting, with few resources focused on developing the existing industry.

9.6 Potential future scenarios for the medicinal plant industry

There are a number of scenarios which could develop in the South African indigenous medicinal plant markets, depending on the relationship between a range of fixed and variable factors in the market. The fixed factors include:

· a large and growing local and international demand for medicinal plants,
· a declining supply of forest species in the short term,
· a fluctuating supply of grassland and savannah species in the short term,
· an increase in the price of scarce plants,
· diverse cultivation potential of indigenous medicinal plants,
· an increase in the number and diversity of market players,
· a negative policy environment in the short term, and
· majority of the current market players having limited business skills in the short term.

In contrast to the fixed factors, there are variable factors which will, to a large extent, determine how the market will change in the future. The key variable factors are driven by the actions of the different market players and the associated authorities. The variable actions of these key players include:

· degree to which the current market players cooperate to develop a common vision and to lobby for government support,

· responses of government departments (Health, Agriculture, Trade and Industry, and Environment and Tourism) to the indigenous medicine industry,

· responses of national, provincial, and local political leaders to the indigenous medicine industry,

· response of formal business to the opportunities in the industry, and

· quantities demanded for different levels of processing, certification, standards, and packaging.

The study identified three potential scenarios which could develop depending on the actions of key role players in the markets. The possible scenarios are as follows.

Scenario 1 - No intervention - the continuation of the status quo - where there is limited investment in promoting the supply of popular plants to the current market players. Consequently, large commercial interests are likely to cultivate high value plants and trade processed products, while most of the current market players continue to compete for a decreasing share to a declining stock of popular plants. A narrow range of species would be cultivated, processed, and distributed for the upper end of the market with a small number of large business interests benefiting. Biodiversity and health care would be negatively impacted.

Scenario 2 - Industry driven intervention - collaboration between progressive current market players and skilled business interests - is likely to offer large benefits to large and intermediate companies and to a limited number of current market players. Cultivation, processing, and distribution would occur for the middle and upper end of the market. Small-scale traders and gatherers are likely to continue to trade in wild plants, but supply is likely to decline as the consumption of cheap products continues at the lower end of the market. Biodiversity and health care would be negatively impacted.

Scenario 3 - Collaborative intervention - collaboration between current market players, government and business interests - this could see the development of a wide range of processed products from simple rural products to sophisticated industrial products. Numerous market players could develop a range of different quality products for a wide range of consumers, with different prices suited the consumers' budgets. Such a scenario, is likely to promote the growth of the industry, and promote development at a broad scale. Investment in resource management is also more likely in this scenario. Health care would also benefit.

The most likely scenario to develop without market interventions is number 2, where big business enters the market and leads market development to suit its own objectives. Current investments by both government and big business are supporting the development of this scenario. Furthermore, current legislation supports the development of the corporate sector by excluding the less developed market players from producing more commercialized indigenous plant products. The costs of this scenario will be borne largely by the current consumers who will lose access to basic consumer goods through price increases and scarcity, and market players will lose access to trade products.

As the current consumers and current market players are largely from the least developed sector of South African society, it is essential to initiate market interventions which promote the welfare of the current consumers and market players, especially at the lower end of the market. At the same time, the opportunities for large-scale corporate involvement at the upper end of the market and in international markets, should be developed. To maximize the benefits to the greatest number of beneficiaries, South Africa needs to focus on achieving the development of both the existing market players and corporate entrants.

The development of the indigenous medicine market in South Africa will promote economic growth, people's development, consumer welfare, and biodiversity conservation. However, this will only be achieved if development takes place across the whole spectrum of the market, from rural resource management and production through to corporate bioprospecting and marketing.

The challenge facing the South African community is to capitalize on the market opportunities and to overcome the market constraints in the medicinal plant industry through achieving a greater balance in the distribution of development resources in public and private sector.

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