South Africa’s top fresh produce exporters remain cautiously optimistic.
Companies such as Colors Fruit, the number three exporter which supplies Morrisons, Tesco and Marks and Spencer, are focusing on quality and innovation in a bid to escape being caught in a downward pricing spiral.
MD Riaan van Wyk said the UK was a challenging market. “When we started seven years ago, the UK was asking for high quality at a high price. Today it is asking for high quality at a lower price.”
However, van Wyk believes that the increasing number of food safety standards and individual retailer schemes could work in favour of top-end growers and exporters who are aiming at the premium end of the market.
The strong cultural links between South Africa and the UK meant it would remain an important export market, he stresses.
He continues: “The rand is unnatural where it is, and South Africa is unbelievably positioned, being close to all the markets. This is a temporary position and I am very optimistic about the country and its future.”
Capespan, South Africa’s biggest fruit exporter with a market share of 26%, generated a net profit of R48.9m (£4m) last year.
Chairman Paul Clüver writes in the company’s annual report: “The start to the 2005 fruit marketing season has been an extremely challenging one with the impact of a drought in certain key production areas and the continued strengthening of the rand. This is placing financial pressure on the viability of certain production areas. The group is focusing its attention to continually ensure that supply chain costs are optimised, improving producer returns.”
Dole, the number two player in South Africa, says pressure is growing to find new markets.
“Some of our growers are suggesting we want to avoid the UK next year,” says Robert-Louis Kuhn, head of Dole South Africa and chairman of the Fresh Produce Exporters’ Forum.
“This year, for the first time, we are getting pressure to drop volumes in the UK. But we plan to keep our split all over the world because a good market this year will not be a good market next year.”
Kuhn says the key to long-term sustainability is to not overly target any one particular market.
Around 15% of Dole’s produce is going to the UK, a lower percentage than supplied by many other exporters.
“The UK is not a bad market at all, but retailers’ requests are complicated. There’s more risk of fruit being rejected and it’s more expensive to package, but they don’t pay more,” says Kuhn.