There’s no escaping the fact that South African fruit farmers are going through tough times. A strong rand, severe winter drought, increased competition from South American countries and falling prices are all putting pressure on the sector.
The South African fruit industry, which includes apples, pears, plums, peaches, apricots and table grapes, has traditionally seen the UK as its most important export market, but that perception is increasingly being challenged. The growing number of supermarket-specific quality and packaging demands from UK retailers, combined with rising labour costs, has caused some suppliers to start exploring new markets in the Far East, Eastern Europe and China.
There is a general feeling, however, that the rand will eventually weaken - and suppliers and exporters are holding tight until that happens.
Table grape producers, particularly those in the Orange River region, are suffering and there are reports of farms being put up for sale at cut prices. Deregulation of the fresh fruit industry eight years ago has increased the vulnerability of some smaller growers to commercial pressures, as well as stepping up competition between them, with the result that many are predicting further consolidation.
Anton Rabe, chief executive of the Deciduous Fruit Producers’ Trust, says fruit volumes are down 20% in some areas of the Western Cape, such as in the Hex River Valley, because of the drought, and the strong rand was “not fun” for many suppliers. “There is great pressure on the bottom line with water, land and labour costs increasing at double the rate of inflation over the past few years,” he says.
“The price wars in the UK are of great concern to us because we are right at the bottom of the pecking order. Retailers don’t seem to think about the social and economic impact of their actions further down the line. What we are hoping for is a realisation of a value-chain approach, not just the bottom line.”
However, lean times have increased the efficiency of many producers and have led to an increased focus on quality and the improved handling and packaging of fruit for the export market.
Whereas under regulation there was a board which took on the work of marketing, farmers are now gaining those skills for themselves. Through trade groups such as the Fresh Produce Exporters’ Forum, Fruit South Africa, the Deciduous Fruit Producers’ Trust and the Stone Fruit Joint Marketing Forum, the industry has taken giant strides in sharing information and launching joint marketing campaigns, with an emphasis on showing that South African fruit, which is counter-seasonal to the northern hemisphere-producing countries, is tastier and fresher.
The avocado and apple industries are leading these efforts and research is being carried out this year into whether a generic campaign for SA Golden Delicious should be rolled out to other fruit.
New education and training programmes bringing previously disadvantaged people into farming and Black Economic Empowerment deals giving over land to communities have been welcomed more by some suppliers than others, but are helping to contribute to positive change.
Nigel Mudge, co-owner of Chiltern Farms in the Western Cape, which supplies most of the UK multiples, and chairman of the South African Apples and Pears Producers’ Association, reckons differentiating SA produce such as Granny Smith and Golden Delicious in the UK is vital to breathe new life into the export market. Trade groups are moving the focus away from in-store activity to consumer promotion of South African apples, he says.
Mudge, however, stresses that the vibe in the apple and pear sector at the moment is “straight survival”. Low grower returns, high input costs and a concentration of power in the hands of a few retailers is hitting unsubsidised South African farmers hard. With some 100,000 people in the Western Cape alone employed in farming, he believes the government should make supporting agriculture more of a priority.
He has also started branching out into Sharon fruit because of what he sees as the consequences of global warming during his three decades on the farm. He is replanting 4-5% of his land a year with Sharon. “It just doesn’t get wet here anymore,” he says. “Deciduous fruit needs cold winters, but we have had consistently warm temperatures.”
Dr Marius Huysamer, industry manager of the South African Stone Fruit Producers’ Association, uses the example of the 99p punnet of plums, a price that has stayed fixed for the past few years in the UK, to demonstrate the pressures being faced by the industry. Meanwhile, the number of controls, such as Eurepgap, that producers are having to comply with is increasing.
Stone fruit’s biggest market is the UK, he says, but it has not been in profit for the past two seasons. The focus now is marketing and plugging supply gaps in the season in order to beat competing countries such as Chile. Huysamer is advocating more early and late plantings to profit from these gaps, instead of flooding the market at peak supply times in December and January.
Tests on new cultivars and plans to launch a joint marketing campaign in the UK and Continental EU demonstrate a new willingness to share information in the stone fruit sector, says Huysamer. “We have made significant inroads in getting the industry to work together.”
Some suppliers are moving into olives, berries and guavas as margins continue to plummet on traditional South African export crops.