South Africans avocado producers have blazed a trail through the UK market in recent years to ensure they remain in place with a commodity that is growing increasingly competitive.
“Global production of avocados is increasingly significantly, particularly from South America,” says Don Westcott, deputy chairman of the South African Avocado Growers Association (SAAGA).
He says when South Africans first started exporting, producers’ eyes were mainly fixed on the likes of Spain and Israel, but now they are watching out for countries like Peru and Brazil.
But most companies remain confident they can cope with the threat: “Global competition is most definitely Peru for us. But I think we need to manage that,” says Andre Ernst, a grower and director with Afrupro. “I think there’s potential for us to compliment each other, they can, and have already, learnt a lot from us.”
One advantage the country has over Peru is the range of production, adds Ernst: “They can’t produce the smaller sized avocados, as they’ve got a more a tropical environment.”
And with demand for baby avocados rising on the UK market, that gives the South Africans a significant advantage.
He’s not alone in seeing Peru’s growing international stature as a potential opportunity. Louis Vorster, general manager for international business with Westfalia, says: “Growth in volume for Peru can create more competition, but there’s also an opportunity and challenge for us to grow the market further.”
He says there is plenty of scope to increase avocado consumption, and extra volume from places like Peru can help with that.”
Ernst agrees: “We can either say, you’re my enemy and try and push them out, or we can try and work together. The challenge is to think globally so that we all make money.”
However, not everyone thinks Peru is likely to become a long-term problem for South Africa. Robbie Taylor, fresh produce director with HL Halls, says: “We’re confident that we’ve got a good quality crop and that our service levels are very high, and they’re the key elements for success; a good product, decent price and a good relationship.”
He says Peru’s ideal market is the US: “They will aim more towards that, particularly if the dollar regains its strength. It’s geographically closer and therefore cheaper to supply. With a strong dollar that makes it very attractive to them.”
However, while the dollar remains weak, the South Africans may find themselves facing stiffer competition from Peruvian product.
Despite this, the SA industry is looking to create greater global co-operation in the avocado sector. While this has been a long-term ambition for SAAGA, Westcott says they are now beginning to make headway.
“One of SAAGA’s main aims is to promote consumption and the next level is to continue with the work we’re doing in the UK and build on that, get other countries to buy into a generic promotion.
“The industry in other countries is becoming more organised, so it’s becoming easier to share information. Information on what Peru is sending now comes fairly regularly and there’s a building level of trust between all the various role players.
“There’s definitely a large measure of good will, the trick is putting everything together and seeing how we can unite all the countries to run a campaign.”
In essence, SAAGA is looking to achieve, globally, the kind of cohesion it has achieved within the South African industry.
Afrupro’s Ernst says: “Co-operation between the exporters, and the whole industry, is important, there’s a lot more openness about what’s going on. If you look at the industry over the last 20 to 30 years, we’ve grown up and matured.
“The simple fact is that we’re all trying to get better prices, rather than trying to do each other down.”
The various companies still see each other as competitors, as Wiedse Kruger, general manager of Afrupro, says: “There’s still competition between all the companies, but it’s a more positive competition. You still can’t pick up the phone and ask a competitor to help out if you’re short, but then that’s an ideal.”
The spirit of co-operation is illustrated, certainly on the production front, by leading growers ZZ2.
The company is carrying out experimental work on the use of composting and micro-organisms, and marketing manager, Cobus Vorster, says it has no intention of keeping the results of their work to themselves. “We don’t want to keep the process to ourselves, we want to share it with the other growers.”
The process he is talking about effectively involves the control of micro-organisms in the orchards. ZZ2 has established a laboratory at South Africa’s University of the North, and can analyse the micro-organic content of soil and compost samples.
At the same time, the company, along with university academics, has developed a process to introduce micro-organic life back into the orchards through the application of a solution, which can either be sprayed directly onto the trees, or drip fed through the orchard’s irrigation systems.
Vorster says: “We can test to find out what the micro-organism levels are in the soil and having done that, we can decide which way to go and how much we need to put in.
“We have the only laboratory in South Africa that can carry out this work and it’s something we’ve been working on for the last three years. We feel we’re doing ground-breaking work for the industry.”
He says the system is still being developed, and ZZ2 is carrying out experimental work. “What we’re doing is looking to develop a system that’s sustainable, that can reduce the dependence on chemicals. Over use of chemicals is simply causing damage to our soils.”
In fact, he says the use of the solution can have considerable cost benefits, completely cutting the need to fumigate soils in some cases.
“We’re not talking about organic farming, we’re talking about balancing the chemical and organic processes so they complement each other, it’s about working to get away from the reliance on chemicals.”
He hopes the system will help give South Africa a competitive advantage: “In this industry, you can either go for volume, or you can go for a unique selling point.
“In the past, volume was our driver, but now we’re focusing on having a USP and feel this system will help give South Africa an edge on the world stage.”
He says ZZ2 is not looking to gain a premium for fruit grown using the process: “We’re just offering a choice, of a product grown in a healthy and sustainable way.”
So far early results are looking promising he says, with trees responding well. According to Vorster, the leaves on the trees have grown extremely large and the fruit is looking very good.
To support its work, the company has also set up its own composting operation, creating around 6,000 tonnes of compost every six to seven weeks. However, it is not alone on the composting front.
Westfalia has also established its own operation, adding in the waste organic matter from its avocado processing plants.
Westcott says: “The issue with composting and micro-organisms is something a wide part of the industry is working on. It’s catching on and people are approaching it much more scientifically.”
The interest in composting is demonstrated through the sales of chipping machines for creating mulch, says Derek Donkin, general manager of SAAGA. “The chipper companies are selling more of their machines to the avocado industry than the forestry sector now. The growers are really buying into the concept.”
Composting aside, ZZ2 certainly has a reputation for innovation. It was one of the first South African companies to identify and commercially apply the benefits of pruning avocado trees.
Soekie Espach, general manager for avocado production, said: “The trees were all over-grown so we started taking out limbs to get some light in.”
The simple act of letting in the sunlight had immediate benefits, helping to clear up diseases which were flourishing in the damp, unlit conditions inside the trees.
It also helped increase production, adds Espach: “Overall production from each tree went up, and we boosted productivity by around six to seven times per hectare.”
Increasing yields is a serious issue for the industry - boosting production per hectare would have serious cost impacts, allowing South Africa to become even stronger on the world stage.
“We have to increase productivity per unit. If you look at the forecasts, we should be producing around 16m cartons for export, but the fact we’re not tells me that somewhere we’re not getting something right,” says Jaco Marais, managing director of Katopé Subtropical. “It’s a big challenge for the industry to get the yields right, it affects costs and we’re in a competitive world. We have to compete with the other countries.
“South Africa is a country where it is difficult to produce avocados, so the costs tend to be higher. We need to make as much use of the available technology as we can.”
Westcott says this is something the industry is looking hard at: “There’s a major research focus on improving production techniques to get a good consistently higher production, year on year.”
There need to be considerable improvements in consistency, says Marais: “We have to have a consistent supply, take the ups and downs of the seasons out. It’s not good, one year having 7.5 million cartons, and the next 12m. That simply opens the doors for our competitors to take market share from us.”
Labour of course, is a big expense for the sector, and that’s something the industry is focusing on, be it through training or providing facilities such as housing and childcare for employees.
Marais says: “We need to concentrate on labour, providing training and education to improve and make us as efficient as possible.”
Staff welfare is something all of the companies place an important focus on. Willie Stevens, human resources manager with Westfalia, says the company is placing increasing focus on the families of employees.
“We provide a good standard of housing for our workers as well as school facilities. We also offer crèche facilities to them.”
The crèche, at its estate near Tzaneen, is certainly something Steven’s is focusing on at the moment: “It’s fully funded by us and caters for between 15 to 40 children.
“We’re looking to use the premiums we’re making from our Fairtrade operations to upgrade the crèche facilities.” He says that if Westfalia invests and improve the facilities, it will then be eligible for government funding and eventually aims to turn it into a pre-school.
“We have employees at work from 7am to 5pm, and we can’t just say, we’re not going to bother about your children. For them, the facility provides them with the knowledge that their children are being fed and cared for. It gives them piece of mind and they can focus on their jobs.”
Overall, the industry has done a great deal to improve its standards, says Afrupro’s Kruger: “As producers we’ve done a lot to get in line with European standards, things like EurepGAP and we’ve appointed a technical manager to assist producers and ensure what we are sending is up to scratch.”
However, producers cannot sit back and relax, according to Marais, who says Katopé is looking to stay ahead of the curve: “EurepGAP and HACCP are old terms, and Nature’s Choice is now old to us. The current thing we’re working on is BRC accreditation, and we’re the only packhouse with BRC accreditation, and I think that distinguishes us from the rest of the industry.”
Perhaps one of the more significant elements for the industry in recent years, however, has been the focus on added value and processing.
Westfalia has invested significantly in avocado oil processing. Vorster says: “The value adding side of the industry, the processing plants and oil plants and innovation has brought stability to the industry.
“The oils we are producing are unbelievable and are a fantastic additional outlet for us. We can’t sell everything we produce as fresh.”
Probably the most significant impact of the growth in processing has meant it has curbed the amount of low quality produce going onto the domestic market, adds Vorster.
This has meant the local market has become an increasingly viable option for producers, says SAAGA’s Donkin.
“Rather than simply sending stuff to the local market because you couldn’t do anything else with it, the factory grade material is now going into the factories and being taken off the market, as a result, domestic prices have started to rise.”
Logistics, too, is an area presenting a challenge, when it comes to costs, but Westcott says the industry is looking at ways to bring those costs down.
“We’ve got to be as sharp as possible on our logistical chains and we’re looking at different technologies to see if there’s ways we can do it cheaper,” he says. “We’re looking at rail opportunities for getting the fruit to port and possible co-operation with other fruit industries to achieve that. Hopefully, we’ll see a major shift to rail.”
The arrival of Smartfresh technology, which helps preserve fruit during storage and transit, has been welcomed, says Donkin. “It offers an alternative to controlled atmosphere shipping, and brings competition into that sector, which should help keep prices down.”
Afrupro’s Kruger says he would like to see further options in the logistics sector: “I’m not sure we can justify further competition in that sector, as we don’t have the volumes yet, but it would be good to have another company in there, would give us another alternative and put pressure on the existing players.”
Overall, the South African avocado has a lot of challenges facing it for the future, but it’s innovating, adapting and doing everything it can to stay one step ahead of the competition.
As Katopé’s Marais says: “There’s still a lot of potential - it’s an exciting and growing commodity and is still growing considerably year-on-year. I see a great future for avocados world wide, specifically for fruit from SA. There’s a lot of change going on and challenges, but the main challenge is to see that as an opportunity and adapt to those changes.”
HASS TO BE BETTER
“I’m very interest in trying to find a better Hass,” says Andre Ernst, a director with Afrupro and nursery owner. “We do our own research and have developed an early Hass type.”
Research and development is a big part of the South African avocado industry with a large proportion of the industry making significant investments into developing fruits for the future.
But it is not something that happens overnight and patience is needed, says Ernst: “Developing new cultivars is a long-term thing. We’ve made mistakes in the past in introducing new varieties.”
He says some new varieties were rushed out too quickly before they were fully understood and there needed to be caution.
His nursery has developed a new variety of Hass, called Maluma, which is around four weeks earlier than normal. “The trees also fruit very heavily and most importantly are not alternate bearers, as the tree recovers its energies in time for the next season. It’s only the first step, but it’s a long-term development.”
Afrupro is not alone in its work either. Westfalia has set up its own research and development department and is doing a wide range of work, both on new cultivars and new root stock, says Stefan Köhne, general manager of the company’s technological services.
One significant area they are working on is the preservation of the wide range of different types of avocados in the wild. “There’s huge concern that the many varieties in the world won’t exist for much longer, so we have developed a gene bank to help preserve that range.”
It makes sense from a breeding as well as a conservationist perspective, he says: “At the moment the preferred variety is Hass, but will that still be the case in 100 years time? Tastes change and if you want to breed new varieties, it’s best if you can breed out of a wider range.”
Köhne and his team are working on extending the season, particularly trying to get 12 months a year to cover the domestic market. “That would boost the South African consumption of avocados considerably.”
There also looking to develop a consistent production of Hass, and Köhne says they are putting a lot of effort into developing trees which produce certain sizes, 14s, 16s and 18s.
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