It is often said that procurement specialists in the UK fresh produce industry enjoy a challenge - and the thrill of the chase in attaining both the desired product quality and price - but few will have relished the uphill task presented in the last quarter.
After a stable European season lacking the drive or demand to garner good prices, the industry was waiting for the southern hemisphere switch to kick-start the market. But rumblings of problems in Brazil began early and when heavy rains in the South American source hit production, signs were ominous.
In actuality, it was always going to be a tricky year to deal with Brazil, as problems abroad the previous season had switched many growers’ thoughts towards the domestic market and even put others out of business.
One insider tells FPJ it has been a struggle: “The market has been very difficult and Brazilian supplies ended very abruptly. Exports to the UK and the EU are down around 30-40 per cent and South Africa started late too. Values have been very, very high on white and red - some of the highest I have known, and certainly as high as they have been in the last six or seven years.
“We certainly saw some empty supermarket shelves, but at least the quality was there, as most Brazilian producers were sensible and didn’t ship after the rain. That meant some pre-rain fruit was stored longer.
“Growers started packing very early this year - some as early as the start of September - as they are acutely aware there is more and more rain every year.”
It has been a torrid two years for the Brazilians. An overlap in supply last year caused by the availability of grapes from California meant that Brazilian product was abandoned at the quayside in the US and has made growers wary of the North American market this year. This export fear has subsequently impacted negatively on the European market, with the domestic market in Brazil taking large swathes of home-grown product. Cheaper packing, packaging and remarkably high local prices - quite apart from freight costs - have kept the Brazilians in their native market.
One source says: “It will be interesting to see what happens next year. A lot of growers went out of business the season before last, putting extra pressure on the market, and I can only see this increasing with each year that goes by.
“When you have difficult situations like this, strong partnerships really come into play, as long-standing agreements mean you can ensure a supply of quality fruit from trusted producers.”
Elsewhere, product from Namibia has also presented challenges. Despite good volumes available by seafreight, quality has been a problem.
Extremely hot weather has brought on the sugars too rapidly, with brix levels reaching as high as 23.
One insider says: “It has been incredibly hot out there and the Thompson crop has come on very quickly. The sugars are extremely high and, as such, more product is going to the continent as its colour and shelf life are not up to UK standards. The fruit tastes excellent but just does not have the shelf life.
“Namibian Flame has been of good quality though, nice and large, and will enjoy good prices, as people have been scraping the bottom of the barrel on it a bit.”
While there have been small volumes available from Peru on white grape, all the attention has turned sharply to South Africa.
A late start to the season as growers struggled to get the sugars and colours they needed proved challenging, but early airfreight and a strong Christmas market will have helped producers gain better returns.
Some rain in the northern provinces of the country caused issues on white grape but quality from the main sourcing region, in the Orange River valley, is said to be very high.
January retails are looking unlikely to be particularly strong in the current climate, with loose grapes feeling the pinch.
One source tells FPJ: “Without any real sales momentum, a pick-up in volume is unlikely to really trigger an increase in sales.
“Everyone is watching what they spend at the moment and grapes can easily fall victim to that when you are looking closely at what is going into the shopping basket.”
KARSTEN GROUP FLYING AS GRAPES PROVIDE BACKBONE OF SUCCESS
The Karsten Group has been one of the largest grape players on the African continent for more than three decades. Fred Meintjes takes a look at the company’s approach and success in the highly competitive category and beyond.
In a minibus somewhere between Cairo and Alexandria in Egypt, Piet Karsten once described the running of his fruit farming business as similar to piloting a jumbo jet. Once you have loaded the passengers and cargo and have taken off, you need to keep the nose up, keep flying, refuel in the air and never touch down - because if you do, you may never get up in the air again.
Since this discussion took place, the Karsten Group has managed to keep ‘flying’ and Karsten has built one of the world’s most successful fruit farming businesses. What started out in a modest way with a few hectares of vineyards on the banks of South Africa’s Orange River 30 years ago has expanded to include the production of dates, citrus and melons.
The vineyards are located over a distance of 250km from Klein Pella on the Namibian border in the West, to Kanoneiland near Upington in the East. Further to the South, in the Western Cape region, apples, pears, plums, cherries, blueberries and onions have been added to the product range. Highly productive farms with modern packing facilities are now supported by a logistical and marketing infrastructure that allows the group to deliver its products to customers worldwide.
The Karsten Group has not only kept ‘flying’, but it has added new flight plans to its schedule. In doing so, it has helped to reshape the way in which the modern fruit export business is conducted. Back in 2002, when the South African grape business was practically on its knees in the chaos that reigned in the aftermath of deregulation, Karsten sensed that in the future there would be a time when business would be conducted directly between growers and customers.
What followed was a period in which the Karsten Group focused on building its own capacity, rather than expecting someone else in the value chain to take responsibility for its products once it leaves the farm gate. Karsten says: “It was not an easy time and it brought us into conflict with the past and the institutions that grew out of the previous era.”
Along with building its own capacity, there was the belief that in order to do business with the leading customers in the world, supply seasons needed to be extended and new products added. That is why Karsten came to Egypt - to source grapes for late-season marketing, during May and June, when the South African season ended. That is also the reason why he developed strong relations with grape suppliers in South America.
“The fruit business has a way of keeping you humble and what has been achieved is due to the commitment, hard work and attention to detail by everyone involved with our business,” adds Karsten.
The Karsten Group has earned its position as a leading South African grape exporter through constant focus on meeting commitments, loyalty to customers and remaining in control of cost along the value chain.
“This has helped the group to remain competitive in an increasingly competitive world and in spite of the recent tough economic conditions across the world,” says Herman Engelbrecht, managing director of Karsten UK, which is responsible for the group’s distribution and service delivery in the UK and Europe.
According to Engelbrecht, Karsten has established an experienced and streamlined supply chain for all its products. This includes Karsten Farms, the South African farming operations; Karsten Middle East, the farming and packing operations in Egypt; New Vision Fruit, the South African marketing company; Horizon Fruit, which handles the group’s logistics; Karsten UK, the company dealing with distribution and service provision in the UK and Europe; and Newfresh, a marketing and distribution company for products exported to the Far East.
Engelbrecht says the group’s answer to questions around food security and safety is to control the growing operations, logistical operations and supply operations. He adds: “Our group is committed to a small number of clients in the UK, Europe and the Far East. We are able to support these clients with an ever-growing basket of fruit, including grapes, cherries, blueberries and citrus.”
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