With the attention of the world on South Africa far beyond the confines of a certain four week football tournament, you could be forgiven for being surprised at the eight per cent GDP growth rate experienced in the fledgling democracy last year.
Put in the context of a crippling global recession which has put established, stable nations such as the UK, the US, Spain, Ireland and Greece in dire long-term trouble, the advances are astonishing. Described as a “hot economy” by one leading produce player, the country harbours both the climate and increasingly the infrastructure to climb to the top of world agriculture.
But it’s not all good news as agriculture remains a difficult profession. The killing of South African farmer and notorious white supremacist Eugene Terre’Blanche in April highlighted the high murder rate of isolated farmers and growers in South Africa and the recent transport strike saw workers snatch their opportunity in the global spotlight to lobby for increased pay to the detriment of South African citrus growers among others.
But, with the strike over and the recent announcement that up to 5,000 South African farms stand to benefit from a groundbreaking new training package targeting discrimination and sexual harassment in the workplace - in a project backed by Comic Relief, M&S, Tesco and supplier Flamingo Holdings and piloted by G’s Marketing in the UK - things are on an upward curve in the country.
Strike turmoil
The citrus season has been undeniably tough. South Africa’s citrus growers did not have it at all their way during the opening months of their new season, but now aim to make up lost ground
Too much rain during the first weeks of the harvesting season in the northern parts of South Africa, the disruptive strike and a negative exchange rate have made things difficult so far this season for the country’s exporters.
It hampered efforts to take advantage of early season marketing conditions which were described as much better than last year and which is entirely due to lower supplies from other parts of the world.
Observers say the strike cost the economy R7 billion (£608m) and the South African deciduous, citrus and sub-tropical industries have jointly decided to approach the country’s Competition Commission regarding the congestion charges levelled on exporters by shipping lines during the recent transport workers’ strike.
The imposition of the congestion charges by first Maersk Shipping line, and more recently other shipping lines, drew heated criticism from the fruit industry who regarded the charges as unfair, according to local sources. Exporters were advised to refuse to pay the surcharges and the industry advised the South African government that they hold Transnet, the parastatal organisation that controls the country’s container terminals, responsible for the cost of the strike.
Citrus Growers’ Association spokesperson Justin Chadwick says growers and exporters have been frustrated in their attempts to take advantage of positive markets during the early season.
“[The strike was] poor timing as the citrus industry gets its export programme started and exporters want to take advantage of the window of opportunity between the northern and southern hemisphere seasons,” says Chadwick.
It is also likely that the debate about more competition between conventional and reefer shipping will be re-opened because of what happened during the strike. Chadwick believes that choice between the two modes of shipping is good for the industry. “A mix of conventional and container shipments allows for competition and reasonable pricing. Should shipments go 100 per cent container then the industry would be at the mercy of container lines in terms of shipping rates and terms and conditions of shipping,” he says. “The container shipping rates may be attractive now - but perhaps this is buying market share to drive out conventional competition. When that option is gone then a hike in container rates could follow.”
Capespan trading director Martin Dunnett adds: “Rains had affected early grapefruit and early navels from the north so the supply was already compromised before the strike. Obviously, South Africa as a country is going to have its teething problems, as it is still a young democracy and growers and packers have had a number of problems in the past five years.
“To be honest, the workers were offered an 11 per cent wage rise and they wanted 15 per cent, which is an outrageous request, but with the fruit coming on stream and the World Cup, they were in a strong position,” he continues. “Five or six years ago we would have split shipping between containers and conventional but the oil prices made conventional shipping with pallets not cost efficient. Getting the containers back in place was a problem and the cycle has been affected. We are still looking to get back to normal as the exports are still not there. This should not last more than two to three weeks more.”
Anton Rabe, chairperson of Fruit South Africa, which represents fruit exporters, has said the strike may have cost shipping lines R600 million (£52m). If this were to be recovered from the deciduous fruit industry alone, it would represent more than last year’s net farming income. In a letter to public enterprises minister Barbara Hogan, the fruit industry said it would encourage fellow exporters to send the accounts for the extra container levy the shipping lines are charging them to Transnet for payment.
Delena Engelbrecht, managing director of GoReefers Logistics, one of South Africa’s leading logistics service providers, says the strike highlighted the vulnerability of the industry: “We have for some time been arguing that Maputo in Mozambique is a port which needs a new focus in this regard. GoReefers has implemented new shipping logistics which has not only proved that Maputo is a real alternative to shipping through the port of Durban.
The strike in the container terminals, and possible disruption due to the FIFA World Cup finals, again confirms that chaos costs money.” She adds: “Congestion charges which were introduced as a result of the strike further exacerbated the problem for the South African industry.”
Export equation
Current forecasts put total citrus exports at 89.9m 15kg cartons this year, up eight million on last year, which was a disappointing export year. All categories are up - except grapefruit - which is down from 13.7m cartons last year to the latest estimate of 10.2m.
The recent 2010 Citrus Stats Book compiled by the Citrus Growers Association reveals that clementine plantings in 2009 were up considerably to 25,130 hectares, as were lemons at 578, 379ha and navel oranges rising from 421,582ha in 2008 to 707,310 in 2009.
This year has been an interesting one for oranges. “The market has been very strong because of the early finish of the Northern Hemisphere season,” Dunnett says. “Cyprus was strong but there were poor volumes coming out of Morocco. Northern South Africa was early but it is not the easiest growing region in the world as there is often scarring on the fruit meaning our high specs in the UK make it difficult. Unfortunately orange growers had a terrible season in 2005 and are only just re-planting. Overall volumes have been short. The market is taking an awful lot of re-stocking after the strike. Orange supplies came on at the end of May and there will be a tight market for the next two to three weeks. Navels are being sold as quickly has we receive them and will finish in mid-July. South African Valencias will be more plentiful then.”
It has been a more difficult year for satsumas than in 2009, where there were additional supplies. There has been rain and hail in the north but the quality has been good. The satsuma supply was affected by rains six weeks ago and volumes will be slightly down on last year. “The market was tight because Argentinean and Uruguayan fruit came under pressure through May and we only received South African fruit at the end of May,” Dunnett says. “Around 0.5m cartons of satsumas are shipped a year. The Miowhase variety was shipped in large volumes and have been of superior eating quality,” Dunnett continues. “The quality of South African fruit is as good as anywhere in the world because of the climate. Ironically the poor soil conditions in the north mean the tree responds and produces good fruit.”
Clementines have been in the market for two weeks. The Eastern Cape is the main production area and there has been drought. It has been very cold on the Western Cape, last year went on longer than anticipated - through until August - but the South Africans have a global market so they can supply the whole world.
The South Africans started very early on lemons this year, in early April. There was a flush of late fruit from Spain but overall it has been a strong market and demand for lemons has added to this. In Argentina, the volumes have dropped so the market has been strong and will probably stay that way until the Turkish season in September.
One importer says: “South African Eureka lemons are one of the finest products in the world. Slowly, lemon prices have encouraged people to grow more. Returns from places such as the Middle East, Europe and the UK have encouraged people and domestic demand for lemons has been added to by the processed market. South African lemon volumes have increased by around 10 per cent per annum.”
On grapefruit, demand continues to decline in the UK. The White Marsh Seedless grapefruit is triggering the decline, which was around 16 per cent in 2009, and continues to be a difficult product to sell. Premium pigmented grapefruit, such as South African Star Ruby, is driving some growth though and has been quite popular. Dunnett adds: “There’s been no glut of fruit from South Africa so the market has been good, most of their fruit goes to Japan but their residue requirements are high so its crucial to see how much they take to see how the market will be. There was a slow start to the South African grapefruit season at the end of April. The market will come under pressure on white grapefruit in July until October.”
Looking to the future, Dr Hennie le Roux, extension manager at Citrus Research International (Pty) Ltd (CRI), is positive. “Several new cultivars have been established in the last ten years with excellent export potential,” she says. “This includes the easy peeler variety Nadorcott and late navels such as the Witkrans. On the scientific front there has been lots of progress to develop safer ways to control pest and disease problems. One good example is the use of Cryptogran, an organic product, to control False Codling Moth.
“Many growers have opened hydroponic systems where pulse irrigation is used to fertigate their trees to ensure maximum fruit set and quality.”
Furthermore, a network of Technology Transfer groups has been established in all the citrus growing regions of South Africa, Swaziland and Zimbabwe to ensure that the researchers stay in touch with the research needs of the industry and to ensure that the research results are chanelled back to the growers - a bi-annual Citrus Research Symposium is organised by the CRI to assist with this.
There are certainly some positive signs for South African citrus and the country’s economy beyond that, but teething problems and a challenging climate are likely to continue to present a problem.
CLEMENGOLD STRIDES FORTH
One of the most exciting initiatives in the citrus category at the moment is the development of ClemenGold. The drive to raise the profile of ClemenGold fruit comes from within South Africa, and arises from fulfilling a major opening for soft citrus in the UK market during a period which there has been very little volume before now.
Michelle Kruger, chief operating officer of the ClemenGold Company, says: “We’ve put a huge amount of energy and passion into laying the foundations for the ClemenGold project, so it’s very exciting to see it come to fruition. The campaign we’ve put in place will ensure that consumers will get to know the product better and realise what a winner it is on all levels, including great quality.”
ClemenGold is available in Tesco, Sainsbury’s, M&S, Morrisons and Asda stores throughout the summer, until late September. The product is being pushed from South Africa and worked on worldwide.
To qualify as ClemenGold, selected producers must provide fruit that conforms to consistent quality specifications. The most important of these is a ratio of sugar to acid of a minimum of 10. The fruit must be sweet, with minimum brix levels of 11.5, and acid no higher than 1.5. Externally, the skin must be smooth, with a deep orange colour with no green specks. The specification for ClemenGold also stipulates that fruit must be allowed to ripen naturally.
The ClemenGold name is owned and managed by the ClemenGold Company, part of the South African company Citrogold (Pty) Ltd and the product is based on the Nadorcott variety, a Murcott and Clementine cross originating in Morocco.
This first co-ordinatedpromotional campaign for ClemenGold focuses on the southern hemisphere season, including fruit from South Africa, Australia, Argentina and Uruguay.
The product will be supported with packaging and promotional activity designed to develop the market further and introduce the fruit to more shoppers.
The initiative will be rolled out from this month and will include tasting events in stores, information booklets and a competition to win a holiday, as well as online advertising and samples distributed to journalists working in the trade and consumer press.
“With the promotion, we are looking to bring the product closer to British shoppers,” says Kruger. “We want to communicate ClemenGold’s inherent values clearly to the people who matter most to retailers and ClemenGold producers - namely consumers.
“Historically, ClemenGold has performed strongly in all of the markets where it is sold. We have now moved up a gear to actively promote the fruit and we expect demand to grow. Future volumes will back the increase in demand we are forecasting.”
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