South African grape growers are optimistic about this season's harvests but concerned over the European Union's fragile economic position.

They told www.freshfruitportal.com they were predicting significantly better fruit yields and quality than last year, when farmers were plagued by floods and production was down by 25%.

But they are worried about whether consumers will have enough money in their pockets for grapes to reach their shopping basket.

The Grape Company marketing executive Jaco Kruger, said Greece's debt situation was an issue.

"It's the knock on effect for us of bigger markets like Germany, France, Portugal and Italy. We are just hoping this won't affect us negatively."

He said higher global prices for rent and energy were exerting pressure on people's disposable income and that U.K. supermarkets Asda, Sainsbury's and Tesco were currently locked in a price cutting battle.

Exporter Zebra Fresh Fruit's marketing manager Hugo Coetzee agreed and said there was a post-war 1950s mentality.

"People are finding it difficult to survive. They are considering the necessities not the luxuries and people sometimes forget grapes in favor of apples and pears," he said.

Alongside this, growers and packers in South Africa have been faced with increasing overheads in a country where inflation currently stands at 5.7%.

Electricity, for example, is estimated to have doubled over the last three years.

"You can only manage costs up to a certain point. The problem is production, you need a certain production capacity to make your sums work. If production is down your unit costs is up," said Kruger.

Karsten marketing manager Pieter Karsten said high fuel costs were the biggest problem.

"We have fixed labor costs set by the government which increase every year but the big issue is oil prices which increase shipping costs and inland freight."

However, Coetzee said the opening price for grapes was looking promising perhaps helped by low grape volumes in Italy.

"I expect to buy more fruit from growers this season, especially grapes."

Karsten said he thought prices would remain steady and be similar to last year's.

He said that while the rand's exchange rate had weakened this did not mean that exporters would be able to drop prices.

Photo: Grape.com

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