South Africa's fruit exporters grapple with supermarkets, labor

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South Africa's fruit exporters grapple with supermarkets, labor

The South African fruit export industry is in a “good space” but will face significant challenges in 2011, Stuart Symington, CEO of the Fresh Produce Exporters Forum, South Africa’s main exporters association, told

Among the major challenges are growers’ and exporters’ relationships with supermarkets, and how they relate to the larger issue of ethical trade, Symington said.

He said that supermarket buying power remains strong, and that some firms take advantage of that power with slow payments and complaints about product, both of which hurt growers and exporters.

“We believe that if supermarket buying practices are unethical, then we need to address them as much as we need to address them on farms,” he said.

The United Kingdom remains South Africa’s main export destination. Symington’s group, along with other growers and exports, studied the buying practices of U.K. supermarkets and produced a report in September calling for set prices for a set amount of fruit, instead of the current consignment arrangement that they believe leaves growers and exporters exposed.

“But due to their dominant market positions, supermarkets have … defaulted into consignment business that has passed all risks back to the growers of the fruit. Sometimes producers only know what price has been achieved for their product once it has been sold to the consumer – there is no recourse for a producer once he finds himself in this position,” the paper said.

He added that the lines between growers, importers, exporters and marketers are blurring, which requires all players to adjust.

“More producers are doing a portion of their own exporting, and marketing agents are buying their own farms to secure their businesses,” he said.  “Supermarkets procure directly from farms and they’re bypassing  South African exporters and their own British importers and sending product straight to their distribution centers in England. It’s all a part of growing up.”

Wal-Mart’s plan to take controlling interest in South Africa’s Massmart is part of these changes, but Symington said the change could benefit fruit growers and exporters by diverting more fruit to the local market, leaving less for export and keeping prices higher.

“If it’s going to promote more consumption in niche markets, that’s good for fruit,” he said.  “That just leaves less for exports, and that keeps prices buoyant.”

South Africa traditionally has exported to the U.K. and Europe and is now turning its attention to “Greater Europe,” including India, Pakistan, the Middle East and Russia. South Africa’s proximity to these markets gives it an advantage over other Southern Hemisphere countries, Symington said.

“The Middle East has been a huge benefit for South Africa, and Russia, of course, is the fastest-growing market and is part of ‘South Africa’s market’ because of the geographical timelines,” he said.

But uncertainty with shipping, such as the port workers strike in May, remains a concern, Symington said.  The strike by some estimates cost South Africa’s fruit industry 1 billion rand (US $130 million). He would like to see ports in the country privatized to avoid such disruptions.

“There would be much greater efficiency, greater productivity, and you don’t get the kind of strikes when you’ve got the port farmed out to many different entities” he said.

Within South Africa, Symington said the country is facing a labor shortage similar to that in Latin America, with workers moving to cities. Immigrants from Lesotho, Swaziland, Mozambique Zimbabwe are taking their places, which at times “expose our industry to xenophobic outbreaks .”

The influx of immigrants is coupled with fewer young people taking on fruit growing or exporting as a career.

“A shortage of skilled labor is definitely in the cards for us in the future,” he said.

Reliable electricity and clean water are also internal issues that South Africa must resolve, Symington said.

Despite the challenges, Symington said we’re “happy with the state of our industry. (But) we need to do things in different ways to keep the customer interested.”


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