A strong rand and low global oil prices have contributed to a challenging start to South Africa's apple season, but one exporter anticipates the situation will improve somewhat over what remains of the campaign.

Fruitways Marketing commercial director Stefan Conradie also said the drought in the country's main pome fruit-growing region the Western Cape was a "serious concern" that was impacting the current crop and would likely be more problematic next year.

Speaking to Fresh Fruit Portal, he said apple and pear volumes in the Grabouw-Vyeboom area were very similar to last year but with big swings between the varieties.

Production of early varieties like Golden Delicious and Royal Gala was around 5% and 15% up on 2016 respectively, he explained.

"We also had a very good color year on Royal Gala which obviously assisted in terms of selling, especially to the Far Eastern markets," he said.

"At the end of February we were expecting a much bigger crop than we actually realized at the end because the later varieties which are Braeburn, Fuji and Pink Lady were down on expected volumes."

Coloring issues for the Cripps Pink variety mean significantly less fruit will be eligible for sale under the Pink Lady brand than last year. Conradie said this was related to the warm weather prior to harvesting, which was also affecting fruit quality on certain varieties.

He also believed the situation was similar in the Western Cape's other major production region of Ceres. 

"Luke warm" Eastern markets

Looking at the market situation, the representative said it hadn't been the easiest of starts to the 2017 campaign, which according to the industry body Hortgro has already seen 75% of pear exports and 50% of apple exports completed.

"It's been tough," he said.

"Obviously from an export point of view we are quite dependent on exchange rates, and the rand has been very strong against the major currencies, the sterling, dollar and the euro.

"Then we’re quite dependant on Africa on our varieties like Goldens, so if those markets are not pulling, then a lot of fruit stays behind in South Africa which places more pressure on the domestic market."

He said low oil prices had affected the economies of some West African countries like Nigeria and Angola, leading to unattractive markets for South African shippers.

Far Eastern markets have been "luke warm" so far, according to Conradie.

"Malaysia is also in a way dependent on oil, so the economy's not flying at the moment," he said.

"I wouldn’t say it's abysmal, but there’s not a major pull for fruits at the moment. Fuji still does well in most of the Eastern markets like Taiwan, Malaysia and Singapore, also there's also good demand from China. So there are opportunities there, but Africa’s been struggling."

On the other hand, he said the European continent had been "pretty good" due to limited local supplies of certain varieties, while the U.K. had seen "some price inflation, but coming off a low base."

"We had a lot of pressure on U.K. retail prices in the past two or three years, but with the rand being so strong we’ve managed to get some foreign currency inflation in most of the U.K. supermarkets.

"But it’s not like it’s happy days or anything like that - it’s really to cater for the inflation we’ve got on production costs here in South Africa."

He noted increasing production of Royal Gala in the U.K. was limiting South Africa's early marketing window, but said the biggest worry in Great Britain was for Pink Lady.

"We won’t have enough supply [of Pink Lady]. Granny Smith has been going okay as we’ve got enough availability and the market has been good. Braeburn we’ve struggled with quality," he said.

For the second half of the season, however, Conradie expected things to improve, with relatively strong prices for certain apples.

"I think generally the U.K. and the European continent are quite dependant in the second half on the Southern Hemisphere, which definitely has a down crop in varieties that are very important to them, which includes Granny and Pink Lady. So I think both of those markets should end up quite strong," he said.

"The Far East I think is difficult to call. I think the fact that the U.K. and Europe will be strong will pull more fruit toward those markets, which will probably help the Far East markets."

He also commented that recent frosts in Europe could result in more selling opportunities for Southern Hemisphere fruit later in the year.

Total exports down on 2016

Meanwhile, the head of another one of South Africa's leading pome fruit exporters, Tru-Cape, said the company sourced from a wide climate area in the Western Cape, helping to offset weather-related issues.

However, he echoed Conradie's words on the growing conditions, describing them as "challenging".

"The impact of drought conditions in the Western Cape has been exacerbated by unseasonably high temperatures, in some cases more than 40°C (104°F), which has further stressed already stressed trees," managing director Roelf Pienaar said.

"We started off with a cool spring and we expected a bumper apple crop but then the season turned into an extremely hot one which advanced maturity, which might impact the shelf life of the product.

"A hot season is, however, good for pears and the dry conditions have resulted in fewer decay issues."

Nevertheless, he noted that fruit size was generally smaller as a result of th conditions, with less fruit meeting the cosmetic requirements for export.

"Eating quality is, however, better than in previous years. The crop size is, more or less, the same as in previous years," he said, believing total industry exports were around 5% down on last year.

Tru-Cape's main markets include South East Asia, the Middle East, the U.K. and Europe, although Pienaar highlighted more than half of its crop was distributed on the African continent, including South Africa.

He noted a general increase in Southern Hemisphere pome fruit hectarage, highlighting Golden Delicious as being "an issue over the last 18 months or so", especially with oil prices affecting the economies of traditional importing countries. 

"Interestingly of the top 20 oil-producing countries in the world, 15 of them are in the 104 countries [we export to]," he said.

"In the Far Eastern markets, especially in China, we don’t always have the size or the colour to compete effectively. However Tru-Cape continues to invest in new varieties and we are excited about the prospects and exciting varieties in our test blocks for the future."

Pienaar said it was too early to comment fully on the 2017 campaign but said that "the strong Rand has meant lower Rand returns to our shareholders and that we are working hard in order to maximise those returns, despite the change in currency."

"However, let’s see how the year plays out," he said.

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