?South Africa's deciduous fruit (peaches, pears, apricots, mixed fruit) canning industry has been globally highly competitive over time and has maintained this competitive trend since the early 1960s, despite changing political, social and regulatory conditions. From 2002 to 2021 it has only been outperformed by Greece and Spain.
However, a decline has been evident since 2016. If this continues, it will lead to employment losses, a reduction in the livelihoods of many, and also losses in foreign exchange earnings – things South Africa can ill afford. To arrest this decline, industry leaders in collaboration with the government of national unity should craft and implement a Deciduous Fruit Canning Industry Recovery and Competitive Plan (DFCIRCP) to enhance the sector's competitive performance and create a basis of growth and economic development within the full value chain.
This one of the key recommendations of a new study at Stellenbosch 中国体育彩票 (SU).
“The DFCIRCP can build a shared vision and strategic actions with government support, public-private partnerships, and alignment with the National Development Plan and the National Agro-Processing Master Plan to stimulate competitive growth in the industry," says Group Risk, Safety and Security Director at Tiger Brands Dr Heinrich Jantjies. He recently obtained his doctorate in Agricultural Economics at SU on the topic of competitiveness in the deciduous fruit canning value chain.
Jantjies explored the ways to measure and analyse the competitive performance of South Africa's deciduous fruit industry, with a particular focus on the canning and processing sector. The investigation spans from the early 1960s to the early 2020s. Jantjies also compared canned deciduous fruit with other major local fruit/vegetable export-driven enterprises such as apples, plums, citrus, wine and avocados.
He used surveys, questionnaires, focus group discussions and interviews with selected experts and industry executives and leaders to collect his data.
Jantjies says his study reveals that the deciduous fruit canning industry has remained resilient and very competitive and despite many global and local structural changes, managed to outperform competing agro-industries.
“The deciduous fruit industry was found to be highly competitive, with fluctuations, with canned fruit, such as peaches, pears, apricots, and mixed fruit, generally performing better in terms of competitiveness than most other fruits, except for fresh citrus and plums.
“It commands a leading position in South African agribusiness and supports growth in foreign exchange earnings, employment – providing jobs to more than 7,500 people in the Western Cape – and related rural development.
“Each year, the industry exports about 85% of its products. In 2021, the export value of canned fruit was $112 million (approx. R2 billion), with canned peaches leading at $47.6 million (approx. R870 million), followed by pears, mixed fruit, and apricots. This is an increase from $94,7 million (approximately R1,7 billion) in 2002, though lower than the peak of $186,2 million (approximately R3,4 billion) in 2010."
However, the industry's competitiveness rating (according to the relative trade advantage – RTA formula) dropped from 23,03 in 2016 to 17,02 in 2020, showing a less competitive environment, according to Jantjies. Pears, however, were an exception, improving from an RTA of 33,96 in 2016 to 40,40 in 2020. “This explains the industry's strong and resilient character."
Jantjies says different factors enhance and constrain the industry's competitiveness and resilience.
“A well-developed industry infrastructure, the availability of storage and handling facilities, competition in international markets, bargaining power of canning firms, relationships with international retail markets and agents, and access to and availability of renewable energy are some of the factors that help the industry to remain competitive.
“On the other hand, things like a lack of innovation in canning technology, a lack of local sales and access of new competitors in the local market, the possibility of land expropriation without compensation, the impact of climate change on fruit yields, and negative perceptions associated between canned fruit and health constrain the industry's competitiveness."
Proposals
Jantjies suggests proposals that can help the industry stay competitive. He says the industry should focus on reducing high transaction and administration costs and effort; intensifying efficiency through smart technological innovations; creating business-friendly environments; continuously upgrading the skills of employees' skills; enhancing the efficiency and effectivity of processing firms; improving growth in the local market by making canned deciduous fruits more accessible to lower-income groups; and targeting emerging markets like India and China, while maintaining a strong presence in established markets.
“The industry should also assist with the promotion of improved distribution and logistics infrastructure and constant maintenance thereof. Improving access to railway facilities and upgrading and investing in trade facilities in our harbours will be required.
“Conducting a thorough and integrated analysis of the entire value chain can lead to better information sharing, cost efficiencies and control, and governance as well as foster innovation and build trust among all participants in the industry."
Jantjies warned that if such proposals are not implemented the industry will decline, farmers would move on to other crops such as citrus, and service facilities will contract.
“This will lead to job losses. International trade partners may also suffer as South Africa is one of the key Southern Hemisphere suppliers of canned fruit, negatively impacting on the considerable foreign exchange potential of this industry."
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