Good crop expected but challenges may reduce grower payouts
As the largest exporter of South African apples and pears and a wholly grower-owned business, Tru-Cape Fruit Marketing growers have more than 7,000 hectares under apple and pear cultivation.
“We represent, more or less, 20% of the South African industry’s apple and pear volume,” says Tru-Cape, Managing Director, Roelf Pienaar adding “harvesting is currently taking place and although still early days we expect a good crop however, we will have to wait and see how the crop comes in and how the final numbers will compare to last year. We are showing growth in the right varieties, which is positive for the years ahead.”
According to Pienaar, the biggest obstacles currently relate to logistics in the total supply chain. Costs increases this year will be another major obstacle. These increases are across the value chain not just in South Africa but also in the market. This is not only driven by freight-cost increases, but also due to increasing production costs of more than 15%,” he says.
Pienaar mentions that global price inflation is a reality and with inflation at record levels in the UK, Europe and US, the consumer will have to pay more for fruit and vegetables. These cost pressures are everywhere and it seems like there is nowhere to hide currently. “As a wholly grower-owned business, and vertically-integrated company, Tru-Cape is in a good position to supply the market efficiently and reliably. Our job is to ensure growers can re-invest, although looking at the macro and political environment in 2022 it will definitely be a challenging year,” Pienaar says.
“On the global front, other apple and pear producers in Chile and New Zealand are facing similar challenges with double-digit increases in freight costs. Producers and exporters must also cope with a fluctuating exchange rates having an impact on both their input costs as well as their revenue.
“Last year Tru-Cape exported close to 18% more volume compared to the previous year, which is encouraging and an indication of growing markets around the world. However, the impact of significantly higher freight costs and other logistical challenges could hit the industry hard in 2022.“In terms of our cultivar mix Golden Delicious remains an important cultivar and represents about 21% of our apple basket, Royal Gala at 15%, Granny Smith at 13%, Pink Lady at 12%. These five varieties make up about 60% of our total apple basket. We are seeing good growth in new varieties like FLASH GALA and, with more than two million trees in the ground, the future looks bright. On pears, Packham’s Triumph, Abate Fetel and Forelle make up almost 85% of our pear basket.
“Top export markets for the South African industry for apples remain the Far East which, in 2021, took almost 29% of our exports, followed by exports into Africa at 27%, the UK at 18%, and then the Middle East at 9%.
“Pear exports from South Africa are more weighted towards Europe, the Far East and Russia who took 26%, 21% and 17% respectively.
“Looking to the future we remain excited about Africa’s potential and see positive growth on the continent going forward.” Pienaar says.
Based on trees currently in the ground Tru-Cape expects to continue its growth trajectory for the next five years. “Although we have had good volume growth over the last few years, even with all the logistical and political challenges around the world, we are expecting volume growth on exports of about 4% this year.
Tru-Cape’s Marketing Director, Conrad Fick, says that in 30-years this season is the most complex. “In previous years you had variables to consider but with so many moving parts now it is extremely challenging. Don’t forget that much of Tru-Cape’s business is programme-based which means that our customers contract us to deliver varieties in their requested sizes that are date coded and delivered in particular weeks of the year. We will have to overcome whatever challenges face us to ensure that we can continue to keep our commitments,” Fick ends.