Western Cape Business News

Send  Share  RSS  Twitter  05 Jul 2009

FRUIT: Export Industry Facing Problems


Recent Western Cape Business News

With the current world economic downturn, exporters have begun to feel the effects. Large buyers in the UK and Europe started to demand smaller shipments and extended credit terms, says Brian Peterson of Coface.

The fruit industry is currently coping, but may experience a downturn as the SA rand strengthens. Coface has seen an increase in non-payment due to the queries relating to the quality of the fruit produce. This has caused cash flow delays which in turn may result in an increase in debtor claims.

The most popular fresh fruit lines being exported are citrus such as oranges, easy peelers, grapefruit and lemons, which account for 60% of overall fruit exports.

Deciduous fruit such as apples, pears, grapes and plums represent 38% of fruit exports and subtropical fruits, avocadoes, mangoes and litchis only represent about 2%.

The biggest export markets for SA are Europe 75%, Middle East 8%, South East Asia 5% and the Far East 5%.

The total value of fruit exports is about R1-billion annually, with about a third going to the UK. The Cape area supplies about 57% of the country’s fruit output.

The industry’s biggest threat currently are the millions of bees that have caught a highly infectious disease that is now threatening the fruit export market and honey production in the Western Cape.

It is believed that the disease entered SA through infected honey with contaminated spores. This alone will have a huge impact on the local fruit market.

Farmers are concerned that their fruit trees will not be pollinated. Bees are used for pollinating fruit trees and vegetable crops. The Western Cape’s fruit industry relies on 30 000 to 40 000 beehives to pollinate their trees.

The disease is highly contagious amongst bees, killing infected colonies, although it does not pose a threat to humans.

The fruit canning industry, which represents around 85% of the products exported, will also be effected this year. The price of tinplate has increased by almost 70% since April, resulting in a 45%-55% price increase of cans.

This will have an adverse affect on the domestic market, especially those depending on basic and convenient canned food and will have a massive effect on the poverty line.

Agriculture is a major earner of foreign currency and the current economic crisis and natural risks will have a definite impact on the SA export market.

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