Lynda Gilfillan
A fresh produce chain offered free apples to customers in a TV advert last week. But, while consumers may smile, apple farmers are facing a crisis with many going bankrupt and up to 180 000 jobs at threat.
Farmers face massive losses this season, and are burdened with multi-million rand debts. Peter Dall, CE of the Deciduous Fruit Producers Trust, prophesies: “Thirty per cent of my fellow farmers won’t be on the land in three years’ time.” Land values have plummeted by two-thirds, from R120 000 to R40 000 per hectare.
The fruit export industry in the Western Cape has provided about R2-billion in foreign exchange earnings annually. But South Africa has lost its edge on world markets, sinking from seventh largest world producer of apples in 1996 to tenth last year.
Since 1994 there has been a world-wide overproduction of apples with a resultant drop in prices. Farmers have also lost the subsidies of the now defunct General Export Incentive Scheme, although in competing countries fruit farming is subsidised.
Deregulation of the local industry has also had its impact. While all fruit exports from South Africa must conform to minimum standards set by the importing country, fragmentation in the local industry has resulted in less consistency and uniformity.
Ceres farmer Peter Dorrington says: “South Africa’s fruit reputation sucks. A lot of lower-grade fruit is currently being sold overseas together with the best stuff.”
Instead of selling through single channel marketers, local producers now compete against each other, further lowering prices.
Louis von Broembsen, of Cape-span, explains that the fragmented supply of fruit from South Africa is entering an increasingly consolidated European market. “Large supermarket chains like Tesco and Sainsbury have powerful buying power – the days of the smaller retailer are over. Ironically, there is also a move in some competing countries to create the very kind of marketing mechanism that we have recently dismantled here, in order to better co-ordinate their supply base.”
The apple has also lost its traditional appeal among European consumers facing an increasing choice of exotic fruits. Moreover, an old faithful like Granny Smith is having to compete with far more seductive varieties such as the two-toned Pink Lady.
South African production has been poor in recent years because varieties like Granny Smith do not thrive in the warmer winters recently experienced in the Western Cape. But, in many cases of threatened bankruptcy, the chickens may simply be coming home to roost.
Rather than build up capital reserves, local farmers tend to upgrade the bakkie, or plough profits into yet another farm. As a result few farmers are able to respond to market changes. Costs of establishing a new cultivar are high: up to R100 000 per hectare, which takes up to 10 years to provide capital return.
As a result there has been little attempt to innovate by developing new cultivars that are better suited to the changing environment, while little effort has been made to develop niche markets.
But one person’s crisis may be another’s opportunity. Von Broemb-sen sees gaps opening for new farmers. “This is a cyclical process. Innovative, entrepreneurial farmers can, with the right backing and support, benefit. Farmers have always been grower-orientated, and, with a market-orientated approach that responds to changing needs, there is still a lot of money to be made.”
Partnerships could be entered into between the government and agribusiness to assist individuals who meet the necessary criteria to purchase apple farms at bargain prices.
This may be good news for emerging black farmers, although Gerrit van Rensburg, Provincial MEC forAgriculture in the Western Cape, is not optimistic. “A new black or brown farmer would need a lot of capital to buy into this expensive farming industry. If the large commercial farmer can’t cope, how will the small farmer manage?”
A combined provincial Department of Agriculture and fruit industry task team has been set up to investigate the full impact of the crisis and seek solutions. But, in the meantime, farmers prepare to leave and put up hopeful “For Sale” signs. And thousands of farm workers are faced with the option of tenure on abandoned farms, or to move to slum settlements. Farm worker Tollie Gouws says: “Our expertise is apples – if they take this away from us, if farms go down the drain, we face a dark night.”