/ 17 February 2003

Maluti Fruit Co-op faces double-edged sword

Faced with fierce global competition from heavily subsidised farmers in Europe and elsewhere, Maluti Fruit Co- operative, one of South Africa’s largest new apple growers, says the South African government should assist the apple industry.

Based near Bethlehem in the Free State province, Maluti only grows the “new variety” of apples, including Royale Gala, Braeburn, Fuji, Pink Lady and Sundowner. The province is one of the country’s smaller apple-growers with only 450 hectares of orchards, compared to 14 000 hectares in the Western Cape.

Commenting on Monday, Maluti’s pack-house manager Kobus du Preez said that

while the governments of almost all first-world countries provide apple growers

with significant subsidies, local growers, who have to compete in a market driven by global prices, recieve no help from the South African government.

This situation was creating a great deal of pressure on margins.

“The fact that first world governments should actually stop providing farmers with subsidies was a big issue at the recent World Summit on Sustainable Development,” Du Preez observed. “It was suggested that first world governments were providing their farmers with an unfair advantage — to the detriment of struggling third world and emerging market countries.

“Third world countries just cannot compete in the global market when their first world competitors are actually been given a substantial boost through subsidies –including those covering production costs and even paying apple growers not to produce when there is a surplus.”

Du Preez said the first apple crops of this year are fetching the same prices they did a year ago, despite the fact that some foodstuffs rose by 25%, such as maize and meat. Meanwhile, during January and September last year, when the rand was hovering around the R9 and R10 mark to the dollar, local apple growers were confronted with much larger production costs in order to harvest the 2003 apples.

Yet despite these higher input costs, growers had received the same price for their apples. One of the reasons for this was that the price of apples was dictated by the global market, over which local growers had no influence.

While retailers did pay higher prices when there was a shortage of applies, as there is early in the year, when supply increases they quickly lowered their prices, and growers had to accept these prices.

“This is putting enormous pressure on margins,” he noted. “In addition,” said Du Preez, “now that the rand has strengthened we are not getting such good returns on our exports. So, right now, we are facing a double-edged sword.”

Meanwhile, he added, Maluti was also going to have to gain accreditation as a recognised exporter by the European watchdog body, Europe-GAP.

“Every grower wanting to export to the lucrative UK and European markets needs to obtain accreditation from this body. We are going through the process right now and the requirements are quite stringent. We are looking at an estimated cost of R100 000, just for us to obtain this accreditation,” said Du Preez.