Declining profits raise alarm bells for SA fruit exporters

Declining profits for exported SA produce has prompted a debate on prices. Some exporters feel SA product is undervalued on the world market, while others say SA fruits and vegetables cannot compete due to unfair foreign competition. The Citrus Growers’ Association says its members are reporting losses between R10 and R15 per carton of fruit exported in 2009, totalling between R800m and R1.2bn in total losses for the industry this year. In a memo to growers, CGA CEO Justin Chadwick posed the obvious question: “Why are we exporting our products at a loss? Every year we are so happy that we have sold these huge volumes of citrus – 80 to 90 million cartons – but at what cost? What is the sense of selling that amount and ending up with a loss?” Suggesting the answer may lie in marketing, Chadwick said the issue was not the quality of SA product, which is good, but pricing that did not cover production cost or allow for profit. “The problem is this – if the final price paid by the consumer is insufficient to cover all costs in the chain, then either the price must be increased or the product must not be put in the chain in the first place. It seems that we continue to supply into the market even though this final price is insufficient – sending a signal to the buyer that the price is sufficient,” he said. Higher prices are not the answer if competitors keep theirs’ artificially low, some exporters learned this year. Jeffrey Zetler of Cape Fresh and Frozen Producers’ Association said his transport needs for frozen product had dropped more than threequarters due to business lost to overseas competition. “I used to sell 2000 tonnes of frozen produce a year. Now I am down to about 400 tonnes a year. I cannot compete with the Chinese – their strawberries in particular. They are flooding the market with product and (their product) is dirt cheap.” Zetler faults government for not applying duties on imported Chinese produce.