Drought dashes SA's hopes of export bonanza

In an economy reeling from

the effects of the battered

rand, the country’s salvation

clearly lies in exports.

And with

the recent

drop in global

demand for

commodities,

largely as

a result

of China’s

slowing

economy,

growth in

perishable

exports and

manufactured goods is the

biggest opportunity for

South Africa, in the view of

Safmarine southern Africa

managing director, Dirk

Hoffmann.

“The refrigerated

export market continued

to see robust growth of

approximately 7% in 2015,” he

told FTW. “This is attributed

to strong crop output of

apples, pears, grapes and

citrus during the year, with

grapes showing the strongest

growth relative to a poor

2014, coupled with stronger

prices in

Europe.”

But the

drought and

excessive heat

have dashed

hopes of a

buoyant 2016.

“It’s not

clear what the

full impact

will be. We

have seen a

pretty good grape season

relative to last year. But that

was because we had frost

in the Orange River region

in 2014 which had a major

impact on the table grape

industry from a total output

perspective because the

grapes were a lot smaller.

“In South Africa a rule

of thumb is if you lose 1mm

on each grape it has a 10%

impact on the size of the total

crop. We can already see in

the Western Cape where the

pear and apple harvest is

starting that the fruit size is

now smaller,” he said.

“The Eastern Cape is not as

badly impacted so maybe we

will still get some good news.

“Citrus grows across the

country so as an industry the

distribution of production

is quite hedged. There are

however reports of a smaller

crop with smaller fruit which

means markets that prefer

larger fruit will be impacted.”

In terms of the automotive

industry, he said that the

export vehicle market was

currently stable.

But as

consumer spend is expected

to be lower in 2016, it is

predicted this will negatively

impact vehicle demand in

South Africa.

“The industry will need

some form of relief, so the

R20-billion investment

into the sector, which was

announced in the national

budget speech, will assist

greatly in this regard.”

He sees the biggest

container growth opportunity

in the vehicle segment within

Africa as countries like

Nigeria purchase more

from South Africa.

INSERT & CAPTION

We have seen a

pretty good grape

season relative to last

year.

– Dirk Hoffmann