Fruit export major pins its hopes on a weaker rand

Now is not the time for foolhardiness as the South African fruit export sector wrestles to come to grips with the extremes of global recession, a reality of which Nico van Staden is all too keenly aware. The group marketing director of Colors Fruit, tasked specifically with the export market, he recalls, perhaps with a twinge of nostalgia, the industry’s glowing successes of 2008, a scenario now as worrisome as an irregular cardiogram. Colors is the third ranked, behind Capespan and Dole SA, having catapulted to prominence after deregulation of the industry in 1997. Last year, the Paarl-headquartered company exported 15 million cartons. But Van Staden expects a decline of perhaps 3% this year. “We started the New Year with a favourable exchange rate, the rand at R10.50 or R10.70/$, but that did not last for long and things have become a lot tougher, given that we all trade in pound, euro or dollar currencies, so it’s a big negative for the export market.” Van Staden says whereas 2008 was a harvest year for speculators, this is certainly not the climate for such pursuits – rather a time for belt-tightening and staying focused. What has stood Colors in good stead, unlike some other exporters, is that it has long followed a successful preprogrammed “recipe” of addressing the needs of global retailers, rather than the wholesale trade. Its long-standing client base includes the French group and world’s second biggest retailer, Carrefour, Migros in Switzerland, Loblaws in Canada and all the UK heavyweights – Morrisons, Marks and Spencer, Tesco, Sainsbury’s and Asda. Around 50% of Colors’ exports go to the UK and continental Europe, the Far East and Middle East, each accounting for 15%, Africa for 5% (via wholesalers) and the remainder to various other markets. Van Staden says the country’s fruit exports are down due not only to the global economic malaise but a smaller crop, mainly in citrus and grapes, although apples and pears appear more stable. As to the future, he pins his – and indeed the industry’s hopes – on a weaker rand, even though the substantially reduced price of oil around $150 a barrel to the current $60-$70, has helped somewhat. Reefer capacity remains a problem on the South Africa-North Europe trade, given that up to 70% of the country’s fruit is shipped to the UK and continental Europe, but availability is more fluid on other trades.