Fruit season gets off to a good start

UK supermarket wars a cause for concern
RAY SMUTS
MOST FRUIT varieties performed well during last season – good quality overall and sound markets – but nature intervened on the volume front and yielded some 300 000 tons less than the previous season’s crop. Some 1.8 million tonnes were eventually exported in the 2005-6 season (down from 2.1 million tonnes in 2004/5) for a total FOB value of around R6 billion. This year looks to be favourable. With the unprecedented quality (of the early grape sendings in particular), strong markets and a weaker rand, the foreign exchange income could be in the order of R7.5 billion, according to Stuart Symington, CEO of the Fresh Produce Exporters’ Forum. “It is an established fact that commodity prices are very dependent on our exchange rate. But as long as exporters do not yield to buyers’ demands of price reductions in the face of a depreciating currency, everyone wins,” says Symington. He believes the season has got off to a great start with the stone fruit and table grape products. However, seasoned operators in this industry will know how quickly this can turn. Unfavourable weather conditions, a volatile currency and unruly competitor behaviour by other countries in our traditional markets can quickly change the situation. The recent frost in the United States is an example where the misfortunes of the Americans could well mean the fortunes of the South Africans in global citrus markets. At this stage, the South African table grape industry is looking to be a star performer (if prices remain buoyant), and with official access to Mainland China in the wings, there is reason for that camp to be bullish about the future. “Always a worrying factor,” says Symington, “is the UK supermarket wars where the big four multiples are constantly seeking market share at the expense of their suppliers. While there is another UK Competition Commission investigation in progress looking at the relationship between UK supermarkets and their suppliers, retailer tactics continue to take their toll. This includes price pressures on suppliers to afford certain retailers the opportunity of selling the product at or below cost price. Everyone loses in this scenario except the consumer who wins under false pretences.”