This week’s announcement that the South African citrus industry is heading for another record export year brought home the challenges that the fresh produce export business will have to deal with in the immediate future.
Most of the major South African fruit export categories are in an era of growth – apples, pears, avocados, table grapes and citrus fruit. They will need excess to all the world’s markets and sound logistical and marketing initiatives to take the fruits they are growing on the farm to the markets.
Let’s face it, the South African economy can use all the help it can get. It has been devastated by Covid-19 and other man-made disasters such as corruption and mismanagement. We should note that during the past year the South African fresh produce exporters delivered a great performance. Despite the disruption of Covid-19, they continued to export record volumes and returned valuable foreign exchange to the country. This is one of the major reasons why agriculture was the only part of the South African economy which delivered growth.
These moneys are spent here – in our own country! Growers may have bought the odd new luxury car or bought a new beach cottage – to use once Covid-19 is gone. But most of it have been re-invested and planting of new orchards. This will help to employ more people. Remember, South Africa’s unemployment rate is above 30% and is sky-rocketing.
Anyway – fruit growers, and most other South Africans, do not like paying taxes. At least planting new orchards create jobs and probably mean that these moneys are better spent by growers that would probably be the case if it ends up in the hands of the government.
It is a new season
But now we are into a new season – with new challenges. The major one is not of the fruit growers own making, but rather of developments in other parts of the world.
Fredo’s came across an article in the New York Times which alerted him to the fact that South Africans really have great challenges ahead of them
The New York Times report that off the coast of Los Angeles, more than two dozen container ships filled with exercise bikes, electronics and other highly sought imports have been idling for as long as two weeks.
“In Kansas City, farmers are struggling to ship soybeans to buyers in Asia. In China, furniture destined for North America piles up on factory floors.”
“Around the planet, the pandemic has disrupted trade to an extraordinary degree, driving up the cost of shipping goods and adding a fresh challenge to the global economic recovery. The virus has thrown off the choreography of moving cargo from one continent to another.”
“At the center of the storm,” says the New York Times, “is the shipping container, the workhorse of globalization.”
It reported that Americans stuck in their homes have set off a surge of orders from factories in China, much of it carried across the Pacific in containers — the metal boxes that move goods in towering stacks atop enormous vessels. “As households in the United States have filled bedrooms with office furniture and basements with treadmills, the demand for shipping has outstripped the availability of containers in Asia, yielding shortages there just as the boxes pile up at American ports.”
Effect on South Africa
Now, how does this affect the lives of the South African fresh produce export industries?
Well, these days a huge percentage of South African fruit is exported in containers – and we are told that there is suddenly a big shortage of them. In short the shipping companies are making so much money on the routes between the East and the Americas, that they employ increasing numbers of the vessels on those routes.
Although South Africans have always told the world – the East, the West and the North – that they are the best positioned to supply them with fresh fruit. Now it seems that this is perhaps not mattering so much – because the Covid-19 pandemic has changed how people operate and there are now different factors dominating the reasons for trade.
It is a fact! There is a world-wide shortage of containers. There is not enough immediate investments to change this. In order to get a fair share of the world’s containers to fill with our fruits, we need to bring those containers we ship from here full of fruit back to the country when they are empty. This is just not happening, because the rates we pay to the shipping lines do not give them an incentive to drop the empty containers here.
When you expand your production and the system you use to ship your expanded production to the world’s markets, fails you, there is a problem.
Fredo will touch on this subject more in future because there are so many different angles to it that should be discussed.