According to Roelf Pienaar, managing director of Tru-Cape Fruit Marketing, apples and pears had a challenging 2022 with slight signs of recovery in 2023. As we enter 2024, he unpacks why optimism surrounds the Far East and Middle East markets and much more.
Due to the Russian-Ukrainian War, inefficiencies in the port of Cape Town and high shipping costs, the 2022 season was very challenging, up to the point where one can call it a disaster. Infrastructure battled to keep up with the big crop and as a result, we had no choice other than selling products in saturated markets. This led to huge price pressure, particularly in Europe and the United Kingdom (UK).
Surviving bad weather and load shedding
The negative sentiment spilt over to 2023, especially when the devastating hail hit the Ceres region, impacting about 10-15% of Tru-Cape’s volume. Fortunately, growers were able to adapt and cut costs. A strong juice market helped to mitigate their losses. We were obliged to carefully consider what fruit we send to the market – especially Europe – and ensure that only the right count, grade and variety gets exported.
Load shedding posed another threat to the industry. During high levels of load shedding, we experienced some quality issues as the cold chain couldn’t be kept intact throughout. Producers have since incurred high costs to implement solar and alternative power sources to address these issues.
Much relief came this year as shipping costs normalised, the exchange rate turned in our favour and international product prices recovered. Competitors like New Zealand and Chile also had climatic setbacks, resulting in relatively empty European and UK markets. Our footprint in the Far East also grew and in general, we had a much better season than the previous one.
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Looking East
We are particularly excited about the growth and opportunities in the East. This was the third year since we gained market access for our pears in China and especially Forelle pears are faring very well.
Five years ago our business in the Far East centred around Malaysia and Singapore, but now also includes important and high-density markets such as Vietnam, China, Bangladesh, India and Indonesia.
There is a clear pattern of volume flowing from the traditional markets to these exciting markets, where red varieties such as Forelle and other blush pears as well as apples like Fuji, Royal Gala, Royal Beaut, Cripps Red and Joya are extremely popular.
The traditional markets will always remain important, especially for varieties such as Abate Fetel, Braeburn and Pink Lady’s. However, the diversification of our markets offers us exciting opportunities and producers keep this in mind when planning for new orchards.
We also look forward to gaining market access in Thailand and then the Philippines in the next few years. On the downside, we temporarily lost market access to Taiwan, which was an important market for Fuji apples. However, we remain positive that Taiwan will re-open for us shortly.”
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The year ahead
As we are moving into 2024, we are cautiously optimistic about what the year will bring. If one considers the flow of fruit and demand from the Far East and the Middle East, the markets seem favourable at this stage. Stock levels in Europe also appear to be under control. Although factors like geopolitics and the exchange rate can adjust reality, we currently expect the first six months of 2024 to be positive.
Although it is still early days, we anticipate a normal-sized crop. Early feedback from the EGVV area (which includes Elgin, Grabouw, Villiersdorp and Vyeboom) is that volume might be slightly down after two bumper crops. In Ceres, there was early frost damage on summer pears, but overall we expect to be back on track after last year’s hail damage.
We are nervous about the ongoing crisis in the port of Cape Town and expect some challenges as the fruit exporting season unfolds. We don’t see a real drive from Transnet to sort out the problems in the port, and can only reiterate that privatisation remains the only feasible solution over the long term. In the meantime, we have no choice other than trucking freight at great cost to Durban or Gqeberha to be shipped from there. It is the only solution while we are at Transnet’s mercy in the port of Cape Town.
The value of apples and pears
With regards to the economic outlook, local and international consumers remain under pressure due to the cost of living crisis. Disposable income is less and interest rates at record highs. However, people realise the value of healthy eating and apples and pears still offer good value relative to other fruit types.
We can only hope that costs come down and the exchange rate is in our favour. On the farm level, it remains a prerequisite for producers to improve their efficiencies in yields and pack-out percentages.
On the positive side, we remain bullish about the market potential in Sub-Saharan Africa. About 50% of our basket is sold in Africa. Tru-Cape, together with three other partners, recently launched Fruitbox Ltd., a state-of-the-art cold storage facility close to Nairobi. This enables us to harness the potential in the whole of East Africa and overcome problems with distribution in the continent. Our strategy remains to get more involved with the supply chain to ensure we deliver the best quality fruit possible to the market.
We also remain excited about the Flash Gala, with demand from India, Africa, the Middle East and the Far East on the rise. We expect volumes to double as orchards come into production or reach full bearing age. We will continue driving our effort to build the Flash Gala brand, especially in markets like Vietnam, India and China.
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