Confederation of South African Workers Union
A Study on the Power Relations in the Fruit
Supply Chain
Piet du Plooy
October 2012
Contact Details:
1. Physical Address
814 Church Street
012 342 1672
Eastwood
Pretoria
0086
2. Postal address
Private Bag 877
Pretoria
0001
3. Electronic contacts
Website: www.consawu.co.za
E-mail: piet@consawu.co.za
4. Telephonic Contact
012 342 1672
5. Facsimile
086 672 4354
Organization registration No.
Reg. No.: LR2/6/4/22
1
CONFEDERATION OF
SOUTH AFRICAN WORKERS' UNIONS
TABLE OF CONTENTS
Pages
Chapter 1: Introduction……………………………………………………………….3
Chapter 2: Context/Justification…………………………………………………….4
Chapter 3: Research Questions……………………………………………………..5
Chapter 4: Methodology………………………………………………………………6
Chapter 5: Description of key stakeholders – companies………………….…..7
Chapter 6: Results and Analysis……………………………………………………20
Chapter 7: Conclusions/Recommendations……………………………………...21
Chapter 8: Bibliography……………………………………………………………….24
2
CHAPTER 1
INTRODUCTION
This research presents a power analysis of the supply chain of table grape in South Africa, the
objective is to gain an insight into where the power resides that is shaping the sustainability situation of
the fruit supply chain in South Africa. In doing so a power analysis study of the table grape supply chain
has been undertaken, in which the key stakeholders, the power they exert in decisions along the chain,
the origin and consequences of that power has been identified and analysed. This analysis will
contribute to the advocacy strategy CONSAWU has been developing in order to address the problems /
challenges encountered in the fruit sector in previous studies and that promote sustainability and
justice.
Information for the research was provided by literature research and information gathered through
interviews, much of the literature used like the MPhil Dissertation “Staying Ahead of the Global Pack
“by Stuart Symington (February 2008), were provided by the people interviewed, for use by the writer.
The participation in the Sustainability Initiative of South Africa (SIZA) is the result of the advocacy
strategy CONSAWU has developed in order to seek solutions to the problems/challenges that might
exist in the fruit producing sector of South African agricultural industry, as highlighted in previous
studies. The Fruit South Africa (FSA) ethical trade programme was established as a proactive response
by the industry to promote ongoing improvement of labour practices on South African fruit farms and
pack houses. It is an holistic programme that identifies problems that may exist, usually by way of an
audit process, and responds with appropriate support and interventions including awareness-raising
around the law and its application, and relevant capacity-building and support programmes. The
industry aims to harmonise ethical requirements through adoption of the Global Social Compliance
Programme reference tools. These tools provide a common interpretation of labour and social
requirements and their implementation and will enable mutual recognition between existing systems.
The fundamental principles for creating fair labour conditions on farms are contained in our labour laws.
The introduction of private sector Ethical Code principles merely seeks to reinforce them.
Whilst the implementation of the SIZA programme is an ongoing exercise, the need was identified to
gain an understanding of the context within which SIZA function, to understand the power dynamics
along the value chain, a study of the largest and arguably the best organized sub-sector of the South
African Agriculture grapes seems the most appropriate sector.
The outline of this paper is structured as follows:
Chapter 2 will look at the Context it will address;
1. Reason for the Study
2. General description of the market structure, looking at:
a. Market size
b. Market structure
i. Producers large
ii. Producers small
(Number of farms (estimate)
iii. Number and size of exporters
iv. Processors
Number of companies
3
v. Retailers
3. Historical overview of developments in the market
a. Is the market consolidated
b. Are the stakeholders evolving
c. Are there any major changes foreseen in the near future with respect to the
structure
d. Any government rules and regulations that influence the supply chain
Chapter 3: Will look at the Research questions;
The question that this research seeks to answer to be explained in this section
Chapter 4: Will deal with the methodology
Chapter 5: Will give a description of key stakeholders
Chapter 6: Is the Results and Analysis
Chapter 7: Is the Conclusions
Chapter 8: Has the resources listed
CHAPTER 2
CONTEXT
Deciduous fruit is the largest sub-sector of South African Agriculture, when measured in hectares
planted. There are about 76,425 hectares of deciduous fruit trees in South Africa, as reported in 2011
HORTGRO1 Tree Census. Of the deciduous fruit grown, about 32% are grapes (fresh and dried), 29
present are apples, 15% for pears, with the remainder going to stone fruits and other deciduous fruits.
(USDA Foreign Agricultural Service GAIN Report 5/15/2012)
The 2011 industry tree census, indicate that there were about 13,462 ha planted to table grapes in
South Africa. There are currently about 382 table grapes producers in South Africa. (USDA Foreign
Agricultural Service GAIN Report 5/15/2012).
Table Grapes are grown in Western Cape, Northern Cape and Northern Province. The Orange River
valley in Northern Cape is the largest production area at 4,501 ha. It is leading the Hex river valley in
the Western Cape, with an area of 3,956 ha, the Berg river valley at 3,288 ha, and Olifants River at 720
ha. The Northern Province accounts for 980 ha of table grapes. South Africa is ranked as the second
largest producer of table grapes and is the fourth largest exporter in the Southern Hemisphere.
South Africa has the longest supply season starting from late October until May. Harvest starts in week
43 in the Northern Cape region, followed the Orange River region, and the first grape crop is supplied
to markets by November. The Hex river valley region is the last region for table grapes intakes.
Western Cape Province exported table grapes worth over R3 billion during 2010. South Africa’s total
exports of table grapes during the same period amounted to R3.7 billion. This clearly shows the
1
HORTGRO, the horticulture knowledge group, is an umbrella communications platform for a number of
horticulture sectors. It co-ordinates many activities to ensure unity with focus on the markets (demand), production
(supply) and a range of cross-cutting industry functions, such as land reform, training and communications.
4
dominant role of the Western Cape when compared with other provinces in terms of exports of table
grapes. (Department Agriculture, Forestry and Fisheries Republic of SA)
The total number of table grape producers during the period 2008 to 2010 has declined from 543 in
2008 to 416 in 2010, a decline of 31%. The greatest declines happened in the Hex River (56%),
Northern Province (61%) and the Berg River (27%). The number of producers in the Olifants River
increased from 26 in 2008 to 33 in 2010 while the number in the Orange River did not change during
the same period. Given the fact that area under production and production volumes increased between
2008 and 2010 (area under table grape production increased from 14 010 ha in 2008 to 14 660 ha in
2010 and production volume increased from 258 773 tons in 2008 to 277 294 tons in 2010), the decline
in the number of producers can be partly explained by increased farm sizes as smaller farms are
increasingly being absorbed by larger farmers in pursuit of economies of scale. This will eventually lead
to more concentration in terms of the primary production of table grapes. (a profile of the South African
table grape market value chain 2011)
Table 1
Region Name
Berg River
Hex River
Northern Provinces
Olifants River
Orange River
Total
NUMBER OF TABLE GRAPE PRODUCERS
2009
2010
118
99
133
128
76
57
30
33
109
99
466
416
2011
94
107
52
26
103
382
CHAPTER 3
RESEARCH QUESTIONS
Fruit growers in South Africa are facing a combination of commercial pressures. There is increasing
integration and transformation of the global value chain through which they export, especially to UK
supermarkets. Consumer trends are changing, and there is a constant demand for new cultivars, linked
to increasing quality standards (technical, environmental and ethical) in the production of fruit.
Simultaneously, producers are facing an increasingly competitive market, especially from other
competitors such as Chile in which there is a downward pressure on prices. Producers now have to
comply with a range of labour legislation that has been enacted since 1993, aimed at improving the
employment conditions of farm workers. Finally, deregulation of the sector within South Africa has
increased the vulnerability of growers to external commercial risks, and increased the competition
between them to access the more lucrative northern markets. South African growers are thus caught in
a 'pincer movement' between rising quality and standards demanded by supermarkets, changing
employment legislation, increased competition and declining real prices on the international market.
All these factors have led to a 'shake up' in the industry, adaptation to global markets combined with
the changing legislative and commercial environment has led to a change in the employment strategies
5
of many growers. (Stephanie Barrientos, Andrienetta Kritzinger, Gerald Muller Hester Rossouw, Paola Termine,
Norma Tregurtha and Nick Vink 2002)
CONSAWU participate in a process that has resulted in the establishment of a South African-based
ethical trade programme, which includes a SA ethical standard (aligned to South Africa labour laws)
and auditing process that is based on global best practice and local law, and that is recognised by all
retailers. The programme is due to be registered as a non-profit legal entity called the ‘Sustainability
Initiative of South Africa” (SIZA) This body will oversee the programme and function as the custodian of
the Standard.
While third party auditing is seen as an important tool to measure compliance against the law, the
broader aim of the SIZA programme is to drive continuous improvement of labour conditions on farms,
focusing on short, medium and long term interventions in order to achieve this.
The SIZA programme whilst envisaged to go a long way to ensure fair and ethical labour standards
cannot operate in a vacuum, it is acknowledge that an understanding of the power dynamics along the
value chain will empower CONSAWU to better inform decisions and actions for instance does other
participants in the value chain not have the power to render interventions and initiatives introduced by
SIZA obsolete, or ineffective. Who exercise what power over the supply chain and can the SIZA model
withstand power influence by parties that does not seek the same objectives as SIZA?
.
CHAPTER: 4
METHODOLOGY
This study was done by tapping into the knowledge of local executives either through interviews, emails
or telephone. Special thanks needs to be extended to Stuart Symington from Stuart Symington Fresh
Produce Export Forum (FPEF). Who allowed the writer to make use of his MPhil Dissertation, but also
Phil Bowes from the South African Table Grape Industry (SATGI).Anton Kruger from FPEF Joe Gondo
President of National African Farmers Union, Colleen Chennells from Fruit SA and Mike Wilson
General Manager - SAI Global, all either gave of their time as well as relevant documentation to be
studied and used.
The methodology followed was to:
1. Do some general reading up of the different products of the deciduous fruit industry
2. Select a particular subject of interest and commodity to study and table grapes were chosen
3. Formulated a broad research question just to give some direction to the study material sought
4. Through internet research and discussions with contacts in the industry identified key role
players who would be able to supply the answers the writer of this report were looking for.
5. Made contact with the identified people and arrange interviews, or in some cases just present
them with some questions, in all cases made sure that the writer were first introduced to the
person being questioned to facilitate easier communication.
6. With the terms of reference of the cooperation of Fairfood international and CONSAWU as a
reference and guide formulate some research questions and a research outline
7. Collate all information and started reading up in pursuance of the general research outline.
8. Wrote the report, tried to follow some chronological order.
6
CHAPTER 5
KEY STAKEHOLDERS
Producer and associated organizations
Grower participation and control of their interests in the industry are structured by means of fruit type
producer associations (Section 21 companies),
The main association responsible for the table grape industry is the South African Table Grape Industry
(SATGI).
Another important entity in the table grape or deciduous industry in general is the South African Plant
Improvement Organisation (SAPO). SAPO is a specialist plant improvement organisation owned by
deciduous fruit growers, Cape Pomological Association (CPA), and Dried Fruit Technical Services
(DTD). It is responsible for the production of certifiable propagation plant material and for phytosanitary
and genetic upgrading (improvement) of deciduous fruit plant material. This includes virus elimination
and testing, establishment and maintenance of nucleus, foundation and mother blocks, as well as the
selection of propagation material and trueness to variety controls. SAPO is the main supplier of such
propagation plant material to deciduous fruit nurseries and in the region of 14 million propagation units
are distributed to nurseries annually. (a profile of the South African table grape market value chain 2011)
Grape production in South Africa is primarily aimed at the export market. The local market is not
substantial. According to Phil Bowes Transformation Manager of SATGI2 95% of South African table
grape production is exported. The volume of table grapes available in the local and export markets is
determined by the amount of table grapes produced in a particular season. More than two-thirds of the
grapes harvested each season are destined for the export market while the remainder is sold in the
local markets.
Current Industry Structures
The current industry structures pertaining to the producer and exporter bodies of the entire South
African fresh fruit export industry are illustrated in Diagram 1.1 below. Most industry associations are
Section 21 companies, which in South African law carry a non-profit status, and are exempt from
paying income tax. Depending on the organization, working capital is raised either by statutory levies or
through voluntary membership fees agreed upon by the members of the organization concerned.
2
South African Table Grape Industry Partnership
7
Diagram 1.1 Organogram of the Whole South African Fruit Industry
FRUIT SA
Subtrops
R170
Avocado
R0
Mango
Deciduous
Citrus
R0
R50
R30
R65
R21.30
Litchi
Grapes
Apple
Pear
Stone
All
SATI
R0.80
FPEF
Grape
Exporters
Apple & Pear
Exporters
Stone fruit
Exporters
Citrus
Exporters
Symington (2006a)
Fruit South Africa
Fruit South Africa (FSA), the umbrella organization for the whole industry, was registered in 2001, and
has since accrued four shareholders: the Deciduous Fruit Producers’ Trust (DFPT) that represents all
grape,3 apple, pear and stone fruit producers via a statutory arrangement;4 the Citrus Growers’
Association (CGA) which represents all orange, lemon, grapefruit and easy peeler producers on a
statutory basis; the Subtropical Association (Subtrops) which represents most of the avocado, mango,
litchi and (recently included) macadamia nut growers on a voluntary basis; and the Fresh Produce
Exporters’ Forum (FPEF) which represents most of the marketing agents and some of the growerexporters of all fruit kinds on a voluntary basis. Fruit South Africa, with strong support from the
Department of Trade and Industry, originally focused its efforts in five areas of generic interest among
the fruit kinds, namely market access, market development, transformation, logistics and information
(FSA, 2004). However, with executive capacity never having been appointed within Fruit South Africa,
the Chief Executive Officers of the individual shareholders have been left to manage the five generic
3
In December 2006, the grapes division (i.e. the South African Table Grapes Producers’ Association (SAT)) withdrew from the
Deciduous Fruit Producers’ Trust (DFPT) (DFPT, 2006a). This is the reason for the dotted line in Diagram 1.1 from the deciduous
sector to the grape sub-sector.
4
The numbers in red in Diagram 1.1 are the annual pallet fees (in rands) - for exported fruits only - levied on each organization’s
member. The grape producers raise R50/pallet on a statutory basis, while the grape exporters raise R0.80/pallet on a voluntary
basis.
8
portfolios within their own organizations. The FPEF manages the secretariat for Fruit South Africa, and
uses the trademark at selected international marketing initiatives, most notably at trade fairs in
overseas markets. (Symington (2006a)
Up until late 1997, the entire affairs of the deciduous fruit industry had been managed via a single desk
at the offices of Unifruco.5 Immediately after deregulation, the DFPT was established to manage the
affairs of all deciduous producers6 to ensure that many of the functions of the former government agent
(Unifruco) were not lost to the industry. After a financially disastrous season in 1999/2000, the table
grape producers also formed regional associations7 to organize themselves, particularly in retaliation to
the opportunistic marketing agents that were prolifically registering export companies in the wake of
deregulation.
It quickly became apparent that the industry urgently required self-discipline and coordination amongst
its marketing agents. The FPEF was therefore established (originally by the DFPT) to visibly accredit
reputable exporting companies and to foster ‘co-opetition’ - a healthy mix of cooperation and
competition - amongst them. Although the FPEF was registered as a company in 1998, it only
employed executive capacity during 2001, arguably a little later than the producers would have liked.
The FPEF is currently a consortium of about 70 accredited South African export companies (out of a
registered 386 companies with the PPECB)8 that collectively export more than 70% of all fresh fruits out
of South Africa (Fairweather, 2004). Table 2 gives a breakdown of industry and FPEF member volumes
for all fruit kinds exported in the 2005/6 season.9
Table 2
Industry Versus FPEF Member Export Volumes (in metric tons) (2005/6 season)
Product Group
Industry Total
% of Total
FPEF Vol.
Industry
Avocados
Citrus Fruits
Grapes
% of Product
Group
35 270
1,9
6 202
17,6
1 061 449
57,6
790 797
74,5
331 426
17,9
257 183
77,6
5
Unifruco was the government appointed agency of the Deciduous Fruit Board in the regulated era, and was responsible for all
deciduous fruit matters – local and export. Outspan was the equivalent agency for the Citrus Board.
6
The DFPT had three major producer shareholders: the South African Table Grape producers (SAT); the South African Apple and
Pear Producers’ Association (SAAPPA); and the South African Stone Fruit Producers’ Association (SASPA).
7
The BTA (Berg River Table Grape Association), HTA (the Hex River Table Grape Association), ORPA (the Orange River
Producers’ Association) and the NTA (the Northern Province Table Grape Producers’ Association) were the regional associations,
which still exist today.
8
The Perishable Products Export Control Board (PPECB) is an assignee of the Department of Agriculture assigned to evaluate the
quality of export fruit according to regulated standards. All companies wishing to export fruit from South Africa are required by law to
be registered with the PPECB.
9
The South African fruit calendar year officially starts on the 1st October of one year and ends on 30th September of the following
year.
9
Litchis
1 545
0,1
906
58,6
Mangoes
2 555
0,1
821
32,1
Pome Fruits
372 041
20,1
240 005
64,5
Stone Fruits
42 604
2,3
36 515
85,7
Grand Total
1 846 890
100
1 332 429
72,1
Source: Symington (2006a)
Retailers
Grape production in South Africa is primarily aimed at the export market, about 85% of South Africa’s
table grape shipments have landed in the EU market since deregulation - 25% to the UK, and 60% to
the European Mainland. Both the UK and the European Mainland markets are inextricably linked due to
their geographical proximity and the effects that the two markets have on each other. The UK market is
a single country market where almost entirely seedless grape product is sold to consumers on the High
Street. The retail sector has evolved into a decidedly structured, sophisticated and concentrated sector.
Growth available to the supermarkets is sought by resorting to: (1) cannibalizing each other’s market
share through mergers and acquisitions; (2) stealing each other’s market share through below-cost
selling; and (3) expanding into new territory by internationalizing their businesses. Supply volumes to
the UK market are essentially controlled by these supermarkets, and so the laws of supply and demand
do not operate as fluently as a free-market system would suppose.
On the other hand, the European mainland is a conglomeration of many countries and is therefore
considered a heterogeneous market where the product is sold through a maze of traders, wholesale
markets and a variety of retail formats. The market is more consumer-driven where the laws of supply
and demand are far more prevalent than in the UK.
Although the South African market for grapes is not substantial, it is dominated by big retail companies;
market share of the big retailer’s market share of these retailers is illustrated by table 3 below
Table 3
Retailer
Grocery sales 2011
USDm
Shoprite
Holdings
8,390
Pick n Pay
5,684
SPAR
International
4,897
1,798
Woolworths
Holdings
Fruit & Veg City 427
Holdings
% Change in grocery sales 10-11
IGD grocery retail
market share 2011
USD
9.6%
ZAR
7.0%
20%
8.7%
19.9%
6.2%
17.2%
13.5%
11.7%
8.4%
5.1%
4.3%
15.7%
13.1%
1.0%
10
Note: excludes Cash & Carry and Members Club operations
Source IGD Retail Analysis April 2012
Exporter
The core business of exporters is to market and sell the fruit of primary producers at the best market
price that they are able to negotiate. In order to realize this, the exporter needs to communicate with
many of the role players in the logistics chain (cold stores, transporters, shipping lines, port terminals,
clearing and forwarding agents, PPECB, regional producers associations and special market
inspectors, etc). It is the exporters’ responsibility to manage the cold chain, handle the fruit in an
acceptable manner and, they are accountable for the quality of fruit that reaches the destination
market.
The main organisation that handles the export of fruits in South Africa is the Fresh Produce Exporters’
Forum (FPEF). The FPEF was registered in 1998 as a non-profit organisation and its membership is
voluntary, members consist of pure marketing agents, agents who have bought farms, producerexporters, pack houses and service providers The FPEF’s mission is to create, within free market
principles and a deregulated environment, a prosperous but disciplined fruit export sector. It was
established mainly to provide leadership and services to its members and the international buying
community. The forum sees itself as the international community’s gateway to providing South Africa’s
finest quality produce from highly reputable South African exporters.
The Exporter Fraternity in Deregulation
Prior to 1994, all fresh table grapes exported from South Africa were marketed through Unifruco, the
sole agent of the Deciduous Fruit Board.10 Between 1994 and 1997, the Deciduous Fruit Board started
to relax the single desk approach (in anticipation of deregulation) by issuing a limited number of export
licenses. These licenses carried quotas that allowed a select few companies to operate alongside
Unifruco. However, in defiance of the government’s modus operandi of gradual and selective
relaxation, other grape exporting companies began to operate ‘illegally’, some of which used the
Namibian, Angolan and Zambian loopholes as their springboard for exports to the UK and other
markets. Therefore, by the time deregulation was officially introduced in October 1997, Unifruco’s table
grape export sales only accounted for about 66% of the country’s export volumes.
‘Exporters’ is a generic term given to those companies that sell their own product, or that of other
suppliers,11 offshore. The business models of these various export companies is based generally on
the size of the business involved and the type of business being conducted. In theory, producers can
select their exporters according to their own particular needs and according to the advantages being
offered by the particular exporter’s business model. In practice however, not all producers enjoy this
freedom of choice. Due to debt repayments and contractual commitments, many producers have found
themselves obligated to certain exporters for protracted periods of time.
10
The Deciduous Fruit Board (DBF), a state controlled monopolistic institution, was given executive powers in terms of the
Marketing Act that created a single export channel for all deciduous fruits exported from South Africa.
11 Suppliers are not restricted to producers. Some exporters also supply product to other exporters .
11
Exporters generally make use of two types of competitive tools to procure product from growers:
minimum guaranteed prices (MGPs), and advance payments in the form of loans and disbursements.
These financial instruments have ethical and legal implications that complicate the business and give
the exporters an array of opportunities to compete for product.
Contracting with a Minimum Guaranteed Price (MGP)
In managing his risk, an exporter needs to decide whether or not it is feasible to give a producer a
minimum guaranteed price in order to secure his product. Where an exporter willingly offers a producer
an MGP for his product that he is confident that he can sell at a particular price, and for which he is
prepared to take that risk, then that MGP becomes a natural element of a consignment deal in a freemarket system.
All MGPs are essentially conditional to the producer satisfying a number of requirements in full, namely
delivering the agreed quality specifications, in the designated weeks and at the specified volumes. Only
part delivery thereof usually renders an MGP null and void, making it a brittle financial instrument.
Contracting by advancing Monies
Commercial banks have traditionally loaned monies to the producers based only on their fixed assets,
namely the value of their land. But the value of the vineyard (and its future harvests) can exceed the
value of the land; Exporters have capitalized on this by securing their advance payments to producers
by taking out various forms of security on their producers’ moveable assets, most notably their
harvests. Whilst the financing of producers by exporters may be controversial (in that producers land up
being financially beholden for years on end to non-financial institutions like export companies), it is an
economic reality - or market force - and a means by which many a producer has lived to fight another
season, money given to a producer in advance of fruit being delivered is categorized as a loan. Such a
loan always carries a procurement hook. For as long as farmers insist on their businesses being funded
up front by their exporters, so exporters insist that the fruit is guaranteed to them in return for the
funding. Those exporters who have a strong cash flow are well positioned to finance needy producers,
and can therefore compete very favorably for product.
Four types of exporters currently operate in the SA grape export milieu. They are:
(1) Marketing agents;
(2) Producer-exporter companies;
(3) Trading companies;12 and
(4) Brokers (or facilitators).13
There were 161 registered grape-export companies in South Africa over the 2006/7 season (PPECB,
2007). Table 4 following; list only the accredited members of the FPEF.
12
A trading company is one that buys the produce at a fixed price from the supplier at some designated point in the trade chain,
and then sells it into offshore markets entirely for its own account.
13 A broker is an individual (sole trader) or company that puts the buyer and seller together through relationship marketing. The
broker takes no risk in the transaction, provides no trade chain services, and charges a brokerage fee usually based on rands per
carton.
12
The Grape Exporters Forum (GEF) members - which form a sub-chapter of the FPEF - exported 93%
of all South African table grape products during the 2003/4 season. By the close of the 2006/7 season,
these same FPEF members had exported 71% of the crop. This drop of 22% over the last four seasons
is indicative of the major producer-exporter companies entering the export arena, many of which
emanated from the Capespan Grapes Trust after it was dissolved in early 2005. 14 It is unclear as to
why some of the major producer-exporters have not joined the FPEF. Most, if not all of these producers
doing their own exporting is, in fact, marketing agents, since they export product on behalf of their
fellow producers as well. The most common reason given for these producer-exporters not joining the
FPEF is because they would have to pay membership fees to the FPEF in addition to the statutory
levies that they are already obligated to pay to their producer association.
Table 4 FPEF- Accredited Grape Exporting Companies
(2003/4 season to 2006/7 season)
Exporter
AFRIFRESH / SUNPRIDE
CAPESPAN
COLORS
DELECTA
DOLE
EXSA
FEDFA
FRESHWORLD
FRUITS UNLIMITED
GREEN MARKETING
IN SEASON
INTERTRADING
KATOPE
LE ROUX
OCEANIC
OREX
SAFPRO
SAFE
SOUTHERN FARMS
SOUTHERN FRUIT GROWERS
SUNPRIX
THE GRAPE COMPANY
UNIFRUTTI
VAN DER LANS
VANGUARD
XL INTERNATIONAL
OTHER
2003/4 2004/5 2005/6 2006/7
2006/7
Pallets (’000)
%
Volume
15
69
14
4
21
25
1
2
12
9
0
2
5
7
0
0
2
8
0
2
0
16
0
0
0
0
8
20
62
20
7
26
25
1
2
10
8
0
1
4
8
1
1
2
9
3
2
2
21
1
1
1
1
7
21
59
21
8
22
30
2
3
14
10
1
2
3
8
1
3
2
9
1
4
1
25
1
1
2
1
6
20
54
23
10
23
13
1
2
7
7
1
1
4
8
1
2
3
8
1
6
1
25
2
1
2
1
5
6
17
7
3
7
4
0
1
2
2
0
0
1
2
0
1
1
2
0
2
0
8
1
0
1
0
3
14
The two most prominent producers that have exported their own volumes in the last two seasons are New Vision Fruit and
Riverfruit, both formerly members of the Capespan Grapes Trust.
13
239
222
93
Industry Total Volume (Pallets)
GEF Total Volume (Pallets)
GEF % of Industry Exports
295
246
83
331
261
79
327
232
71
100
71
Source: Grape Exporters’ Forum (GEF, 2007) and PPECB (2007)
De-concentration of the Table Grape Export Sector
By the end of the first officially deregulated grape export season in 1997/8, Unifruco had retained 66%
of its volumes and had 51 exporter companies trading alongside it (see Table 5 on the following page).
The conservatism of the producers waned continually over the following ten years as the number of
exporters in the industry trebled from 52 in 1997/98 to 161 in the 2006/7. Despite the rise in the
industry’s export volumes from 136 000 mt in 1997/8 to 327 000 mt in 2006/7, Capespan (formerly
Unifruco) found its own export volumes from South Africa declining from 91 000 mt in 1997/8 to 54
000mt in 2006/7. This meant that by the 2006/7 season, Capespan’s volumes had declined to 17% of
the industry’s total export volumes, though it still remains the biggest single export company of grapes
out of South Africa.
Another look at Table 5 reveals the fact that since the start of deregulation, the top 20 exporters of table
grapes have never exported less than 80% of the product. In only two of the ten years of deregulation
was the amount of product exported by the top 20 exporters less than 85%. It is apparent then that the
long tail of small exporters – from about the 1999/2000 season onwards - has been unable to grow its
share of the business.
Table 5 Table Grape Export Statistics of the Deregulation Period
10-Year Period of Grape Seasons in Deregulation
97/98
98/99
99/00
00/01
01/02
02/03
03/04
04/05
05/6
06/07
136
172
167
175
198
210
239
295
331
327
52
103
131
144
165
158
154
127
156
161
3
5
7
11
10
8
14
27
25
34
91
98
71
82
72
58
68
62
59
54
Volume of SA
grape exports
(‘000 mt)
Total number of
exporters
Total number of
producerexporters
Export volume
14
(‘000 mt) of
Capespan and
66%
57%
42%
46%
36%
27%
28%
21%
18%
17%
97.5
91.4
87.7
87.0
81.7
85.3
85.4
85.0
86.2
81.8
its industry %
Export volume
share of top 20
exporters (%)
Source: PPECB (2007) and Capespan (2007)
Business Models of Exporting Companies
Marketing Agents
A marketing agent (or export agent) sells product overseas on behalf of his principal, the producer. He
adds value to the consignment deal in terms of his product knowledge, his ability to sell to the various
international markets, and his skills in coordinating the necessary logistics service providers to move
the product successfully through the chain. In return for this value-add, an agent charges his producer
a commission15 on sales.
Most South African table grape exporters at this stage of deregulation can be regarded as marketing
agents. They can be categorized into one of several types of agents depending on the size of the
companies, the functions that they perform, who owns the companies and where that ownership
resides. These export agent categories are not mutually exclusive in that aspects of their business
models will overlap with one another. They can be divided into: (1) Multinational companies; (2) South
African-owned and -based export agencies; (3) Foreign importing companies with branches in South
Africa; and (4) South African based producers who export their own product and a few of their fellow
producers’ crops. (Stuart Symington 2008)
The multinational companies like Dole, Capespan16 and Katope offer producers an array of
advantages that their competitors cannot easily match.
South African owned and based export agencies vary in size from one-man-bands through to
companies of 50 employees or more with turnovers17 of hundreds of millions of rands. These agents
15
Generally, marketing agents charge commissions quoted in CIF terms (6%) or in the equivalent FOB terms (9%). These
commissions are a (varying) percentage of the sales price of the product. This produces a sliding scale income for the exporter
where income is a function of the price and the volume sold. Other marketing agents charge the producer a fixed cost per carton to
export the grapes, regardless of the price achieved in the market for the fruit.
16
Capespan is somewhat of an anomaly being a South African company with a locally based Group corporate headquarters. The
group is producer-owned with 10% of its shares being owned by a foreign multi-national company (MNC). The control of its
marketing companies in other parts of the world varies from 50% in Europe (Capespan PLC) and the Far East (Metspan), to 100%
in the case of North America (Fisher-Cape) and Japan. The Middle East is handled as a Business Unit as part of the export
company. Unlike Dole and Katope, for example, Unifruco, Outspan and later Capespan all were - and still are - South African
grower-owned and therefore grower-controlled. So for convenience purposes only, Capespan will be categorized here as a
multinational company.
15
are essentially divided into two camps: larger agents18 and smaller agents.19 This division has generally
manifested as a result of how early the agents started their businesses after deregulation,20 where on
the product quality spectrum they decided to position their businesses, and what their philosophies
were on being volume driven. Marketing agents’ business models are tailored to meet their own
objectives as well as the needs of their producers.
Foreign importing companies with branches in South Africa like Vanguard (American-owned) and
Van Doorn (Dutch-owned) do not account for a large volume of grape product being exported from
South Africa. Their greatest appeal to producers is the relatively ‘direct deal’ that the South African
branch facilitates with the parent company offshore. The South African leg of the business simply
streamlines the movement of the product to the destination market, firstly by sourcing the right product,
and secondly by assisting with the South African logistical side of the chain. The sales proceeds are
paid directly by the overseas parent company into the producer’s account, thereby achieving a level of
transparency and directness desired by some producers
A single producer that exports his own and his fellow producers’ crops also constitute a relatively
small part of the South African export business. Because there is a natural empathy between
producers, one producer moving product on behalf of another producer is an endearing system.
Producers like Hoekstra Farms, Suiderland Plase and the more recently established River Fruits21 are
motivated to take other producers’ crops to achieve the necessary economies of scale and the
associated cost benefits with service providers. Combining neighbouring farm volumes also enables a
producer to access the more volume-orientated supermarket programmes. Retailers are tending to buy
more produce directly from the farms believing that they are making a saving of the agent’s commission
in doing so.
Exporting Companies
CAPESPAN, the Bellville-based fruit marketing and logistics company CAPESPAN vertically integrate
its business operations and already has 4 786 hectares of production on its own farms, Over 2 100 tons
of grapes are produced from 798 hectares
The DUTOIT GROUP (PTY) LTD is a family agri-business which was established in the Ceres region
in 1893. The Group produces packs and markets more than 15 million units of fruit and vegetables
annually in both the local and international market. It has extensive fruit and vegetable growing
divisions, cold storage and packing facilities in the Western and Southern Cape.
17
There is some debate as to the legitimacy of an agent declaring his principal’s proceeds as his own turnover. Agents do so to
show financial strength on their income statements and thereby secure loans more readily from financial institutions to fund the
export costs on behalf of their producers.
18
The bigger (non-MNC) marketing agents are companies like The Grape Company, Colors, Afrifresh, Sunpride, Green Marketing
and SAFE.
19
The smaller (non-MNC) marketing agents are companies like Delecta, Fedfa, Freshworld and WP Fresh.
20
The earlier the agency started the more of a chance it had to build substantial volumes over time. EXSA and The Grape
Company for example started their companies before the official deregulation date.
21 Riverfruit is an agency that was established by Gerhard de Kock, a producer of substantial volumes in the Hex River and
Namibia, and who formerly supplied Capespan through the Capespan Grapes Trust. Riverfruit procures table grapes from other
producers and sells them on an agency basis.
16
The Afrifresh Group is one of South Africa's top producers, with large Citrus and Grape production at
its strong base. A fully integrated business, its activities span farming, packaging, technical assurance,
quality control, marketing, exporting and logistics. Afrifresh exported 1 610 890 cartons of table grapes
in 2012 The Afrifresh Group owns a growing portfolio of high-yielding farms which, by 2011
encompassed nearly 6900 productive hectares across South Africa.
J F Le Roux Boerderye is situated in Northern Paarl and consists of two farms, Mooikelder and
Joubertsdal. These farms produce approximately 280 000 cartons (4,5kg) of export table grapes off 70
hectares. In addition there are 20 hectares of soft citrus varieties
The Colors Group was founded in 1997 by a number of prominent South African farming families.
Following the deregulation of the South African fruit sector, the Van Wyk and Carstens families set out
to market their fruit directly to retail customers in newly accessible markets, bringing the retailers closer
to the farm gate. 14 Years on and Colors, is the 2nd largest exporter of South African fruit in 2010.
Southern Fruit Trading ( Pty ) Ltd is a fresh fruit export company based in Cape Town, South Africa,
established as a joint venture in 2009 between Exporter and Grower Companies
Producer-Exporter Companies
A producer-exporter company can be described as one whose shareholders are the producers that
supply the majority of product for export.22 They could consist of a single producer marketing his own
product like the Le Roux Group or Karstens Boerdery,23 to a group of 40 producers or more marketing
their own product through their own export houses, like EXSA and Fruits Unlimited. The ideal number of
producers in the bigger ‘marketing co-operative’ type of export business model depends on the number
of cartons that need to be packed, the varieties available and the spread across the production regions
(to capitalize on all of the marketing windows available to South African product).
Transporter
Transporters perform a key link in the fresh fruit supply chain by facilitating the physical transfer of the
products between parties such as the producer, cold store and terminal operator. Transporters are
responsible for maintaining the cold chain during transit
Perishable Products Export Control Board (PPECB)
PPECB (Inspection Officer)
In terms of the PPECB Act (Act 9 of 1983) the PPECB is responsible for the “control of perishable
products intended for export from the Republic of South Africa”. This mainly involves the control of the
22
Interestingly, some of the marketing agents claim to be of the producer-exporter model because a minor percentage of their total
product sold is supplied by their own shareholders. Just because supplying producers sit as directors on the Boards of some of the
export agent companies, it does not qualify them for producer-exporter status. With the current trend of supermarkets wanting their
service providers (category managers) to buy direct from producers, it is simply a case of these marketing agents spin-doctoring the
overseas buyer into believing that the product can be acquired ‘as directly’ as through the genuine producer-exporter channel.
23
Karstens Boerdery, formerly a supplier from the Orange River to Capespan through the Capespan Grapes Trust, now markets its
own product through its marketing company New Vision Exports. Karstens Boerdery has also purchased or leased production units
in other grape-producing countries. This enables Karstens Boerdery to supply supermarkets with grape product outside of South
Africa’s traditional marketing windows - a model that starts to resemble that of a ‘multinational producer-exporter’.
17
cold chain (including the shipping process). PPECB also acts as a government “assignee” in terms of
the APS (Agricultural Products Standards) Act (Act 119 of 1990) and is responsible for the “control over
sale and export of agricultural and related products”. PPECB controls (and certifies) that the quality
standards of these products are met. The National Department of Agriculture, Forestry and Fisheries
(DAFF) issues the phytosanitary certificates.
All PPECB and other inspection regulations, protocols or requirements must be met and adhered to.
Port and terminal operators
Terminal operators must inform exporters, PPECB and other relevant parties in the supply chain such
as transporters, producer associations, producers and cold stores about port related delays such as
labour strikes, wind delays, plug-in congestion and other traffic congestion in the port that will impact on
the flow of fresh produce into and out of the harbour. The South African Port Operations (SAPO)
container terminal reports to shipping lines.
(a profile of the South African table grape market value chain 2011)
Shipping Lines
South African table grape exporters are witnessing a dramatic revolution in the shipping side of their
business. The container liner sector has shown unprecedented growth
The expansion of the global container shipping industry is a result of intense, intercontainer liner
competition, stemming from the industry’s high level of fixed costs, the widespread practice of
governments subsidizing their shipping and shipbuilding industries, the entrance of newly-established,
low-cost Asian shipping lines, and the ease with which containers are able to be transhipped from one
mode of transport to another (Trace, 2002:2)
International shipping is moving away from the traditional port-to-port services towards door-to-door
solutions (Paixao & Marlow, 2003). This has come about through the interoperability of transport
modes, the interconnectivity of land networks with sea and the compatibility of information systems.
And because these shipping lines hold such a key position in the chain and essentially operate most of
the containers, the extension of their services from specialized shipping to trade chain logistics was a
natural progression (Slack1992)24
The international transport sector - particularly the container shipping lines - has responded to an
environment characterized by global corporations, outsourcing, deregulation and technological
innovation in two ways
Firstly they are offering global logistics packages to shippers in order to achieve economies of scope.
This amounts to vertical integration in the chain where the ‘door-to-door’ or ‘onestop-shop’ philosophies
24
Notteboom (2004) confirms this by noting just how far Maersk Sealand has progressed with: (1) its door-to-door logistical
service packages via Maersk Logistics; (2) its management of container terminals in European ports; (3) its inland transport
joint venture with P & O Nedlloyd in European Rail Shuttle; and (4) its direct dealings with exporters in bypassing the
forwarders
18
have revolutionized most shipping lines into intermodal logistics organizations25 Secondly; shipping
lines are increasing the size of their operations through deploying larger vessels and engaging in
mergers and alliances so as to achieve economies of scale. This amounts to horizontal integration in
the chain in which the lines hope to achieve cost leadership and better service to their clients via
advanced IT solutions, more frequent services, a wider global coverage and reduced transit times
(Notteboom & Winkelmans, 2001).
Table grapes are exported to the UK market predominantly through the seaport of Cape Town.26 Export
consignments are trucked from farm to port using either merchant haulage, which is the exporters’
responsibility, or carrier haulage, which is the shipping lines’ responsibility (Allen et al, 2005). These
consignments arrive in the port either in refrigerated road trucks or refrigerated containers. The railage
of grapes to the port is no longer a viable form of transport, as the correct rolling stock is not readily
available for transporting containers and because it is significantly slower than road transport (Ortmann,
2005). This is despite rail being a far more efficient mode of transport compared to road haulage. For
example, a single train of table grape containers is the equivalent of using 32 road trucks doing the
same job (Ortmann, 2005).
If the fruit is being loaded onto a conventional vessel, it is delivered to the break-bulk terminals that
unload and store the fruit until it needs to be stevedored onto the vessel. These terminals (as well as
the inland storage facilities) provide cold sterilization functions and provide access for the Department
of Agriculture (DoA0 and the Perishable Products Export Control Board (PPECB) to inspect the fruit.
More recently, the conventional terminals have started handling some containers that are loaded on top
of reefer vessels for the increasingly popular form of combi-shipping. The break-bulk terminal facilities
were monopolized by Fresh Produce Terminals (FPT) in the deregulated era, which is a subsidiary of
one of the exporters, Capespan. Meintjes (2005) states that Capespan’s ownership of the conventional
shipping terminal has been contentious in the deregulated era.27 There was a challenge to the
dominant position of FPT by transient competitor South African Fruit Terminals (SAFT) that has now
closed its doors for commercial reasons.28 However Capespan has in recent years divested of its major
25
The Capespan Group, as a major shipper of South African table grapes, exemplifies this type of vertical integration in the
chain. It part-owns the conventional terminals in the Cape Town port; it leases conventional vessels (the ‘snow’ vessels) to
transport its product abroad; and it now has an investment in the Groot Garieb cold stores in the Orange River production
area. According to Meintjes (2004c) and Meintjes (2005e), this allows the company to manage the cargo information right
from source and to streamline the scheduling of product into their terminals and onto their ships. As a result, it reduces
conventional terminal congestion, optimizes ship loading and minimizes costs for growers. In 2006, Capespan opened a
subsidiary logistics company (The Fresh Chain) in a bid to offer other exporters a similar service. It will be interesting to see
whether Capespan’s fellow exporters (essentially their competitors) will support this initiative.
26
Some of the early table grapes in the Orange River production region that were destined for the UK market used to be
airfreighted
from Upington in the Northern Cape Province to England’s Heathrow Airport. However these charter flights stopped
in 2003, as this mode of transport cost up to 10 times that of sea-freight.
27
The controversy around Capespan owning FPT was because it was considered an asset that had been paid for by the
growers in the regulated era, and because it had a dominant position in the ports through which most of Capespan’s
competitors had to ship their product (giving Capespan an advantage on pricing and an unencumbered insight to their
competitors’ shipments)
28
According to Meintjes (2004a), SAFT was essentially established to provide producers and exporters with an alternative
conventional terminal service to FPT. Meintjes (2004f) - Managing Director of SAFT at the time - claimed that SAFT was not
just a port terminal operator, but a good example of an integrated service provider offering inland cold storage facilities (at the
Cold Harvest premises in Paarl which it owned), road transport services from pack house to port, load scheduling onto ships
and some container loading for combi-shipping on reefer ships.
19
shareholding in FPT to a Black Economic Empowerment consortium, and can therefore no longer be
fingered as dominating the break-bulk terminal business. With the upsurge in container shipping at
conventional shipping’s expense, FPT’s volumes have shrunk to such a degree that the company has
been soaking up spare capacity by diversifying into alternative freight types. However the fact remains
that FPT retains 90% of the current break-bulk terminal business countrywide with terminals in Cape
Town, Port Elizabeth, Durban and Maputo (Meintjes, 2006a).
CHAPTER 6
RESULTS and ANALYSIS
It is apparent that the table grape producing industry is almost totally dependent the European and UK
markets. The UK market is a single country market, dominated by retail supermarkets. The European
mainland on the other hand is a conglomeration of many countries where the product is sold through a
maze of traders.
Supplying the European market is done through a number of role players with most of them exercising
some power over the supply chain some to a higher degree and some lesser.
It seems that the producer, the primary source of the product, operates under all sorts of pressures due
to other stakeholders that perhaps have stronger influence and power over the market. Some
producers however have integrated their businesses, both horizontally as well as vertically.
The total number of table grape producers during the period 2008 to 2010 has declined from 543 in
2008 to 416 in 2010, a decline of 31%. While the production volumes increased from 258 773 tons in
2008 to 277 294 tons in 2010. The area under table grape production increased from 14 010 ha in 2008
to 14 660 ha in 2010. The increase in production volumes and areas under production with the
decrease in the number of farms clearly makes the point of horizontal integration.
While Capespan on the other hand would be a good example of vertical integration: The Capespan
group is producer-owned South African company with 10% of its shares being owned by a foreign
multi-national company (MNC). The control of its marketing companies in other parts of the world
varies. Capespan were and still are a South African grower-owned and therefore grower-controlled
company.
But there is also a number of other companies that integrate vertically, as can be seen by the number
of producer-exporter companies entering the export arena, many of which emanated from the
Capespan Grapes Trust after it was dissolved in early in 2005. Most, if not all of these producers doing
their own exporting is, in fact, marketing agents, since they export product on behalf of their fellow
producers as well, a number of the bigger table grape producers are forming producer alliances.
Together these producers are amassing critical volumes of product to export - for their own account. In
order to get their product to market, they employ marketing expertise, most typically the skills of a
former marketing agent (Stuart Symington 2008)
20
The bigger agents are integrating backwards in the value chain by acquiring production units.29 By
doing this, marketing agents are securing product for themselves.
If one accepts that that the biggest market of the South African table grapes is the European mainland,
it is clear that the role players exercising influence and power on the flow channels from the farm in
South Africa to the market in Europe, are the role players that are able to exert more power over the
supply chain and here we see two dominant entities namely the; Marketing Agents and the Shipping
lines.
Multinational companies operating Marketing Agents, these Multinationals have access to (a) cheap
international finance due to their head offices being located in foreign countries where low interest rates
have prevailed; (b) ships and preferential shipping rates due to the product volumes that they move
around the world through certain shipping lines; and valuable international marketing information due to
their global networks, the financial strength of multinationals also enables them to invest in much
needed research.30 (Stuart Symington 2008)
Also consider the financial control exercised by the marketing agents in term of the MGP’s and loans
they make available to producers locking them into agreements favorable to the agents.
The burgeoning shipping industry – especially the container shipping lines – wields an inordinate
amount of market power in the logistics chain. Shipping lines are increasing the size of their operations
through deploying larger vessels and engaging in mergers and alliances so as to achieve economies of
scale. This amounts to horizontal integration in the chain in which the lines hope to achieve cost
leadership and better service to their clients via advanced IT solutions, more frequent services, a wider
global coverage and reduced transit times (Notteboom & Winkelmans, 2001).
But shipping lines also integrate vertically. The Capespan Group, as a major shipper of South African
table grapes, exemplifies this type of vertical integration in the chain. It part-owns the conventional
terminals in the Cape Town port; it leases conventional vessels (the ‘snow’ vessels) to transport its
product abroad; and it now has an investment in the Groot Garieb cold stores in the Orange River
production area. According to Meintjes (2004c) and Meintjes (2005e), this allows the company to
manage the cargo information right from source and to streamline the scheduling of product into their
terminals and onto their ships. (Stuart Symington 2008)
CHAPTER 7
CONCLUSIONS/RECOMMENDATIONS
Conclusion of this study is that the table grape industry are export driven, that it is vertically as well as
horizontally integrated, that the industry are dominated by a number of big enterprises that controls the
value chain from the farm to the landed product at the European market, two such companies is the
29
For example, Colors, Afrifresh and SAFE have all been involved in buying farms.
Stuart Symington and Sarel Joubert cites the recently released and patented V-channel carton by Experico (Capespan’s
technology development division) as an example of such research, which improves the cooling rate in grape cartons by up to 30%.
30
21
DUTOIT group and Capespan with Capespan the dominant one as it even operates its own shipping
lines.
The aim of this research was to find; who exercise what power over the supply chain and can the SIZA
model withstand the power influence by parties that does not seek the same objectives as SIZA? The
objective was to see if commercial interest would not outweigh ethical interest.
This research found that the value chain is complex, involving different role players, those players
exercise different power and influence in different sections along the value chain, but some and
especially some dominant ones although driven by commercial interest would be susceptible to the
kind of pressure exerted by SIZA and in fact are members of SIZA through Fruit SA and therefore
subscribe to the principles of SIZA.
Now the essence of the SIZA programme is to marry commercial interest with ethical considerations it
must make business sense for the producer to be part of SIZA.
The beauty of the SIZA programme is that although on face value it might seem that some role player
along the chain might be able to derail the programme; if reduced to commercial interests everybody
buys in, even if only for personal benefit.
If one considers that the UK market take up share of 30% of the South African produce and that the
European mainland is the biggest market for South African table grapes, and that the European market
is predominantly driven by free market forces a Dutch covenant that says by 2020, consumers can be
confident that all fresh fruits and vegetables in Dutch supermarkets are sustainably produced, becomes
so much more relevant. The covenant is an agreement with the entire sector in which large and small
parties agreed to work together towards a sustainable supply chain, it becomes clear that the ethical
consideration especially as far as South African table grape produce is concerned will outweigh the
commercial interests, and the ethical interest and commercial interest will become one and the same.
This study does show that if one should single out a role player along the value chain that are able to
play a bigger part in the buy in of the SIZA programme it would be the marketing agent, because they
have the ability to influence the behavior in the value chain both up and down, they interact directly with
the market (supermarkets etc) as well as the producers, they need to meet customer expectations.
The role that CONSAWU has established for itself apart from ensuring the implementation of SIZA is
with building capacity, making workers aware of the tools at their disposal to improve their own
conditions, tools that talks to the heart of the commercial interests of farmers, that interest is market
access.
Off interest is the new EU law on food Information to Consumers. The rules that will apply from 13
December 2014 in terms of this law is:
 Obligation to provide nutritional information will apply from 13 December 2016
 Significant changes to the following:
• Nutrition information on processed foods;
• Origin labeling of fresh meat from pigs, sheep, goats and poultry;
22
•
•
•
Highlighting allergens e.g. peanuts or milk in the list of ingredients;
Better legibility i.e. minimum size of text;
Requirements on information on allergens also cover non pre-packed foods
including those sold in restaurants and cafés.
•
EU food regulations on food safety standards are complex and focused on quality control, process
verification, labeling and traceability. These regulations have influenced other countries to adopt
stringent regulations of the same level.(Mike Wilson 2012)
The European market is a very sophisticated market, a market that creates its own momentum, a
market that has accepted sustainability as an integral part of it.
The conclusion one draws from the study is that; the SIZA programme is ideally placed, consider that
Fruit South Africa host the SIZA board, and that all the major role players are part of Fruit South Africa,
it is clear that the SIZA board will have the power to regulate industry behavior. CONSAWU and Fruit
South Africa through the memorandum of understanding are committed to building a long-term relationship
based on co-operation, openness and trust. They acknowledge a shared aim of the sustained, long-term growth,
prosperity and profitability of the fruit industry and the improvement of lives of workers in primary agriculture in
South Africa.
The challenge CONSAWU now has is to build capacity on the farms, making people and workers in
particular aware of the benefits of the SIZA proramme, but also to organize farm workers in trade
unions, an exercise that remains very difficult given the complexities of the industry. The other
challenge that remains in the industry is that off seasonal employment, Seasonal employment does not
give job security and without that workers will always be exposed.
Although this and previous studies has pointed out that trade union density in the agricultural industry is
very low, partly because of the nature of employment being seasonal, and that the SIZA programme
and the to be established SIZA board will provide overall management and control of the SIZA
programme, the board will not be a collective bargaining forum, where wages and conditions of
employment are negotiated, so one would find that SIZA will be able to ensure compliance to minimum
wages determined by the wage determination act but there is no mechanism to negotiate anything
above that.
It is envisage that a spinoff from the capacity building programme could be member recruitment, but
would still be faced with the obstacle of collecting union dues.
The SIZA board membership will consist of CEO’s from HORTGRO, CGA, SATI, Subtropicals and
FPEF and CONSAWU. The Board will oversee the secretariat and the Ethical Steering Group and will
have the final say and control in all matters pertaining to SIZA. The Section 21 articles should allow for
the Board to recruit new members from other agricultural industries, labour, NGO’s and government
where these represent interests at a national level.
23
CHAPTER 8
BIBLIOGRAPHY
Allen, P., Nicolas, T. & Louw, D. 2005. Looming threat for fruit logistics (part 2).
Unpublished paper.
A profile of the South African table grape market value chain 2011
Directorate Marketing
Private Bag X 15
Arcadia
0007
Tel: 012 319 8455
Fax: 012 319 8131
E-mail: MorokoloB@daff.gov.za
www.daff.gov.za
Stuart Symington
MPhil Dissertation
University of Cape Town
(Department of Economics)
“Staying Ahead of the Global Pack”
[Creating Sustainable Competitive Advantage in the Marketing of
South African Table Grapes to the United Kingdom in the
Deregulated Era]
Stuart Symington
(February, 2008)
Supervisor – Dr Corne van Walbeek
GAIN Report 15/5/12: South Africa - Republic of Fresh Deciduous Fruit Semi-annual Fresh Apple and Table
Grape Exports Expected to Increase
Meintjes, F. 2006a. Trade South Africa 06. Eurofruit supplement: 41-73.
National Department of Agriculture, Forestry and Fisheries
Directorate: Statistics and Economic Analysis
Private X 246
Pretoria
0001
Tel (012) 319 84 54
Fax (012) 319 8031
www.daff.gov.za
Notteboom, T. & Winkelmans, W. 2001. Structural changes in logistics: how will port
authorities face the challenge? Journal of Maritime Policy Management 28(1): 71-89.
Ortmann, G.F. 2005. Modelling the South African fresh fruit export supply chain. MSc
thesis. Stellenbosch University.
Paixao, C. & Marlow, P. 2003. Fourth generation ports – A question of agility?
International Journal of Physical Distribution & Logistics Management 33(4): 355 – 376.
24
Slack, B. 1992. Pawns in the Game of Shipping. Unpublished paper. Presented to the IGU
Commission on Marine Geography. Concordia University, Canada.
Slack, B., Comtois, C. & McCalla, R. 2002. Strategic alliances in the container shipping
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