South African growers will not get anywhere if they do not have good knowledge of their market place and align themselves that market place in order to produce the kind of products that that market place requires.
This is the view of Capespan Director and Orange River table grape grower, Piet Karsten who addressed the congress of the international farm Management Association at its recent congress in Durban.
Piet Karsten said that there are certain trends in the international market that South African growers must take notice of if they wish to be successful in the international fruit markets. The most important of these were the concentration power in the hands of fewer larger organisations.
" There are probably only 50 players world wide that handle more than 85% of South Africa’s fruit exports. In the UK, where we sell 85% of our country’s seedless grapes, six big retailer customers handle 80%of our sales.
At the same time the number of small retailers have declined dramatically –of the 36000 corner shops operating in the UK at the beginning of the 1990’s, there are now only about 6000 left.
Piet Karsten said retail groups in the Europe, and elsewhere in the world, is expanding across borders in order to consolidate their positions. In 1996 only four of Europe’s biggest retail organisations did not have substantial investments in other European Countries. On average the 16 others had investments in at least three other countries.
"As an example in 1997 there were 11 foreign retail organisations active in Belgium, 15 in France and seven in the UK. And the great American invasion of Europe has just started with Wall Mart, one of America’s biggest food retailers, having announced their plans to buy ASDA, the 17th biggest retailer in Europe.
Another trend that South Africa Retailers should note is that there is a world wide oversupply of fresh produce."It is certainly true to say that one can today find produce of almost every variety every day of the year on the shelves of the world’s biggest retailers. The world has become smaller and the population of the more affluent countries of the world - which also represents the market place for South African fruit growers - have increasingly been traveling the world. In the process they have come into contact with new fruits and products which they reasonably expect their retailers to offer then on a continuous basis. One single multiple group may carry up to 500 lines of fruit and vegetables in a typical 40 000 sq.ft store".
Traditional fresh produce which in any event has been under over supply pressures for many years, are increasingly battling to hold their own. "It is no wonder that their is called pressure on individual governments to protect their own agricultural industries. The playground is being levelled as far as tariffs are concerned, and whilst the recent trade agreement between South Africa and European Union will certainly bring benefits, it is a sobering thought that the battle ground will probably shift in a different direction. It will most likely be that of phytosanitary and other restrictions which in many ways could be used to restrict access".
"At the same time", says Piet Karsten, "supplier power has been diluted with produce supply from around the world having been deregulated. The big single channel organisation of Israel, the Maroc Citrus organistaion, the marketing boards of South Africa, is all gone. The last remaining ones are those in New Zealand, which will deregulate within two to three years".
South Africa's producers are now competing head-on with one another for the prize of being able to supply an increasingly smaller market place which is dominated by large retailers. For those who do not make it on the supermarket shelves, the only playing ground which remains are wholesale markets which increasingly resembles a war zone with blood flowing freely.
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