South African plum industry at crossroads

Press release: September 2021

South African plum growers are on the doorstep of a make-or-break season that will determine its future and sustainability.

According to Hortgro’s Markets and Trade Manager, Jacques du Preez, plum growers faced many challenges over the past five years. “We had a severe drought, a Covid pandemic, logistical threats, and then finally, when production recovered during the 2020/21 season, returns to growers were below cost and breakeven prices.”

Du Preez said that the increase in production and export volumes sadly did not materialize into positive financial returns. “What should have been an exceptional season for growers turned into the exact opposite.” Hortgro’s estimate, based on independent industry surveys, is that plum returns per carton were 30-40% lower during the 2020/21 season compared to the previous year.

Growers are under extreme financial pressure. The industry is concerned that demands from retailers, specifically in terms of quality, ethical production practices, and sustainability and the related compliance and audit costs vs what is being paid for the product, are not financially sustainable. Prices paid to producers in the UK and Europe are well below inflation, despite the fact that the demand for fresh produce shot up in the midst of the Covid pandemic. The era of supermarket price wars are not sustainable for long-term industries, in particular the plum industry that requires large investments in orchards, packhouses, and infrastructure, not to mention the socio-economic investment required, Du Preez said.

“If there is not a radical change in the mindset of importers, traders, retailers, and consumers, with regards to the constant race to the lowest possible price, the plum industry specifically, will wane to a shadow of its former self.” Du Preez warned that the impact on rural areas and jobs linked to the plum industry could be catastrophic.

He said that some of the tools and practices of buyers are also detrimental to the sustainable future of the industry, such as the tender process. “We don’t work with factories where production can be adjusted at the flip of a switch. In agriculture, we are at the mercy of Mother Nature.”

Du Preez said that a range of industries with associated value chains is built on the growers of fruit and that without growers, there will be nothing to sell. “We are now at a point where we need a quantum shift in prices to ensure sustainable returns for growers. Retailers and consumers need to realize that fruit and vegetable prices need to keep up with the constantly increasing production and compliance costs.”

According to Hortgro’s estimates, input costs through the production and logistical chain will increase as follows:

• Sea freight: +30-50%
• UK haulage: 40%
• Fertilizer and crop protection: +20-30 %
• Electricity: +16 %
• Wages: +15 %
• Packaging: +10-15%

“Plum growers will simply not be able to survive the coming season based on the returns of the 2020/21 season. We cannot accept price decreases. In fact, prices need to be increased substantially in order to compensate for the realities of the cost structures.”

According to Du Preez, European growers are experiencing similar cost increases with the added pressure of the availability and cost of labour. “We, therefore, urge growers and exporters to inform themselves of the breakeven/production costs and transparently communicate this to their customers and trading partners.”

“I find it ironic that customers are constantly pushing suppliers for things they expect free of charge such as environmental sustainability while offering a financially unsustainable price. Now more than ever we need customers and suppliers to work together. Customers to accept costs are up across the card and suppliers to push for fair and reasonable price increases.” – Excerpt from an article in the Fresh Produce Journal of 15 September 2021.