1 DESCRIPTION of the INDUSTRY Pears Are One of the Most Important
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PEAR MARKET VALUE CHAIN 1 DESCRIPTION OF THE INDUSTRY Pears are one of the most important deciduous fruits grown in South Africa, taking into consideration their foreign exchange earnings, employment creation and linkages with support institutions. In 2008, they contributed 15% of the total area planted to deciduous fruits. The South African pear industry is export oriented with approximately half of pears being absorbed by the export market. Majority of South African pears are available in many northern hemisphere countries during their winter and spring seasons. The bulk of these sales to the consumer are by means of contractual agreements via preferred category suppliers to the large supermarket chains. Furthermore, various export companies or agents conduct business on the basis of consignment sales on behalf of the growers or packers. The industry operates in a deregulated environment were prices are determined by the market forces of demand and supply. The total value of production for pears for the seasons 1998/99 to 2007/08 is shown in Figure 1. Figure 1: Total value of production for pears, 1998/99 – 2007/08 1400000 1200000 1000000 800000 600000 R'000 400000 200000 0 9 1 3 4 6 8 /00 /02 /0 /05 /07 8/9 0/0 9 99 0 01 03 04 06 9 9 0 0 0 0 1 1 20 2 2002/0 2 2 2005/0 2 2007/0 Years Source: Agricultural Statistics The total value of production for the industry has been on a steady increase since 2000/01. That has been mainly due to amongst increasing popularity of healthy living trends and higher income as a result of an increasing middle class’s spending power. 1 1.1 Pear production areas in 2008 South Africa’s main pears producing areas are Ceres, Groenland, Wolseley/Tulbagh (all in the Western Cape) and Langkloof East in the Eastern Cape. The Western Cape province account for more than half of all the pears produced in South Africa. Figure 2: Pear production areas in 2008 Langkloof West Somerset West 1% 2% Southern Cape Berg River 1% Stellenbosch 2% 1% Others Groenland 1% 13% Klein Karoo 7% Piketberg 2% Wolseley/Tulbagh 11% Ceres 38% Villiersdorp 8% Langkloof East 13% Source: Deciduous Fruit Producers’ Trust Figure 2 above shows that in terms of the area planted for pears in hectares, Ceres accounted for 38% with 4 355 ha, Langkloof East accounted for 13% with 1 542 ha, Groenland accounted for 13% with 1 452 ha and Wolseley/Tulbagh accounted for 11% with 1 279 ha. Total production area for pears in 2008 was 11 425 hectares. This represents a 1% decrease in production from the 2007 production year. 1.2 Pear production In determining which pear cultivar to plant, a producer should take the following into consideration: • The global demand and the demand in specific markets, • His (the producer’s) current infrastructure in respect of being able to cope with pruning, spraying, picking, cold storage and packing of a particular cultivar, and 2 • The availability of natural resources like water, soil types, cold units and slopes. Figure 3 illustrates total South African production of pears for the years 1998/99 to 2007/08. Generally, the production of pears in South Africa has been fairly stable since the 2002/03 production season. Figure 3: Total production of pears, 1998/99 – 2007/08 400000 350000 300000 250000 200000 Tons 150000 100000 50000 0 2 00 /01 0 03 05 07 /08 2/ 99/ 01/ 04/ 06/ 003/04 1998/99 19 2000 20 200 2 20 2005/06 20 2007 Years Source: Agricultural Statistics Pear production has maintained a relatively constant pattern over the past decade. That has been primarily due to South Africa’s main producing areas. They offer mild Mediterranean climatic conditions that have enabled the country to produce its pear. 1.3 Pear cultivars South Africa’s main pear cultivars are Packham’s Triumph, Williams Bon Chretien, Forelle and Early Bon Chretien. Figure 4 shows that in 2008, Packham’s Triumph accounted for 29% of the total area planted, followed by Forelle (25%), Williams Bon Chretien (18%) and Early Bon Chretien (9%). 3 Figure 4: Leading pear cultivars in 2008 Abate Fetel Doyenne Du Other 4% Comice 7% Beurre Bosc 2% Packham's 3% Triumph Rosemarie 29% 3% Early Bon Chretien 9% Williams Bon Chretien 18% Forelle 25% Source: DFPT Tree Census 2008 1.4 Employment Full-time labourers employed on pear farms are primarily employed for a number of specialist tasks such as pruning of trees. Labour is also required to carry out thinning practises during blooming or during first four weeks of fruit growth. Other tasks include harvesting, supervision, operational duties in the pack house, irrigation management, scouting for insects and diseases on a seasonal basis, tractor or forklift driving and grafting. Seasonal labour is employed on a contractual basis for a fixed period of time with the main purpose of harvesting or fruit packing. The prescribed minimum wage is used as a baseline for determining basic wages in accordance with the legislation governing conditions of service. Much of this labour is drawn from the ranks of the unemployed persons in neighbouring towns. In some cases a system similar to the previous recruitment of migrant labour continues to be used. The industry makes an important contribution to direct employment in the pear production and processing. It provides indirect employment for numerous support industries in the areas where pears are grown. In 2008, direct employment within the industry was estimated at 14 432 people with 57 729 dependents. 4 2 MARKET STRUCTURE Over half of the pear crop is normally destined for the fresh pear market. Figure 5 illustrates that pear production in South Africa is primarily aimed at both exports and processing and to a lesser extend, local markets. Dried fruit production is relatively insignificant. Figure 5: Pear crop distribution, 1998/99 – 2007/08 180000 160000 140000 120000 100000 80000 Tons 60000 40000 20000 0 /00 /02 /04 /06 /08 1998/99 1999 2000/01 2001 2002/03 2003 2004/05 2005 2006/07 2007 Years Local Exports Dried Processed Source: Agricultural Statistics 2.1 Domestic markets and prices of pears Local pear market volumes and general price trends from 1998/99 to 2007/08 are presented in Figures 6 and 7. 5 70000 60000 Figure 6: Local pear sales, 1998/99 – 2007/08 50000 40000 Tons 30000 20000 10000 0 1998/99 Source: Agricultural Statistics As illustrated in Figure 6, volumes1999/0 of0 pears at local market have generally been constant. The lack of serious growth in the local market may be due to a lack of coordinated marketing.2000/01 Growth in the sector has been absorbed by the increased exports to the traditional markets. 2001/02 Volume in Tons 2002/03 2003/04 Years 6000 4000 Figure 7: Pear price trends, 1998/99 – 2007/08 2004/05 5000 3500 Average price in Rand/Ton 3000 4000 2005/06 2500 3000 2000 Rand/Ton 2000 2006/07 1500 1000 1000 500 2007/08 Rand/Ton 0 0 1998/99 Source: Agricultural Statistics Export Net Realisation 1999/00 2000/01 2001/02 2002/03 Local Market Average price 2003/04 Years 2004/05 2005/06 6 2006/07 Processed Average price 2007/08 Pears generally fetch higher prices in exports. Prices at both export and local markets have generally been on the increase. That may have been due to a consistent demand from both the export and local markets. At the same time, processing prices have been fairly stable. 2.2 Pear exports South Africa is a relatively small pear grower in terms of global hectares. However, the country is a major volume exporter in global terms. Pears sold in the export markets generate a greater unit price than that achieved on the local market. Therefore, a thorough understanding of the rules of the export markets is for success in pear production and marketing. Figure 8: Pear exports, 1998/99 – 2007/08 180000 6000 160000 5000 140000 120000 4000 100000 3000 Tons 80000 60000 2000 Rand/Ton 40000 1000 20000 0 0 9 6 /00 /05 1/02 6/07 98/9 99 0 02/03 03/04 04 05/0 0 0 19 19 2000/01 20 2 20 20 20 20 2007/08 Years Volume in tons Net Realisation in Rand/Ton Source: Agricultural Statistics The fresh pear exports have been fluctuating for the past decade according to Figure 8. The 2006/07 as well as 2007/08 seasons were the best in a long time in terms of export volumes as well as prices paid to producers. The increased export volume achieved in 2006/07 was maintained in 2007/08. The increase in exports may have been due to pear size, as well as quality. The season was a big relief on the financial wellbeing of the pear industry that took a strain from 2004/05 to 2005/06. 7 Figure 9: Export destinations for South African pears in 2008 'Canada 'Ireland Other 2% 2% 12% 'Singapore 2% 'United Arab Emirates 'Netherlands 2% 28% 'Portugal 3% 'Italy 3% 'France 'United Kingdom 3% 16% 'Russian 'Malaysia Federation 3% 12% 'Belgium 'Germany 5% 7% Source: International Trade Centre (ITC) European Union (EU) countries such as Netherlands, United Kingdom (UK), Belgium, Germany and France as well as the rest of the European countries such as Russia and Switzerland hold a bigger market share of South African pear exports according to Figure 9. Together they constitute over 80% of South African pear exports. There are attempts to expand other markets like the Middle East (United Arab Emirates) and Asia (Malaysia and Singapore).