De Klerk is optimistic, "Sizes are smaller this year, but the Packhams, Grannies and Fuji, which were down last year, are back to average volumes. I expect it to be better year on year. Poor winter chilling contributed to small sizes. Packouts are expected to be good."
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Capespan aim to export 60-70% of the topfruit, this may vary depending on variety. The local market has been attractive and a lot of fruit will also be put into CA stores.
"2013 was one of the best seasons in 30 years which resulted in a lot of trading business. Because 2015 is likely to be a tough market, producers are targeting programmes again. I think a good balance is 60% -70% programmed and the rest for trading," explained De Klerk.
As for the markets, he goes on to say that the Far East is a very unique market and can be a difficult environment where you can't afford to make mistakes, but if you get it right it can be very lucrative. It is a market with huge potential.
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"The Middle East can also be a good market, but can also become a dumping ground, the price can be very low and payments can be slow. This year the European market also has its problems, it has enough fruit and then there is the Russian situation. It is very difficult to predict what will happen, we have to be in Europe because we have orders, but we won't send fruit which doesn’t have a fixed place to go. Saying that, we are surprised about the prices we are currently getting, but movement is slowing down which could be the first signs that things are changing. We are putting a lot in storage just as others are doing, it is a case of wait and see."
It has been a very good quality year for the Galas, in fact for all colour varieties which immediately gives more opportunity globally.
He thinks the strategy should be to have a more evenly spread global approach.
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Volumes to Africa are way down on last year, according to De Klerk, by 50%, "They are still paying a good price but the fruit is not moving fast, this mainly due to the influence of the oil price. People who have been supplying Africa for the last 15 years will tell you if you want to supply Africa you have to be there every day - it is all about consistency there."
De Klerk points out that Africa is not one big country and each area has it own preferences. On the west coast they prefer the yellow varieties while on the eastern coast they want red and then the retailers on the east coast are more geared to the tourist trade. Countries just north of the South African border will take fruit but they will also buy in South Africa and truck it over themselves. North Africa is not an option as it is supplied by EU.
"Our strategy over the last 10 years has been to lessen our dependence on Europe, historically we have been too dependent on that market, there is only so much consumption and then you have improved CA stores and new varieties so we have branched out. South African suppliers are now global players, worldwide fruit consumption is going up, people now buy it as standard every week, De Klerk is positive about this and thinks it will continue in this trend.
South American production has rapidly increased in recent years and they are also global players but De Klerk doesn't see it as a threat, just as a challenge.
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"UK has done very well in putting down a 12 month per year buying pattern, which has increased consumption and if the market is difficult they are still selling
We have the window from 1 Jan to week 30 then the duty goes up, then it is not economical to send any more unless the prices are very high. Retailers want to work with suppliers year round and our new CEO is working on that, he wants Capespan to be a provider 12 months of the year, this would involve extending our operations in various countries."
De Klerk explains the markets have changed and will take different sizes these days, unlike a few years ago, the retailers are also asking for new varieties. "We want to deliver quality and get good yields so it not just a question of price when considering a new variety. It can take eight years before a new orchard comes into full production so you have to be sure."
Pears are even more tricky, they give less yield and there is less consumption than with apples, but you have to have them. An 80-20 ratio of apples to pears is quite normal for South African growers. The main varieties are Packham and Forrell. You need to have a range of blush pears and we are working on that.
Capespan has around 1200 hectares of land under production in South Africa. Two top fruit farms and a packhouse in Paarl in the Western Cape, 8 farms in the Northern Cape as well as two citrus farms.
The intention is to own about 30% of our export basket, meaning controlling the input and the decisions on how to market it. This would involve expanding growth areas in the coming years and using Capespan’s production operations to benchmark and constantly improve on the service delivery levels through our Group structures.
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For more information:
Johan De Klerk
Capespan
Tel: +27 21 917 2624
johan_de_klerk@capespan.co.za
www.capespan.com