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Ryan Davis - United Exporters
South African blueberries a niche product, but growingCompared to the country's bigger commodities such as citrus, South African blueberries make up a small part of the country's agricultural portfolio. But willing investors and ambitious marketers are carving out lucrative niches for South African berries in Europe and at home.
“It is now easier to get funding,” said Ryan Davis of United Exports. “Venture capitalists usually look for a rate of return of 35 percent for high risk projects, and our models show a higher rate where projects use our exclusive blueberry varieties. It's just a lack of knowledge so far, but we've been getting many more inquiries about funding.” The issue is getting the right mix of know-how and planning to get things going. Fortunately for United Exports, the company has a head start on growing berries.
“We are already growing our unique cultivars in the country, so we have a proven model and product,” Ryan said. “The industry will catch up quickly, but we stand to do well in those three to five years.” United Exports is in the second year of a five-year plan to roll out significant plantings of blueberry production that will span the northern part of the country, curve around the eastern part and swing back down the Southern Cape. Already some of the bushes it has planted are nearing peak production.
Part of the reason for more plantings is that there are large windows of opportunity in the European market which we aim to exploit. Between weeks 37 and 47 are when Davis believes berry levels in Europe are sufficiently low that South African shipments can get good returns there. Add in untapped markets in the Middle East and Asia that United Exports can explore via its existing stonefruit and table grapes business, and the outlook is positive. For now, the focus is on building up production.
“The biggest issue is getting good land, because you have to maintain the correct pH level,” explained Ryan. “If you don't have that, then you could grow in another medium, but that will be an additional cost. Then there's good access to water, though you want to stay away from areas that have rainfall during your season.” It's a balancing act, but it's one that the company is managing. On top of the physical considerations, United Exports also takes into account the human factors – both in terms of workforce and the people affected by new plantings.
“After the soil, the most important issues have to do with the people, the workers, the management,” said Ryan. “We have an internship program where we develop talent for that. Then we try to have projects in areas where those projects will have positive employment effects. There are communities that have been hit by the declining mining industry, so there's lots of labour there. This also includes partnering with growers who have decent land and can do the job, but who also engage in projects that will have long term benefits for South Africa and its people.” Then there's the food safety certifications and protective nets that ensure a consistent quality of product suitable for export. But all of those things add costs. That's why the production cost per hectare is significant and often a barrier to entry into this market.
“Air freight is another challenge we face,” noted Ryan. “The flight situation changed last year, and people, not just in the agricultural industry, have been competing for air freight space. So people have been bidding up prices for transportation.” The problem is exacerbated by freight costs tied to the U.S. dollar while the company deals with an anemic currency value at home.
The prospects for the industry, however, still make growing blueberries a good proposition. For their part, Ryan noted that the current berries being grown are exceptionally large, they require fewer chilling hours than previous cultivars, they are firm and they have a flavor that does well with consumers. Even local retailers, who used to cede the best fruit to the export market, are now asking growers to grow enough premium fruit for local consumption.
“As a fruit type, blueberries are still expensive, but you see them do well in traditionally developed niche markets,” said Ryan. “We've got a market, we've got a good product, and we'll see how well we can deliver that product.”
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