Sundays River Valley concludes very challenging season

It has been another difficult season in the Sundays River Valley, with slumbering labour unrest (against the background of 'expropriation without compensation') and a drought, the impact of which was more severe than anticipated, coupled with a slack market for most citrus categories except lemons.

Three weeks to go, with the last of the Valencias and grapefruit being packed, and export volumes are reckoned to be between 10 and 20% lower, says Hannes de Waal, managing director of the Sundays River Citrus Company, but in terms of returns the outlook is more favourable, primarily because of lemons.

“The lemon markets pulled us through, and it was strong because of Argentina’s enormous problems with quality.”

“The orange market was never spectacular, with Egypt staying in the market for so long, but on large counts the Valencia price isn't bad. Problem is, we mostly had smaller counts, and Valencia exports will be 8 to 10% down on last year which is unheard of, since we had the heat and wind damage on the Valencias last year.”

As for grapefruit, of which the Sundays River Valley is not a dominant producer, in total South Africa had 2 million cartons more on the market, also smaller counts, making this a very difficult season.

The Rand has weakened by 7% over the past month as all developing markets were hurt by the woes of the Turkish lira and the South African economy is officially in recession, it was announced this week. “We believed, as many economic advisors did, that the Rand would move to R10 or R11 to the US Dollar [it’s R15.42 today], so we’re not benefiting much from the current weakening.”

“We’d thought the drought was over but it hurt us again this season with smaller fruit and a lower harvest. It’s the biggest drought in living memory. We have sufficient irrigation water but without rain and without lightning, which is the best nitrogen supply you can find, the trees are struggling.”

The good news is that the Eastern Cape received good rain over the weekend, up to 50mm in places, which is sorely needed in the Gamtoos Valley particularly.

Last week employees of the Sundays River Valley’s citrus operations were forced to miss one day of work when a group of South African National Civic Organisation members prevented buses from taking people to work.

It’s a case of 20 people holding 40,000 hostage, as Hannes de Waal puts it, and as always the attempts to disrupt citrus operations are part of a larger picture of political struggle and can be viewed in the context of upcoming national elections and the populist rhetoric of the expropriation campaign. There are between 40,000 and 70,000 people living in the Valley, of whom approximately 40,000 are employed by the citrus industry. 

A breakaway group of SANCO is demanding that the interdict which the Sundays River Valley Citrus Producers' Forum obtained against them at the time of the week-long strike in June, be set aside. According to the interdict, they may not come closer than 500m to any citrus facilities.

Their other demand – for a minimum wage of R20 (1.14 euros) per hour – has already been met and in many cases exceeded because of the system of incentives, of which this group also disapproves. However, De Waal says, without a system of incentives they wouldn’t be able to get all the fruit off the trees.

“The big problem is that while the industry moved ahead, the community stayed behind, and it will take a long time to put it right. The municipal decay you see around here is just a symptom of a larger problem. The level of involvement by citrus producers in the community is massive, in things like water delivery, because it gets up to 40°C here and you can’t expect someone who doesn’t have water at home, to come and pack fruit. We don’t mind taking over some of these duties, we’re in the business of people and we believe South Africa will only work if South Africans take responsibility for South Africans.”

The problem is, he continues, that citrus producers can’t shoulder the financial burden alone anymore and they’ve started reaching out to banks and other businesses, as overseas retailers have lessened their social corporate involvement in South Africa, although there are still programmes like that run by Albert Heijn in the Sundays River Valley. Political leadership, or the lack thereof, is not easing the burden of the big (and oftentimes only) employers in this region.

“I do think the disruption is over for the year,” De Waal concludes, “but after this season, we’re really looking forward to next season.”

For more information:

Hannes de Waal

Tel: +27 42 233 0320

Email: srcc@srcc.co.za