Lucerne Fresh is busy with the tail-end of their butternut harvest in an export season that benefited them on two counts: Northern Hemisphere butternut production ended early as a result of quality issues from heavy rains in the production areas, and much reduced carry-over stock.
Juan-Ivan Smuts, managing director of Lucerne Fresh in Robertson, Western Cape, reckons the heightened interest in butternuts (they’re still getting lots of enquiries, but all of their butternut is spoken for) can be ascribed to Covid-19. There is a change in buying patterns among consumers, with a return to bulk presentation products, like butternuts, tomatoes, pumpkins, onions, potatoes, he says. They export around 80% of their butternut production, mostly overseas retail and service providers, and the balance for local retail. Products like blueberries, grapes, and stone fruit are a bit on the back foot currently, he notes.
“People are probably cooking more while staying home at the moment and we’re definitely getting the benefit of that.”
Butternut pallets (photos supplied by Juan-Ivan Smuts)
UK retailers offer direct butternut programmes
The UK has long been the major butternut receiver of South African butternuts. “For the first time a number of UK retailers have offered us direct programmes on butternuts, in the same way as for traditional commodities like stone fruit, grapes and citrus. We’re doing a lot more direct business with retailers now on butternuts. They’re realising the benefit for them, in a year of shortage like this, to be dealing directly with the butternut grower, getting closer to the product.”
They send little of their butternut to the European trading environment. Most go directly to clients in Italy, Germany and Spain.
They spread the net wide with their butternuts, with exports to Singapore, low volumes of highly selected product of large, very uniform counts. “It’s a bit more effort to service the Far East spec, like on citrus and other commodities, but price levels make it worthwhile.”
Building Singaporean business
“We’re always trying to identify and develop markets where traditionally exporters aren’t going. In Singapore particularly we’re trying to entrench our position, using our existing importers handling our current commodities to introduce retailers and consumers on that side to butternuts. It takes time to make inroads, especially in a a region where butternuts aren’t a traditional part of the cuisine.”
South Africa competes with Australian butternut exports, where the latter has the advantage of closer proximity to the Middle & Far East where there is a growing butternut market.
“To compete with Australia it’s necessary to enter at a very aggressive pricing point on a commodity where there aren’t broad margins. Around 40 to 50% of the export cost on butternuts are made up of logistics costs, like transport and packaging. It’s less expensive than exporting cooled fruit, but it’s a low value bulk product. We produce, pack and export ourselves. We focus on streamlining and trimming costs along the chain, for instance by experimenting with various combinations of packaging that still gives you the necessary strength to reach the end customer in good shape."
Control of the logistics chain allows cost streamlining
Start of the citrus season looks promising
Their Satsuma season has just ended, with exports to the UK and Scandinavia. In three to four weeks harvesting of clementines and Novas starts.
Juan-Ivan is very excited about the quality of the crop that will be harvested this season, and will simultaneously be giving them access to good retail programmes in the US.
Nules Clementines is a variety of which they have sizeable young plantings. “I believe in our area we can produce a very desirable quality of Nules. If you can be consistent in your quality, there will always be demand for it.”
There are years of research in the variety, it’s an old variety, a real cart horse, he calls it, very popular among consumers in Europe and the UK, but with the access to good programmes in the US, he expects it will change the dynamic for them as producers.
Bigger soft citrus & lemon sizes than last year
The indication of bigger caliber fruit this season will surely allow them to focus on the mainstream channels where optimised returns are achieved, Juan-Ivan says.
“We’ve also been seeing a big development in the market for Novas in Bangladesh, getting a lot of enquiries on Novas and later mandarins for particularly smaller counts like the 5s and 6s."
"It can help a lot in a year when the size distribution tends to be smaller but, but as I mentioned, this year the size distribution is looking good, bigger than last year, not only on the soft citrus but on our lemons as well.”
"We will start harvesting lemons in three to four weeks, focusing on retail programmes in the UK and Germany, with a good portion also packed for the Middle East."
He notes that lemon prices are currently tremendously high, especially in Russia. “Turkey’s decision to stop their lemon exports because of Covid-19 has left a big gap, but there’s a lot of product on the way, both from South Africa and from South America, so the price is bound to come down.”
“Our focus remains on programme business, worldwide, and will be of great value in the future when supply might become excessive."
He adds: "It is often very difficult to not send product to the spot market in years like this, when returns can be 50% higher and even more in some cases, but it has always been retail that has allowed us to grow consistently."
During the Southern Hemisphere summer Lucerne Fresh produces stonefruit
Currently the volumes from South Africa aren’t at optimal levels yet, as the Eastern Cape has not really started packing, and the impact of Covid-19 will surely be felt on the logistical chain in coming weeks, but Juan-Ivan has confidence in the work done by organised agriculture to minimise the effect.