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Difficult times trying to crack the South African market

Updated: Feb 28, 2021

You could be eating cheaper avocados in South Africa. If only others wanted you to.


I have seen the prices of the avocados in the South African stores. I have seen the jokes around price and comparable other things beyond reach on a relative basis. Sadly, for Jo Consumer the price is normally a function of supply and demand, no matter what the commodity, in this case “Green Gold” as a friendly South African avocado farmer puts it.


It really need not be that way. Something magical is happening on your doorstep. An army of small-scale agricultural warriors tick all the right boxes for both the environmentally conscious and normal consumer alike. Small-scale producer. Check. African grown. Check. Organic. Check. Water neutral, i.e., no irrigation. Check. Less than a week away. Check. Cheaper than imported prices. Check. Supply for two-thirds of the year of quality Hass avocados. Check. Conflict-free, no high fences. Check. No theft from farmers. Check. Real change in subsistence farming to small scale commercial. Check.



It almost sounds too good to be true. It is true. I can vouch for it. I have seen the massive economic changes associated with “Green Gold”. These Tanzanian avocados, on your doorstep, are exported to Europe, the Far and Middle East, and sold in well know global supermarkets and grocery stores. They could be in your stores for 9 months a year. And at the drop of a hat.


So why are they not sold to South Africans? That, my friends, has a far more complicated answer than you may think. Yes. This article may be too long to read, I hope not, but it is worth the journey, to demand reasons from all the stakeholders in South Africa. To make the fruit more accessible to all. Health of course, as we have learned the hard way, is more important than money. Upliftment of communities and sharing of ideas for economic upliftment of small-scale farmers across the region will benefit us all.


The main reason for the current high prices is mostly that South Africa does not have a local production season from around the middle of December to sometime in the middle of March. South Africa imports fresh avocado from the production areas of Spain and Israel to fill the demand in the local market in order to meet year-round demand, since avocados are received by the consumer as a superfood. -----


How do avocados travel from Spain to South Africa?


If you check the public schedule of the Maersk (a global shipping titan) website, a trip from Spain, from the port of Algeciras to Cape Town will take less than two weeks, if everything goes according to plan. But often weather delays can wreak havoc on best laid plans and fruit delivery schedules.


With the careful planning around harvest to stuffing the container full of avocados and through the gate at the port readying for the journey to South Africa, you are looking at another three to four days minimum. Two weeks to South Africa, to Cape Town from there. Another 48 odd hour trip up to Johannesburg, and you would probably see the fruit a week later after it has been through a ripening, packaging and distribution process.


Transport of a container of fruit, including the inland transportation leg from Spain to Johannesburg is around two hundred thousand Rands, there are port charges and customs charges, handling on both sides, which possibly ends up seeing 22 odd ton of fruit, or roughly 100 thousand pieces, around 2 Rand a piece. OK, so not as much as you would have thought, but a single avocado from closer is likely to be far fresher and costs less to transport.


The fruit itself fetches a high price in the organized fruit marketplace, avocados are graded in sizes of 4-kilogram boxes, a size count 20 indicates that many pieces in a 4 kg box. Big sizes for the Hass varietal range from really big 12-14 sizes, to a more common and sought-after supermarket sizes of 16-22 sizes. Smaller sizes, up to 32 pieces in a 4kg box equivalent normally go into “netting” programs, you will find those in 4-6 pieces, typically inside of a green net.


A middle of the range size of grade 1 fruit would fetch 240 odd Rand a box. For 20 pieces, 12 odd Rand a piece. There are of course other charges all along the way, from the start to the end, including refrigerated costs (electricity), ripening, packing, retail costs in the shops, you get why that fruit costs a lot. Who “handles” the market on behalf of the consumer? Typically, producers of the fruit locally have access to fruit in other parts of the world, and purchase agreements, if they are a business of size and scale. They would be the well-known larger members who have their own production in South Africa. We will get to this in a moment. ------


How long does it take from harvest to my plate?


What about the time taken in total for that fruit harvested in Spain that ends up in your supermarket? All in all, my best guess is that the fruit from harvest to shelf in front of the consumer would be around four weeks old. Quite normal actually, the reverse trip to European customers from South Africa often sees “good arrivals”. South African avocados have a good name, as good as Mexican fruit. Four weeks is far longer than local production that would be less than two weeks from harvest to ripe and ready to eat.


Depending on what kind of avocado varietal you may find the tastiest, the South African market is quite rare in terms of their local production of being able to provide you with a lot of choice. More recently, as with the rest of the world, the market has trended towards darker skin varieties that offer the grower, the intermediaries and ultimately the end consumer the peace of mind that the fruit is indeed ripe and ready to eat. Hass avocado is the variety that changes from green to black, at that point it is ready to eat.


Unfortunately for the end consumer of a delicious avocado, the absence of fruit supplied from South African farmers coincides with a general shortfall across the global market, and prices for those producing at that time are generally much better than when it coincides with big volumes from Peru in the middle of the year, June and July. Again, simple economics of supply and demand dictate a higher price when demand is generally stable, and supply is short.


Nothing to do about this, you say. You have seen the magazine programs where stolen fruit, which is immature and will not ripen properly, is a function of thieves taking advantage of high prices to make a quick buck. Farmers have to incur high costs as a result of added security, high fences, paid private security, alarm systems, they are subjected to losing a lot of fruit. Ironically as a result of higher imported prices for the fruit, but how are thieves to know when the fruit is ready or not? I feel desperate for farmers who see a more and more meaningful portion of their crop disappear, I feel desperate for the poor people who are driven themselves by desperation.


Again, simple economics suggest the high prices in the local market are as a result of no supply. Where the prices are high, in a country like South Africa with high crime rates, and just as high inequality rates, that mix inevitably will lead to thieving of the product. Similar practices take place in Mexico and also in the US avocado growing areas in California.


A quick look at an income inequality measure, the Gini coefficient, reveals South Africa by some measures stands at the top of that pile, California as a “standalone country”, if a US state could stand in such a category, would be rubbing shoulders with the likes of Venezuela and lastly Mexico.


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Is there fruit in closer proximity to me?


In short, though, there is no local supply. Or is that the case? Is there no fruit any place close-by, that could plug the proverbial giant gap that sees higher prices for the end consumer? Imported fruit is expensive. Tanzania has planted vast tracts of land with avocados that will in time rival their neighbour Kenya, and indeed surpass South Africa. Some of the rainfall areas of Southern Tanzania have as much as 2 meters of rain a year, the area is water neutral. In other words, requires little to no irrigation.


Another major difference, as mentioned earlier, is that much of this fruit is grown by small scale farmers, who typically have a couple of acres, a hectare is the average size. In Tanzania, land ownership by small scale farmers of good quality agricultural land is very high, in South Africa as a result of a wicked and cruel history of land dispossession, the opposite is true. In South Africa, according to the South African Avocado Growers’ Association (SAAGA), the industry supports the employment of 1 person per 2,4 hectares.


In Tanzania it is about double that, granted the biggest difference is land ownership. These smaller scale (relative to commercial) farmers live on the land and tend to their orchards daily, if the need arises. Commercial farms represent a fraction of what exists in South Africa, maybe 6-8 percent at a commercial level, by a measure of more than one contiguous planting. Then again, who determines what is commercial and what not, the smaller scale farmers are definitely commercial in nature.


Land dispossession (legislated for 78 years in South Africa, black South Africans could not own 93 percent of the land in their land of birth, until as recently as 1991) and a lack of rural development help (and we are talking about hard green dollars) for new aspirational farmers to transform the industry have not been forthcoming.


I spoke to a farmer in the Tzaneen area, he happened to be black, and he said he had done it all himself, no support from government and definitely not the established industry. Established industry I can understand, who would want to spawn the competition? Government, well ….. let us just say that resources are not forthcoming for obvious reasons. It becomes harder to crack the market with a higher cost base.


To cut to the proverbial chase, and this is what interests you, the customer, the most, Tanzanian farmers can offer generally water neutral (and by this, I mean no irrigation), mostly all organic in nature, and definitely conflict free. No fences. No guard dogs, no security for the fruit, you could walk from the road to the tree and pick it, if you wanted. But nobody does, the village community trust system is real, and works. ---- Cheaper. Organic. Longer supply.


Tanzanian avocados would be cheaper than Spanish avocados by a long, long way. And the best quality. I can assure you that, the best and quickest cash conversion for Spanish farmers would be their “local” European markets, and here they would achieve the best price, and obviously send their best quality to close markets. I cannot believe that Spanish farmers would export their best fruit to South Africa. I may be wrong, but I doubt it.


Conversely, Tanzanian farmers would send their best Grade A (or class 1) Hass avocados. Strangely, as South Africa is predominantly an export market themselves, the best fruit is sent for export, the overflow fruit not for export would be presented to the local market, mostly for the Capetonians. As Tanzania would view South Africa as an export market, premium grade Hass would be enjoyed for as long as 8 months of the year.


And the best part is that it could reach Johannesburg, border crossings willing, in less than 8 days from harvest. It could be in the supermarkets and in your fruit bowl in around 10-12 days less than the Spanish fruit. And no doubt of course, less time than the Israeli or Mexican fruits. Or even Kenya. Only Mozambique and local supply from South Africa will reach markets in time.


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Let us start today! Not so fast.


So why is this not the case to simply import fruit? Well, it is much harder than you think to just import fruit into a country, even if they are on a relative basis in close proximity to one another. Tanzania and South Africa are part of a trade bloc that is supposed to have standards and norms in order to promote and support trade, spread services and knowledge and make it seamless to operate. Including agriculture.


This trade bloc is known as SADC, The Southern African Development Community Free trade area was adopted in August 2008.


Earlier In 2004, the governments of SADC in Dar es Salaam signed a declaration on Agriculture and food security in the SADC region:


Point 5 in the segment titled “In the medium to long term (2004-2010) ensure” makes reference to market access, which states the following:


b) establish price stabilization mechanisms to protect both smallholder producers and consumers in accordance with WTO provisions on domestic support for agriculture;


As well as


c) strengthen rules and disciplines governing trade in agriculture through the implementation of the SADC Trade Protocol


AND


d) expedite harmonization and implementation of Sanitary and Phytosanitary measures to the required international standards


SADC should have easier access to one another’s products, in particular if climate events are going to throw a spanner in the works with regards


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We need to protect our plants from pests and diseases. Let us use common sense.


That said, there are international plant protection protocols that are in place to protect the wildlife and agriculture of each country, a 1997 treaty which falls under the umbrella of the World Trade organization called the International Plant Protection Convention (IPPC). This set of protocols allows for each country to protect themselves from importing pests and diseases into their own production areas. It is quite clear about the pests and diseases being imported and not actually existing. In order to obtain such clearance, a country has to undergo a Pest Risk Analysis. This procedure is scientific (and we know science is hard) and takes time, and involves plant health officers of both countries.


Pests of concern that occur in Tanzania include, amongst others, the False Coddling Moth and the Asian Fruit Fly, both of which can destroy parts of the agricultural sector. The same SAAGA mentioned earlier, in a letter sent of their support for Tanzanian avocados (after their first letter decided as an industry body, and not government, that the Tanzanian avocado was illegal), stresses these two as their main concern, hampering the import of that origin. South Africa has these pests too. In a very recent SAAGA presentation from last week, available on their website, the organization admits that there are these pests in avocado orchards in South Africa. Sounds strange, I know, science is hard as 2020 has proven to all of us.


Hence, using a phytosanitary certificate issued by Tanzania, which is fine for the purposes of anywhere in Europe, the UK, Singapore, Hong Kong, Dubai, all no problem and being tired of waiting for an industry and not government driven process, we decided ourselves to export this out-grower fruit to South Africa. Kenya has a permit for fresh fruit. Mozambique has a permit for fresh. Zimbabwe has only a processing permit, in other words, only for oil and guacamole, Zambia has nothing in place, like Tanzania. But yet fruit from Kenya can be trucked down through countries that have no permits, carrying pests that fly in the window and discharging them in Polokwane when the thirsty truck driver stops for refreshments. And then fly out the window.


None of these made sense at a scientific level, if one is worried about specific flying pests, how could one country next door, Zimbabwe, be only OK for sending their fruit for oil and guacamole to one of the SAAGA members, but not for the fresh market. Mozambique is seemingly fine. Kenya is fine, Tanzania, well, they are not.


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Science is harder than ever before.

In a working paper titled PEST RISK ANALYSIS (PRA) TRAINING for the purposes of background to norms around International Plant Protection, the convention paper states the following:


Like the IPPC, the WTO-SPS Agreement states that measures must be science-based and not used for the purpose of trade protection. It requires that phytosanitary measures be based on an assessment of the risk to human, animal or plant health, taking into account risk assessment techniques developed by the relevant international organizations, and that they should be technically justified. "


"Transparency—countries should publish and disseminate phytosanitary requirements, restrictions, and prohibitions promptly and the rationale for such measures should be made available upon request."


"Non-discrimination—phytosanitary measures should be applied without discrimination between countries of the same phytosanitary status. For a particular quarantine pest, phytosanitary measures should be no more stringent when applied to imported goods than measures applied to the same pest within the territory of the importing country."


I have read reams and reams of IPPC protocols and standards and have even read World Trade Organization protocols and treaties.


I have read all these documents looking for where the industry should get involved after a Pest Risk Analysis has been done. This should not happen, but I have seen industry funded bodies write the import permits for government. It sounds strange to me that the avocado industry in South Africa should dictate to the very custodians of the plant health, the Government, and the plant health officers, what terms and conditions should be applied to fruit imports. Yet, I have been privy to those emails that suggest exactly that. If you do not believe me, spend 120 odd Rand and apply for a permit for processed avocado from Zimbabwe, see the exact co-ordinates of where the fruit must come from and where it must go to.


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Little moustaches and spectator shoes.


I have seen combative industry insiders scare the living daylight out of the marketplace. I have seen first-hand the bullying and threats towards anyone involved with Tanzanian avocados. I have seen tactics that resemble those of people with thin moustaches, pin striped suits and spectator shoes (look it up), a fedora hat to boot to close out the look. There has literally only been support from one fellow, a nice man and established farmer who has stuck his neck out. Everyone else is scared of the majors, and that is not the way that a market should work.


Contrary to the belief from some in the industry in South Africa, these fruits are not of inferior quality. A CEO of a very well-known global avocado company, and member funder of many bodies, including SAAGA, said that the fruit is not the right quality. He went on to say that this is because the bulk of it is coming from out-growers, the quality is not up to standard. And it is not controlled. This is ironically the same fruits from the same farmers who supply seeds that the major nurseries use for their trees. Including the one that he works for. That point, I think, is important.


South Africa had no problem in granting a permit for the import of fresh avocado seed (this one was easy to obtain) that is used in some of the major nurseries in the country, but fresh fruit, well, that is too close to home. It boggles the mind that the seed for the finest trees in the world, produced for the purposes of commercial farming, come from these small-scale farmers, but the same out-growers who grow fruit (from the same seed), grow inferior fruit. Something does not add up there. Again, we all know, science is hard, opinions are easier, even if no scientific evidence is supplied. I am not stupid, nursery engineered plants with years of expertise and science are likely to produce something special. That said, I have seen a “Rolls-Royce” tree next to a locally produced one in an orchard, the yields and quality of the tree health are not detectable to the naked eye. Again, science is probably too hard for me. -----


Consumers will win in the end.


This process of obtaining a permit has taken five years, and then some more. Started over a decade ago, with questionnaires and detailed scientific analysis. A lack of willingness and capacity has held it up more recently, with sluggishness from government and despite industry displaying their support, we have experienced almost the exact opposite of that.


One other point, it is no secret that the South Africans are trying to open avocado fresh fruit access in the same way as Tanzania to newer consumers globally. It does however take two to tango, you cannot have it both ways, if the world knows your country takes a tough stance for locally (regionally) produced fruit, it is quite some irony that the same would happen in return. Message, be nice and others will be nice too.


The growing conditions of the Southern Highlands of Tanzania represent some of the best globally to grow avocados in a natural way. And by that, I mean with nature. As consumers become more aware of the environment, so they will look at drip irrigated and fed fruits in the desert areas of South America and wonder about sustainability.


The quality of the fruit, you can decide, the customer. The consumer of the superfood. And not the industry who are genuinely threatened and acting in a protectionist manner. With growing global demand and markets opening up all around the world, South Africa should welcome the fruit to their non-existent pest flyover border (flying creatures don’t clear customs, do they?), in the same way that the USA and the reluctant California avocado farmers accepted Mexican fruit. And guess what? Consumption went up sharply, and prices for the local farmers didn’t fall. If anything, with a readily available 12-month supply of regionally produced fresh fruit on the doorstep, demand went up sharply and continues to grow.


South African consumers with cheaper fruits on their supermarket shelves year around, during the warm days of summer, would maintain their year around demand, meaning when the local fruits came, their appetites would remain unchanged. The impact could be the same for local farmers, seeing consumption growing and volumes increase. By consuming more favourite tropical fruits, supply from the region could boost economic growth. In fact, the transfer of knowledge to even start a similar program in South Africa could become a reality in the very short term, empowering small-scale farmers with cheaper seedlings and industry support. I think that it would go a long way to reducing prices locally on the South African market, which would hopefully see the risk-reward ratio of thieving of fruits reduced dramatically. And a cost reduction by extension around security and safety. Share and be rewarded. Or maybe I am just naive. Either way, the consumer and the farmers, both commercial and small scale could all be winners. Watch the space. For the time being, the same still applies, you could be eating cheaper avocados, if only others wanted you to.

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