Developing new markets is essential in spreading and managing market risk. Where New Zealand and Australia have secured new markets for their fruit, South Africa seems to struggle to maintain the ones we already have. The managing director of Tru-Cape Fruit Marketing, Charles Hughes, spoke to Glenneis Erasmus.
How did South Africa’s loss of access to the Thai fruit market affect the local industry?
The industry suffered a severe blow as Thailand used to import a substantial volume of our apples and pears. Size and taste requirements of the Thai market are different to those of most other markets, so we couldn’t simply divert fruit to Europe or the Middle East. Sending fruit to other markets also led to an oversupply. The estimated loss is probably in excess of R50 million.
Why did we lose this market?
Thailand gave us about a year’s notice regarding its plans to change import protocols early in 2008. Unfortunately, South Africa did not see this as a priority. When the country closed the door on us, it became an issue.
Can’t we just sign a new agreement?
Thailand has a string of requirements it wants resolved before we can re-enter the market. The Department of Agriculture is working hard to get them resolved. Even so, it’ll take several years and in that time, we’re allowing other countries to firmly establish themselves in the market we used to own. Even when exports are opened again, it’ll take a long time to re-establish ourselves.
What’s happening in Russia?
Russia is one of the world’s largest importers of fruit and vegetables. It used to be a dumping ground, but as consumers become more sophisticated they demand better quality. In November last year, Russia released a Memorandum of Understanding (MoU) specifying minimum chemical residue and other food safety requirements. They wanted the document signed in January this year, which was just too soon for us. We’re, however, fully prepared to meet Russia’s requirements. Other countries have already signed the MoU, but with provisions of dialogue to agree to the requirements.
Did other countries have similar problems meeting the regulations?
Argentina signed the agreement almost immediately. It’ll now be off the radar and subjected less to Russian scrutiny at negotiation time. The Russian market has huge potential, despite the current financial problems. It could bring at least R500 million into the South African economy.
What is our relationship with the market in China?
All countries used to export via Hong Kong to southern China before joining the World Trade Organization six years ago. China’s policy in 2002 allowed South Africa to export citrus to it ex gratia (not compelled by legal right). But we didn’t export fruit during that time. The grape protocol was signed in 2007, but for export of other deciduous fruit like pears and apples, a protocol should have been signed in November last year. Cold chain protocols for grapes and citrus are making these difficult to export. We hope apples will be easier so we can maintain the low zero-degree regime.
Some people were sceptical about trade negotiations because part of the signing of the grape protocol involved an agreement with China, allowing it to export apples and pears to South Africa in return for market access. These people feared China might flood our market with apples. It’s ludicrous to think this. We’ve only received about two containers of apples and a few containers of pears since signing the agreement, with no effect on our own product sales.
Which other markets are also affected by new regulations?
Countries are continuously changing the rules, putting increasing pressure on our agriculture department. We can’t afford not to export. Our domestic market won’t be able to absorb that much fruit. We need to expand to diversify market risks.
So where does the problem lie? Is it with the agriculture department, a shortage of staff or incompetence?
Most staff work hard and are eager to promote the industry. The South African agricultural attaché in China, for example, has extended his term there to finalise negotiations.
Top and senior management understand the importance of these markets and how they work. In China, for example, only ministers do business with ministers and only presidents do business with presidents and sign documents or perform trade negotiations. The same applies to Russia and Thailand.
Changes in government add to the problem both here and there as priorities keep changing, much the same as would happen in commercial business. This impacts directly on our ability to take care of growers’ interests.
With the current global financial crisis, our agricultural industry needs as many open markets as possible to spread production and protect our values. |fw
