AN OVERVIEW OF THE SOUTH AFRICAN AVOCADO INDUSTRY by larryp

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									        AN OVERVIEW OF THE SOUTH AFRICAN AVOCADO INDUSTRY

D.J. Donkin
South African Subtropical Growers’ Association, PO Box 866, Tzaneen, 0850
Email: derek@subtrop.co.za
August 2007

Abstract
The South African Avocado industry consists of 12 000 ha of commercial avocado
orchards, the majority of which are situated in the North Eastern part of the country
in the Limpopo and Mpumalanga provinces. Avocados are also grown commercially
in certain areas of KwaZulu-Natal Province. Annual production is the region of       90
000 t, of which approximately 40 000 t is exported the Europe and the United
Kingdom. The remainder of the crop is consumed domestically and approximately
10% is processed (oil and purée). The South African Avocado Growers’ Association
(SAAGA) has a voluntary membership accounting for 85% of export production. The
aim of the association is to improve the profitability and sustain the viability of
growing avocados in South Africa. SAAGA’s activities are funded by its members
and include technical research, extension services, generic promotion to develop the
local and export market, and the provision of marketing information. Generic
promotion is based on public relations techniques and accounts for 45% of SAAGA’s
budget. Current trends in the industry include consolidation within the export
business, private cultivar development, integrated fruit production, processing,
growth of the South African market and efforts to access new markets.


Keywords
Avocado, South Africa, Trends, Generic Promotion

1. Introduction

Avocado production in South Africa is concentrated mainly in the warm subtropical
areas of the Limpopo and Mpumalanga provinces in the North East of the country
between latitudes 22 oS and 25 oS. Annual rainfall in most of these areas is high (>
1000 mm p.a.), but there are some orchards in semi arid regions with rainfall of ±
400 mm p.a. Approximately 8% of commercial avocado orchards are in KwaZulu-
Natal province where the conditions are cooler due to the more southerly latitude (±
30 oS).

The South African Avocado season extends from mid-March to September. Due to
climatic variability between growing regions, most of the major cultivars are available
over an extended period during the season. For example, ‘Fuerte’ is harvested from
mid-March to May in the northern regions, and is harvested in July and August in
KwaZulu-Natal.


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The avocado industry in South Africa expanded steadily in from the early 1970s to
2003, with plantings of ±2000 ha in 1970 increasing to ±12 000 ha in 2003. Growth
in plantings, however, has slowed since 2003 with total area planted to commercial
avocado orchards remaining stable at around 12 000 ha. ‘Hass’ and ‘Fuerte’ are the
major cultivars each accounting for 37% of the area under avocados. Details of
cultivar composition are provided in Fig. 1. Due to the European Market’s preference
for ‘Hass’ less ‘Fuerte’ has been planted than ‘Hass’ in recent years, and in many
cases ‘Fuerte’ orchards have been re-planted to ‘Hass’.

Approximately 70% of the trees produced by avocado nurseries are ‘Hass’ and the
remaining 30% is comprised mostly of ‘Fuerte’, ‘Ryan’ and ‘Pinkerton’. Avocado
nurseries are currently producing ca. 110 000 trees p.a. These trees are mainly
being used to replace old orchards, but there are also some completely new
orchards being planted.




                                Other
                                 2%
                        Ryan            Edranol
                        12%               3%
          Pinkerton
             9%                                                 Fuerte
                                                                 37%




                        Hass
                        37%




Fig. 1 Cultivar composition (by area planted) of the South African avocado
industry. (Total area planted = 12 000 ha).




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High summer rainfall (> 1000 mm p.a. in most areas), and warm temperatures
contribute to the incidence of root rot caused by Phytophthora cinnamomi. This
disease is effectively controlled through phosphorous acid trunk injections integrated
with practices that promote root health, such as the addition of compost and
mulches. The majority of plantings since the early 1980s have been on
Phytophthora- tolerant rootstocks such as ‘Duke 7’, and in recent years a growing
number of trees on the rootstock ‘Merensky II (Dusa®) have been planted.
Approximately 60% of current nursery trees are on ‘Merensky II’. Other commonly
used rootstocks include ‘Duke 7’, ‘Bounty’, and Velvick seedling.

Exports of approximately 40 000 tons p.a. account for ca. 50% of production. The
United Kingdom and Western Europe absorb at at least 90% of the exported crop
with the remainder feeding Eastern Europe and the Middle East.

Although the South African industry is export orientated, the South African market
also plays a significant role with demand having grown considerably over the past
few years.


2. Organisation of the industry

2.1 The South African Avocado Growers’ Association

The South African Avocado Growers’ Association (SAAGA) has a voluntary
membership that accounts for 85% of South African avocado exports. Activities of
the association are funded by its grower members through levies on local and export
sales. The aim of SAAGA is to improve the profitability and sustain the viability of
growing avocados in South Africa. To this end, the association is involved in the
following activities:
- Technical support and advisory services to its growers
- Funding of appropriate technical and market research
- Provision of relevant market information
- Local and export market development through generic promotion
- Liaison with government and other bodies both locally and abroad.
Although SAAGA is funded by growers other role players, such as export
companies, are also members.

2.2 Quality standards and food safety

Quality standards for export are determined by SAAGA in association with the
National Department of Agriculture. These standards ensure that a good quality
product – meeting the standards of the country of destination- is exported, and
include factors such as fruit maturity, size, and blemish levels. Quality inspections
are carried out by a parastatal organisation, the Perishable Products Export Control


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Board (PPECB) on a consignment basis prior shipping. The PPECB also ensures
that standards for refrigerated road transport and refrigerated containers are met. In
addition, growers that export have to comply to Good Agricultural Practice standards
that are laid down by the Department of Agriculture. This however, is the minimum
standard and more than 95% of the industry is EurepGAP accredited. Other
accreditations such as HACCP, BRC. LEAF, Fairtrade and Tesco Nature’s Choice
are commonplace. The Food safety and traceability systems in place are an
indication of the sophistication of the industry.


3. Export logistics

The majority of avocados are exported by sea in refrigerated containers under
controlled atmosphere (CA). 1-MCP (SmartFresh®) treatment is used as an
alternative to CA for fruit destined for markets where avocados are not ripened prior
to retail. Airfreight is expensive and is only viable when prices are abnormally high.
Fruit exported by sea is packed and cooled in the production regions. It is either
loaded directly into refrigerated trucks at the packhouse or into refrigerated
containers for transport to by road or rail to the port. Avocados transported in
refrigerated trucks are containerised in the port prior to shipping. Cape Town is the
major export port and is approximately 1800 km from the production regions. The
sea voyage from Cape Town to Europe takes 12 to 14 days. Because it takes fruit
about 25 days from packing to reach the European retailer, strict control of all links in
the cold chain is vital in order to maintain high standards of fruit quality.


4. Generic promotion

SAAGA has been funding generic promotions in the United Kingdom for the last 11
years and in the South African market for the last 9 years. A campaign was also
launched in France in 2007. Promotional activities account for ± 45% of SAAGA’s
annual budget. All of SAAGA’s promotional campaigns are based on Public
Relations (PR) techniques, as opposed to advertising. A PR approach to promotion
is one that makes use of journalists to write articles that will change perceptions and
educate the target audience. Using this approach, journalists are not paid to write
about avocados, instead, they are supplied with interesting information, recipes,
press releases and photographs that will encourage them to write about avocados,
or include them in a feature on a radio or TV programme.

Advertising differs from PR in that one has to pay directly for space in the media and
is therefore more costly than PR. Advertising is more target orientated because
adverts can be placed in a specific place at a specific time, whereas with PR, one
can never be sure when a journalist’s article will be published. As a result, an
advertising campaign would usually have more of an immediate effect than a PR


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campaign. On a relatively modest promotions budget, PR is deemed to be more
cost-effective than advertising. But in order to be effective, a sustained effort is
required. This is why SAAGA has persisted with its PR campaigns over a number of
years and regularly receives media coverage with an advertising equivalent value in
excess of 10 times of the total amount invested in particular campaign.

SAAGA’s promotional activities in the UK have contributed to an annual average
growth of 11.6% per annum in that market. The UK is South Africa’s most stable and
lucrative market and is the market in which South African avocados are most
prominent during the South African season. In 1995, prior to the onset of South
African generic promotions, 16.7% of the South African export crop was sold in the
UK and in 2006, 34.3% of SA exports were sold in the UK. Research carried out by
Taylor Nelson Sofres indicates that the number of households in the UK that eat
avocados has grown from 16% in 2001 to 25% in 2006. It is believed that the
availability of ripe and ready to eat avocados has also stimulated consumption. In
2005, the Chilean industry started with generic promotions in the UK. These
promotions start at the end of the South African season and the beginning of the
Chilean season, thus extending the period in which avocados are promoted and kept
foremost in the minds of British consumers. Consequently, the Chilean promotions
are also have playing an important role in increasing household penetration.

5. Current trends in the industry

5.1 Integrated fruit production

Integrated fruit production is well established in the industry. Growers are aware of
the negative effects of the injudicious use of pesticides- both to humans and to the
orchard ecosystems. Insect pests are monitored, and registered insecticides are only
used if economic thresholds are exceeded and pre-harvest intervals can be adhered
to. Similar principles are applied to disease control and fungicide applications.
Compost production is common on many farms and the value of compost in terms of
maintaining a healthy population of soil microbes for tree health and optimum tree
nutrition is evident.

5.2. Consolidation within the industry

A need for continuity of volume in order to meet the requirements of supermarket
programmes has resulted in significant consolidation within the South African
avocado export business. Contracts with major retailers provide greater price
stability than selling fruit on the open market. Eighty percent of exports are controlled
by four companies, all of which have strong grower involvement. These exporters
either have their own importing companies in Europe and the UK or work very
closely with established importers.



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5.3 Growth in the South African market

Since 2000, the South African economy has been growing at a rate of 3.5% per
annum. Coupled to this, is rapid growth of the middle class. Greater levels of
dispensable income, together with generic promotion and an awareness of the
importance of healthy eating, have increased the demand for avocados. There has
also been growth in the upper income group that is willing to pay high prices for
value added products. Consequently, there is strong growth in sales of avocados
that are sold ripe and ready to eat.

5.4 Processing

It is estimated that 10% to 12% of the annual crop is processed either into
Guacamole or oil for cosmetic or culinary use. Only ‘Hass’ is used in the production
of Guacamole, whereas all cultivars are utilised for oil extraction. Processed
avocado products are sold locally as well as on the export market.


5.5 New markets

The South African industry is working on accessing new markets such as the USA,
Japan and China. Access efforts are being carried out within the bounds of official
government-to-government protocols. Research is underway in order to develop
mitigation procedures for phytosanitary pests, according to the specific requirements
of new markets.

5.6 Cultivar development

Historically, development and testing of new varieties and rootstocks has been
viewed by growers as something that SAAGA should engage in on behalf of the
industry. However, in recent years, nurseries have entered this field to take
advantage of commercial opportunities linked to cultivar ownership.


References

National readership survey www.nrs.co.uk

SAAGA, 2005. South African Avocado Growers’ Association Avocado Tree Census.




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