Commodity Profile by gyvwpsjkko

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									              APRICOT MARKET VALUE CHAIN PROFILE


1 DESCRIPTION OF THE INDUSTRY

The South African apricot industry is well established and primarily
aimed at supplying apricots to the export market. Majority of South
African apricots are exported to the northern hemisphere countries
during their winter and spring seasons. The bulk of these sales to the
consumer are by means of contractual agreements via preferred category
suppliers to the large supermarket chains. Furthermore, various export
companies or agents conduct business on the basis of consignment on
behalf of the grower or packer. In 2008, they contributed 5% of the total
area planted for deciduous fruits.

Figure 1: Total value of production
            180000
            160000
            140000
            120000
   R1 000




            100000
            80000
            60000
            40000
            20000
                0
                       9


                                  0



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                   98


                              99



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                19


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                                      20


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                                                                                                        20


                                                                                                                   20


                                                                       Years

Source: Agricultural Statistics

The industry operates in a deregulated environment were prices are
determined by the market forces of demand and supply. In 2007/08,
total value of production for the sector was approximately R101 million.
As indicated on Figure 1, that represents a 26% increase in total value of
production for apricots from the 2006/07 season. The value of
production for the industry has been on the increase from 2001/02 to
2003/04. That may have been due to an increase in exports. However,
there was a 49% decrease in 2004/05. That may have been mainly due
to amongst others severe droughts and floods in some areas of the
Western Cape, major logistical problems and a sluggish demand in the
United Kingdom and other European markets.



                                                                1
1.1 Production areas

South Africa’s main apricot producing area is Little Karoo. In 2008
production year, Little Karoo accounted for 73% of all apricots produced
in South Africa. Provincially, the Western Cape is the leader in
production of apricots. This is primarily due to its Mediterranean type
climate (cold winters and hot dry summers) that is suitable to apricot
production.

Figure 2: Production areas in 2008
                       Villiersdorp/                Others
           Piketburg                   Hex Valley
                        Vyeboom                       5%
              4%                          2%
                             2%

Langkloof East
     6%

 Langkloof West
       2%


   Ceres
    4%



 Wolseley/Tulbagh                                       Little Karoo
       2%                                                    73%




Source: Deciduous Fruit Producers Trust, 2008


Total production area for apricots in 2008 was 3 750 ha, which
represents a 4% decrease in total hectares used for apricot production in
2006/07 season. Figure 2 above shows that in terms of the area planted
for apricots in hectares, the Little Karoo accounted for 73% with 2 722
ha, Langkloof East accounted for 6% with 227 ha and Ceres accounted
for 4% with 160 ha.
1.2 Production

Apricot production trends planted from 1998/99 to 2007/08 are
represented by Figure 3.




                                           2
Figure 3: South African total production, 1998/99 – 2007/08
            120,000

            100,000

             80,000
     Tons




             60,000

             40,000

             20,000

                 0
                       9


                                  0


                                             1


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                                      20


                                                 20


                                                            20


                                                                       20


                                                                                  20


                                                                                             20


                                                                                                        20


                                                                                                                   20
                                                                        Years

Source: Agricultural Statistics

Figure 3 shows that total apricot production has decreased steadily
2000/01 to 2002/03. That may have been due to pressure caused by the
strengthening of the Rand particularly in the processing industry. Large
proportions of the apricots are produced for processing. There were 51%,
42% and 29% increases on production of apricots in 2003/04, 2005/06
and 2007/08 respectively. It is also clear from Figure 3 that the apricot
industry generally experience effects of alternate bearing 1 after previous
season’s big crop.

1.3 Employment

Full-time labourers employed on apricot farms are primarily employed for
a number of specialist tasks such as pruning and training of trees.
Labour is also required to carry out thinning practices during blooming
or during first four weeks of fruit growth. Other tasks include harvesting
supervision, operational duties in the pack house, irrigation
management, scouting for insects and diseases on seasonal basis, tractor
or forklift driving and grafting.



1   The tendency of fruit trees to bear fruit in 2-year cycles, consisting of large crops
followed by little or no crop, is termed alternate or biennial bearing. Alternate bearing
occurs in most tree-fruit crops.




                                                                 3
Seasonal labour is employed on a contractual basis for a fixed period of
time with the main purpose of harvesting the crop/or fruit packing. The
prescribed minimum wage is used as a baseline for determining basic
wages in accordance with the legislation governing conditions of service.
Much of this labour is drawn from the ranks of the unemployed persons
in neighbouring towns. In some cases a system similar to the previous
recruitment of migrant labour continues to be used.

The industry makes an important contribution to direct employment in
the apricot production and processing. It provides indirect employment
for numerous support industries in the areas where plums are grown.
Direct employment within the industry in 2008 was estimated at 4 137
people with 16 549 dependents.




                                   4
2 MARKET STRUCTURE

Figure 4 illustrates crop distribution for apricots. The distribution is similar
to peaches with between 70 and 80% being processed, followed by dried
apricots. However, since the deregulation of the agricultural sector in the
mid 1990s, export volumes of apricots overtook the local market of fresh
volumes. There is a scope to expand apricot exports with the right cultivars
and an increase in market access to markets that is not currently part of the
marketing portfolio.

Figure 4: Crop distribution

          90000
          80000
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          60000
   Tons




          50000
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                                                Years

                                  Local   Exports       Processed   Dried

Source: Agricultural Statistics

2.1 Domestic markets and prices

Local market volumes and general price trends for apricots from
1998/99 to 2007/08 are represented by Figure 5 and table 1.




                                          5
Figure 5: Local apricot sales
         4000                                                                                                                                                                              5000

         3500                                                                                                                                                                              4500
                                                                                                                                                                                           4000
         3000
                                                                                                                                                                                           3500
         2500                                                                                                                                                                              3000




                                                                                                                                                                                                  Rand/Ton
  Tons




         2000                                                                                                                                                                              2500

         1500                                                                                                                                                                              2000
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         1000
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           0                                                                                                                                                                               0

                            99               00               01               02               03                04               05               06               07               08
                   9   8/           9   9/           0   0/           0   1/           0   2/            0   3/           0   4/           0   5/           0   6/           0   7/
                19               19               20               20               20                20               20               20               20               20
                                                                                                     Years

                                                                   Volume in Tons                       Average price in Rand/Ton

Source: Agricultural Statistics

As illustrated by Figure 5, volumes of local apricots market have been
decreasing particularly from 2000/01 to 2002/03. Generally, local
market has not experienced significant growth in the last decade. That
lack of growth in the local market may be due to a lack of coordinated
marketing. At the same time, local apricot prices have been increasing
from 2001/02 to 2006/07 mainly as a result of increased demand of
apricots during that period.

Table 1: Apricot price trends, 1998/99 – 2007/08
Years                            Average price on                                                Export net                                                      Processed average
                                 national markets                                                realization in                                                  price in Rand/Ton
                                 in Rand/Ton                                                     Rand/Ton
1998/99                          R1 854.00                                                       R7 267.00                                                       R566.00
1999/00                          R1 972.00                                                       R10 901.00                                                      R525.00
2000/01                          R2 150.00                                                       R10 184.00                                                      R703.00
2001/02                          R2 177.00                                                       R5 418.00                                                       R793.00
2002/03                          R2 803.00                                                       R7 033.00                                                       R1 063.00
2003/04                          R3 230.00                                                       R5 699.00                                                       R1 142.00
2004/05                          R3 662.00                                                       R7 186.00                                                       R1 017.00
2005/06                          R3 604.00                                                       R7 277.00                                                       R875.00
2006/07                          R4 488.00                                                       R4 033.00                                                       R1 057.00
2007/08                          R4 668.00                                                       R4 036.00                                                       R1 190.00
Source: Agricultural Statistics




                                                                                                       6
Historically, apricots have generally fetched higher prices in exports than
in both the local and processing markets. However, since 2006/07, local
market has been fetching higher prices than the export market. Price
fluctuations in the past decade can be attributed to fluctuations in
production volumes which occurred mainly as a result of inconsistent
weather conditions.

2.2 Exports

South Africa is a relatively small apricot grower in terms of global
hectares. However, the country is a major volume exporter in global
terms. Apricot sold in both export and local markets generate a greater
unit price than that achieved in the processing market. Therefore,
management orientation and understanding of the rules of both the
export and local markets are critical factors in the pathway to success in
apricot production.

Figure 6: South African Apricot exports, 1998/99 – 2007/08

          6000                                                                                                             12000


          5000                                                                                                             10000


          4000                                                                                                             8000




                                                                                                                                   Rand/Ton
   Tons




          3000                                                                                                             6000


          2000                                                                                                             4000


          1000                                                                                                             2000


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                                                 01




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                       19




                                              20


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            19




                                  20




                                                                    Years

                                             Volume in tons            Net Realisation in Rand/Ton

Source: Agricultural Statistics,

According to Figure 6, there was a 22% increase on apricot exports in
2007/08 when compared with the 2006/07. However, there was no
increase in export price at the same time. Adverse weather conditions in
some leading production areas during the critical stages of flowering
period as well as the effect of alternate bearing after the previous
season’s big crop affected the export volumes negatively in 2006/07.
Furthermore, there were shipping delays before Christmas, mainly as a


                                                                        7
result of congestion in the Durban port. That caused some problems
particularly towards the latter part of the season.

Figure 7: Export destinations for South African fresh apricots in
2008




                                                      'United Arab
                                                        Emirates
                                                          18%
                            'Germany
                              11%
                                                                     'Belgium
                                                                        3%
       'United Kingdom
             19%                                                     'Saudi Arabia
                                                                          4%

                                                                     Others
                                                                      5%

                                       'Netherlands
                                           40%




Source: International Trade Centre (ITC)

Netherlands and the rest of the European Union (EU) countries such as
Germany and United Kingdom (UK) hold by far a bigger market share of
South African fresh apricot exports according to Figure 7. Together they
constituted approximately 73% of South African fresh apricot exports in
2008. This is in comparison with approximately 98% exported to the
European Union member states in 2007. There are attempts to expand
other markets in the Middle East countries such as United Arab
Emirates (UAE) and Saudi Arabia. The aim is to increase the current
percentage shares in these growing markets.




                                             8
Figure 8: Export destinations for South African dried apricots in
2008




                            'Netherlands        Other
           'New Zealand          6%              1%
               9%                                       'Australia
                                                          38%


         'Japan
          13%




                                       'Switzerland
                                           33%




Source: International Trade Centre (ITC)

Australia, Switzerland and Japan hold a larger market share for the
South African dried apricots according to Figure 8. Together, both
countries constituted over 80% of the South African dried apricots
exports in 2008. Switzerland and Netherlands, the only European Union
member states in the top five importers of South African dried apricots
hold approximately 40% market share for South African dried apricots,
again indicating the importance of the EU as an export market. Japan
holds the biggest market for South African dried apricots exports in the
Far East region. The country is responsible for 13% of the South African
dried apricots exports.




                                            9
Table 2: Leading fresh apricot exporters in 2008.
                                                        Annual
                                              Annual
                  Value                                 growth   Share
                         Quantity             growth
               exported                                   in      in
                         exported Unit value in value
 Exporters      in 2008,                               quantity  world
                          in 2008 (USD/Ton) between
                 in USD                                between exports,
                           (Tons)              2004-
               thousand                                  2004-     %
                                             2008, %
                                                       2008, %
'World            376308    207187      1816       14          6    100
'France            91232     29155      3129         6       -12 24.24
'Spain             68877     35687      1930       11          1   18.3
'Kyrgyzstan        33995     21541      1578      111         65   9.03
'Turkey            31968     22101      1446       32         28     8.5
'Greece            30648     16503      1857       17          9   8.14
'Italy             29724     13257      2242       13         -3     7.9
'USA               14545      8738      1665       14          7   3.87
'Netherlands       12052      4390      2745       15         -6     3.2
'Uzbekistan         9165      9761       939       10          7   2.44
'South
Africa               6733        5190           1297   7    35      1.79
Source: International Trade Centre (ITC)

Table 2 shows that globally, France was the biggest exporter of fresh
apricots in 2008, exporting over $91 million a year and accounting for
24.24% of world export market in fresh apricots. Second was Spain with
18.3% market share followed by Kyrgyzstan (9.03 %) and Turkey (8.5%).
SouthAfrica contributed 1.79% share in word exports of fresh exports in
2008.

In terms of annual growth between 2004 and 2008, exports of fresh
apricots from Kyrgyzstan increased by 111% and 65% in value and
quantity. Another country that experienced high growth in both value
and quantity is Turkey. The country increased its value and quantity by
32% and 28% respectively.

At the same time France experienced a 12% drop in quantity exported
between 2004 and 2008. Italy and the Netherlands also experienced
negative growth in quantities exported during the same period.




                                           10
Table 3: Leading dried apricot exporters in 2008
                                                       Annual
                                              Annual
                  Value                                growth   Share
                         Quantity             growth
               exported                                  in      in
                         exported Unit value in value
Exporters       in 2008,                              quantity  world
                          in 2008 (USD/Ton) between
                 in USD                               between exports,
                           (Ton)               2004-
               thousand                                 2004-     %
                                             2008, %
                                                      2008, %
'World            419287   146442       2863       14       10     100
'Turkey           313496     98178      3193       13         5  74.77
'Tajikistan        26511     26403      1004       46       73    6.32
'France            14583      2421      6024       -1       -5    3.48
'Germany           11805      2617      4511       18       15    2.82
'USA                 8022        2334           3437    15    14      1.91
'Netherlands         4496        1164           3863    15     9      1.07
'Slovakia            4466         856           5217   138   117      1.07
'RSA                 3811         827           4608    -6    -8      0.91
'Uzbekistan          3663        2996           1223    50    51      0.87
'Italy               3527         564           6254    16    13      0.84
Source: International Trade Centre (ITC)

Table 3 shows that globally, Turkey was the biggest exporter of dried
apricots in 2008, exporting over US$313 million a year and accounting
for 74.77% of world export market in dried apricots. Second was
Tajikistan with 6.32% market share followed by France (3.48%) and
Germany (2.82%).In 2008 South Africa was the only significant exporter
of dried apricots in the Southern hemisphere.

In terms of annual growth between 2004 and 2008, exports of dried
apricots from Slovakia increased by a substantial 138% and 117% in
value and quantity. Another country that experienced high growth in
both value and quantity is Tajikistan. The country increased its value
and quantity by 46% and 73% respectively. Uzbekistan increased its
value and quantity by 50% and 51% respectively, whereas Germany
increased its value and quantity by 18% and 15% respectively.

It is interesting to note that South Africa’s annual growth between 2004
and 2008 in value and quantity has decreased by -6% and -8%
respectively. In general, this means that there has been a decline in
export growth of the South African dried apricots between 2004 and
2008.

2.3 Provincial and district export values of South African apricots

A review of provincial level trade data shows that the Western Cape
Province is the major source of apricots destined for the export markets.
The reason for that is the fact that the Western Cape Province is the


                                           11
major producer of apricots accounting for over half of total national
production. Secondly, the registered exporters are based in the province
and thirdly, the province serves as an exit point for apricots exports
through the Cape Town harbour. Figure 9 depicts the value of apricots
exports from each province of the Republic of South Africa.

Figure 9: Value of apricot exports by Provinces
          1000000000

          900000000

          800000000

          700000000

          600000000
  Rands




          500000000

          400000000

          300000000

          200000000

          100000000

                       0
                            1999      2000      2001     2002      2003      2004     2005      2006      2007      2008

          Western Cape 515397343361274355449802464495994471518387850579350539540417429439964456644045211885674960
          Eastern Cape     1605320   878299    335386   5679827   7162430 12223176 5635505     4576234   5000956   5194367
          Northern Cape       0      653820      0        0          0           0   145405       0         0      950175
          Free State       3767734   1956213   658250   563275    1740842    400       0          0        0          0
          Kw azulu-Natal   459741    2567515   6204091 14059666 13413612 2719251     4310799   2335687   3816060   6852703
          North West          0        0       17892    863763       0      339499     0          0        0          0
          Gauteng          30441909 39845516 56842842 93296859 93889619 85221729 74468734 52254179 51096960 57964616
          Mpumalanga        6719       0         0       83208    1416415    14115    36240      292       0        2826
          Limpopo            267      50993      0        0        6726          0     0       941789    3131324   7983528

                                                                         Years

Source: Quantec Easy data

Highlights of the apricot exports in Figure 9 were that the provinces of
Western Cape and Gauteng to a lesser extend were consistently the top
apricot exporting provinces of South Africa over the last decade. Other
provinces featured intermittently but usually registered minimal trade.
The following Figures (Figures 10 – 18) show the value of apricot exports
from the various districts in the nine provinces of South Africa.




                                                           12
Figure 10: Value of apricot exports by the Western Cape Province

                   600000000


                   500000000


                   400000000
  Ran d s




                   300000000


                   200000000


                   100000000


                             0
                                  1999      2000      2001      2002     2003      2004      2005      2006      2007      2008

            West Coast           13805377 5405396 16863384 26501491 13442783 19550445 7102861         9457147 22354642 21322107
            Cape Winelands       25614124 50856108 99481571 159065004 187404375 225028602 232222841 144726634 179909499 337960924
            Overberg             17046647 2735159   6532697   5313921 10317792 2496129      4802776   1803586   8826125 11377727
            Eden                 333432    925471    823214   1004149   842482    1546126   777710    387483    928818    453430
            City Of Cape Tow n 458597764 301352221 326101599 304109906 306380418 330729238 295511242 283589605 432026127 514560773
                                                                             Years

Source: Quantec Easy data

It is clear from Figure 10 that apricot exports from the Western Cape
Province are mainly from the City of Cape Town and Cape Winelands
Municipalities, with high values recorded in 2008 (for both the City of
Cape Town Cape and Winelands). As mentioned earlier on, the use of the
Cape Town harbour as an exit point may have played a major role in the
City of Cape Town being a leader in the export of apricots from the
Western Cape Province.




                                                              13
Figure 11: Value of apricot exports by Gauteng Province

                 60000000

                 50000000

                 40000000
  Rands




                 30000000

                 20000000

                 10000000

                             0
                                  1999     2000     2001     2002     2003      2004     2005      2006     2007    2008

          Sedibeng                  0        0        0        0        0      4094243 4590359 2325722 12296528 14527854
          City Of Tshw ane       10981822 25006008 30087026 39799943 50953425 40372440 31254401 15711363     0     2495193
          Metsw eding               0        0        0        0        0           0     0       1076312 967635      0
          West Rand              3035611     0     555101      0     445817         0   1739553     0      3561779 4805414
          Ekurhuleni             4510218 7622981 17482730 33011956 20191841 17808068 12201545 13314784 15939301 14565301
          City Of Johannesburg 11914258 7216527 8717985 20484960 22298536 22946977 24682876 19825998 18331716 21570854
                                                                            Years

Source: Quantec Easy data

In Gauteng Province, the leading role players in the export of apricots for
the past ten years have been the City of Johannesburg, City of Tshwane
and Ekurhuleni Metropolitan Municipalities. High export values of the
leading municipalities were recorded in 2002 (for Ekurhuleni), 2003 (for
the City of Tshwane) and 2005 (for the City of Johannesburg).




                                                            14
Figure 12: Value of apricot exports by the Kwa-Zulu Natal Province.
              16000000

              14000000
              12000000
              10000000
  Rands




                8000000
                6000000
                4000000
                2000000
                        0
                             1999       2000     2001     2002     2003      2004     2005   2006    2007    2008

          Ugu                  0         0         0        0        0      1164475    0      0        0       0
          Umgungundlovu        0         0         0      191843     0           0     0      0        0       0
          Amajuba              0         0         0        0      32502         0     0      0        0       0
          Uthungulu            0         0       11726     491       0       1208     1962    0        0       0
          Ilembe               0         0       839710     0        0           0     0      0        0       0
          Ethekw ini         459741    2567515 5352655 13867332 13381110 1553568 4308837 2335687 3816060 6852703

                                                                         Years


Source: Quantec Easy data

It is clear from Figure 12 that apricot exports from the Kwa-Zulu Natal
Province are mainly from Ethekwini Metropolitan Municipality. High
export value for the leading municipality was recorded in 2002. The use
of the Durban harbour as an exit point may have played a major role in
the Ethekwini being a leader in the export of apricots from Kwa-Zulu
Natal Province.

Figure 13: Value of apricot exports by the Eastern Cape Province
                   8000000

                   7000000

                   6000000

                   5000000
  Rands




                   4000000

                   3000000

                   2000000

                   1000000

                         0
                               1999      2000     2001     2002    2003      2004     2005   2006    2007    2008

          Cacadu             1605320 843299      194666 1698427 2514337 6885083 1565751       0     1091275 1058882
          Amatole                  0         0      0        0     362721        0     0      0        0      0
          Nelson Mandela           0    35000    140720 3981401 4285372 5338093 4069754 4576234 3909681 4135485

                                                                         Years


Source: Quantec Easy data




                                                            15
It is clear from Figure 13 that apricot exports from the Eastern Cape
Province are mainly from Cacadu and Nelson Mandela Municipalities.
High export values for the leading municipalities were recorded in 2004
(for both Cacadu and Nelson Mandela). The export value of Cacadu has
dropped drastically from the 2004 peak.

Figure 14: Value of apricot exports by the Free State Province
                     3000000

                     2500000

                     2000000
   Rands




                     1500000

                     1000000

                      500000

                             0
                                  1999    2000     2001      2002    2003    2004   2005   2006   2007   2008

           Motheo                  0       0         0      151577    0       400    0      0      0      0
           Lejw eleputsw a       1073141 1938137     0      411698 1740842    0      0      0      0      0
           Thabo Mofutsanyane 2694593 18076        658250        0    0       0      0      0      0      0

                                                                          Years

Source: Quantec Easy data


In the Free State Province, there have been fluctuations on the apricot
export values between 1999 and 2004. The leading role players in apricot
exports are Thabo Mofutsanyane and Lejweleputswa District
Municipalities. High export values for both municipalities were recorded
in 1999 (for Thabo Mofutsanyane) and 2000 (for Lejweleputswa).
Generally, all the district municipalities have been decreasing their
export values, particularly from 2002 (in the case of Thabo
Mofutsanyane) and from 2004 (in the case of Lejweleputswa)




                                                            16
Figure 15: Value of apricot exports by the Northern Cape Province
          1000000

          900000

          800000

          700000

          600000
  Rands




          500000

          400000

          300000

          200000

          100000

                0
                        1999        2000     2001     2002          2003        2004      2005    2006      2007    2008

          Siyanda        0         653820     0        0             0           0       145405    0         0     950175

                                                                         Years

Source: Quantec Easy data

It is clear from Figure 15 that apricot exports from the Northern Cape
Province are from Siyanda District Municipality. High export value for the
leading district municipality was recorded in 2008.

Figure 16: Value of apricot exports by the Limpopo Province
          7000000

          6000000

          5000000

          4000000
  Rands




          3000000

          2000000

          1000000

                    0
                         1999        2000     2001     2002         2003         2004     2005    2006      2007    2008

           Mopani            267     50993        0        0             0           0      0     936891     0     1834209
           Vhembe             0        0          0        0         6726            0      0      4898      0        0
           Waterberg          0        0          0        0             0           0      0       0      3131324 6149319

                                                                             Years

Source: Quantec Easy data

It is clear from Figure 16 that there has been minimal trade in apricots
from Limpopo Province. All the municipalities in Limpopo province


                                                               17
(Mopani, Vhembe and Waterberg district municipalities) have recorded
some trade in the past decade. High export values for the district
municipalities were recorded in 2006 (for Mopani), 1998 (for Vhembe)
and 2008 (for Waterberg).

Figure 17: Value of apricot exports by the North West Province
                 1000000
                  900000
                  800000
                  700000
                  600000
  Rn s
   ad




                  500000
                  400000
                  300000
                  200000
                  100000
                          0
                                  1998       1999       2000    2001     2002    2003      2004      2005    2006   2007
          Bojanala Platinum        0          0          0      17892 863763          0    339499        0     0      0
                                                                              Years


Source: Quantec Easy data

It is clear from Figure 17 that apricot exports from the North West
Province are mainly from Bojanala Platinum district municipality. High
export value for leading district municipality was recorded in 2002.

Figure 18: Value of apricot exports by the Mpumalanga Province
               900000

               800000

               700000

               600000
   ands




               500000
               400000
  R




               300000

               200000

               100000

                      0
                          1999         2000       2001       2002      2003     2004      2005      2006     2007   2008
          Gert Sibande        0          0          0          0    828391       0         0         0        0      0
          Nkangala        6719           0          0        81197 582516 14115            0         0        0     2826
          Ehlanzeni           0          0          0        2011      5508      0        36240     292       0      0
                                                                         Years


Source: Quantec Easy data
It is clear from Figure 18 that apricot exports from Mpumalanga province
are mainly from Gert Sibande, Nkangala and Ehlanzeni district
municipalities. High export values for the leading district municipalities
were recorded in 2003 (for both Gert Sibande and Nkangala) and 2005


                                                               18
(for Ehlanzeni). However there has been a steady decline in the value of
apricot exports from all the district municipalities in Mpumalanga since
the 2003 peak.

2.4 Share Analysis

Table 4 is an illustration of provincial share towards national apricot
exports. It shows that Western Cape together with Gauteng Province (to a
lesser extend) have commanded the greatest share of apricot exports for
the past ten years. As explained earlier, this means that the leading
export Provinces (Western Cape, and Gauteng) derive their advantage
from the fact that the registered exporters are based in their provinces
and they also have exit points for apricot exports.


Table 4: Share of provincial apricot exports to the total RSA apricot
exports (%)

Years          2000       2001   2002   2003     2004   2005   2006   2007   2008
Province

Western         88.7      87.5   81.2   81.5     85.2   86.4   88.0   91.1   91.8
Cape
Eastern         0.2       0.1    0.9    1.1      1.8    0.9    0.9    0.7    0.5
Cape
Northern        0.2       0      0      0        0      0.1    0      0      0.1
Cape
Free State      0.5       0.1    0.1    0.3      0      0      0      0      0
Kwa Zulu        0.6       1.2    2.3    2.1      0.4    0.7    0.5    0.5    0.7
Natal
North           0         0      0.1    0        0.1    0      0      0      0
West
Gauteng         9.8       11.1   15.3   14.8     12.5   11.9   10.4   7.2    6.0
Mpumalanga      0         0      0.1    0.2      0      0      0      0      0.1
Limpopo         0         0      0      0        0      0      0.2    0.5    0.8
South Africa    100       100    100    100      100    100    100    100    100
Source: Calculated from   Quantec Easydata

The accompanying tables 5 to 13 show a share of the various districts’
apricot exports to the various provincial apricot exports.

Table 5 shows the share of district apricot exports to the total Western
Cape provincial apricots exports for the years 1999 to 2008. It can be
observed that the City of Cape Town and Cape Winelands district
municipalities are the leading exporters of apricots in the Western Cape.
Together, they account for over 90 percent of total Western Cape apricot
exports.




                                            19
Table 5: Share of district apricot exports to the total Western Cape
provincial apricot exports (%)

Years       1999    2000     2001   2002    2003    2004     2005    2006   2007   2008
District

West        2.7      1.5   3.7    5.3       2.6     3.4      1.3     2.1    3.5    2.4
Coast
Cape        4.9      14.1  22.1   32.1      36.1    38.8     43.0    32.9   27.9   38.1
Winelands
Overberg    3.3      0.8   1.5    1.1       2.0     0.4      0.9     0.4    1.4    1.3
Eden        0.2      0.2   0.2    0.2       0.2     0.3      0.1     0.2    0.1    0.1
City     of 88.9     83.4  72.5   61.3      59.1    57.1     54.7    64.4   67.1   58.1
Cape
Town
Western     100      100   100    100       100     100      100     100    100    100
Cape
Source: Calculated from Quantec Easydata

Table 6 shows the share of district apricot exports to the total Eastern
Cape provincial apricots exports for the years 1999 to 2008. The majority
(80%) of apricot exports are from the Nelson Mandel District.

Table 6: Share of district apricot exports to the total Eastern Cape
provincial apricot exports (%)

Years        1999   2000     2001   2002    2003     2004    2005    2006   2007   2008
District

Cacadu       100      96.0 58.0   29.9      35.1     56.3    27.8    0      21.8   20.4
Amatole      0        0    0      0         5.1      0       0       0      0      0
Nelson       0        4.0  42.0   70.1      59.8     43.7    72.2    100    78.2   79.6
Mandela
Eastern      100      100  100    100       100      100     100     100    100    100
Cape
Source: Calculated from Quantec Easydata

In the Mpumalanga province all apricot exports in 2008 were recorded in
the Nkangala district (see Table 7).

Table 7: Share of district apricot exports to the total Mpumalanga
provincial apricot exports (%)

Years           2000      2001   2002   2003       2004     2005    2006    2007   2008
District

Gert Sibande    0         0      0      58.5       0        0       0       0      0
Nkangala        0         0      97.6   41.1       100      0       0       0      100
Ehlanzeni       0         0      2.4    0.4        0        100     100     0      0
Mpumalanga      0         0      100    100        100      100     100     0      100
Source: Calculated from   Quantec Easydata


                                           20
Table 8 indicates that there was no apricot exports recorded in the Free
State province since 2005 (also see Table 4).

Table 8: Share of district apricot exports to the total Free State
provincial apricot exports (%)

Years             2000 2001       2002   2003   2004    2005       2006    2007   2008
District
Motheo            0      0        26.9   0      100     0          0       0      0
Lejweleputswa     99.1   0        73.1   100    0       0          0       0      0
Thabo             0.9    100      0      0      0       0          0       0      0
Mofutsanyane
Free State        100    100      100    100    100     0          0       0      0
Source: Calculated from Quantec   Easydata

The North West province also recorded no apricot exports since 2005 (see
Tables 4 and 9)

Table 9: Share of district apricot exports to the total North West
provincial apricot exports (%)

Years         1999 2000 2001 2002 2003           2004       2005    2006   2007   2008
District
Bojanala      0       0    100     100   0       100        0       0      0      0
Platinum
North West 0          0    100     100   0       100        0       0      0      0
Source: Calculated from Quantec Easydata

Table 10 shows the share of district apricot exports to the total Gauteng
provincial apricots exports for the years 2000 to 2008. The Gauteng
province displays a fairly balanced distribution in the contributions of
the various districts towards the total Gauteng provincial apricot exports.
The leading district is the City of Johannesburg (37.2%). It is followed by
Ekhuruleni and Sedibeng, both at 25.1 percent.

Table 10: Share of district apricot exports to the total Gauteng
provincial apricot exports (%)

Years            2000      2001   2002   2003   2004    2005       2006    2007   2008
District
Sedibeng         0         0      0      0      4.8     6.2        4.5     24.1   25.1
City         of 62.8       52.9   42.7   54.3   47.4    42.0       30.1    0      4.3
Tshwane
Metsweding       0         0      0      0      0       0          2.0     1.9    0
West Rand        0         1.0    0      0.5    0       2.3        0       6.9    8.3
Ekurhuleni       19.1      30.8   35.4   21.5   20.9    16.4       25.5    31.2   25.1
City         of 18.1       15.3   21.9   23.7   26.9    33.1       37.9    35.9   37.2
Johannesburg
Gauteng          100       100    100    100    100     100        100     100    100
Source: Calculated from   Quantec Easydata


                                         21
The Northern Cape province recorded no exports of apricots since 2006
(see Table 11).

Table 11: Share of district apricot exports to the total Northern
Cape provincial apricot exports (%)

Years       1999     2000   2001   2002      2003       2004   2005   2006   2007   2008
District
Siyanda     0        100    0      0         0          0      100    0      0      0
Northern 0           100    0      0         0          0      100    0      0      0
Cape
Source: Calculated   from Quantec Easydata

In the Limpopo province the leading district in apricot exports in 2008
was the Waterberg district (77%) (see Table 12). The balance was
contributed by the Mopani district.

Table 12: Share of district apricot exports to the total Limpopo
provincial apricot exports (%)

Years         1999 2000 2001 2002                2003   2004   2005   2006   2007   2008
District
Mopani        100     100  0       0             0      0      0      99,5   0      23.0
Vhembe        0       0    0       0             100    0      0      0.5    0      0
Waterberg     0       0    0       0             0      0      0      0      100    77.0
Limpopo       100     100  0       0             100    0      0      100    100    100
Source: Calculated from Quantec Easydata

The Ethekwini district was the only district in Kwa-Zulu Natal that
recorded apricot exports in 2008 (see Table 13).

Table 13: Share of district apricot exports to the total Kwa-Zulu
Natal provincial apricot exports (%)

Years                2000   2001   2002      2003       2004   2005   2006   2007   2008
District

Ugu                   0     0      0       0            42.8   0      0      0      0
Umgungundlovu         0     0      1.4     0            0      0      0      0      0
Amajuba               0     0      0       0.3          0      0      0      0      0
Uthungulu             0     0.2    0       0            0.1    0.1    0      0      0
Ilembe                0     13.5   0       0            0      0      0      0      0
Ethekwini             100   86.3   98.6    99.7         57.1   99.9   100    100    100
Kwa-Zulu Natal        100   100    100     100          100    100    100    100    100
Source: Calculated   from Quantec Easydata




                                          22
2.5 Apricot processing

2.5.1 Uses of apricots

The apricot in its fresh form is used as a dessert fruit. It is however,
generally used in its dried form. The heat renders it easier to digest. It is
made into excellent jam, jelly and marmalades and preserved apricots
canned in sugar are also popular. The nut of the apricot is extensively
used in confectionary.

2.5.2 Medicinal and non-food uses

Throughout the centuries, the fruit, kernels, oil and flowers of the apricot
have been used in medicine. In China, a famous medicine known as
'Apricot Gold' was made from the kernels of trees which grew in certain
areas. This medicine was reputed for the powers to prolong life. The
Chinese also believed that apricots reacted sympathetically to women's
ailments. The apricot flowers, therefore, formed a common ingredient in
their cosmetics.

The kernel, which yields an oil similar to that of the almond, have been
widely used for their sedative, antispasmodic that gives relief to strained
muscles and demulcent or soothing properties. They are useful in the
healing of wounds, in expelling worms and as a general tonic.

Constipation

The fruit is highly valued as a gentle laxative and is beneficial in the
treatment of constipation. This is due to its cellulose and pectin
contents. The cellulose, which is not digested, acts as a roughage - that
indigestible part of the food which helps the bowel movement and the
pectin which absorbs and retains water, thereby increasing bulk to
faeces and stimulating smooth bowel movement. Patients suffering from
chronic constipation can greatly benefit by regular use of apricots.
Generally six to eight apricots used per day will produce the desired
result.

Indigestion

Apricots have an alkaline reaction in the system. They aid the digestion,
if consumed before a meal. Marmalade, made from organically grown
fruit, is also valuable in the treatment of nervous indigestion.




                                     23
Anaemia

The apricot is an excellent food remedy for anemia on account of its high
content of iron. The small but essential amount of copper in the fruit
makes iron available to the body. Liberal use of apricots could also
increase the production of hemoglobin in our body.

Fevers

Fresh juice of apricots, mixed with glucose or honey, is a very cooling
drink during fevers. It quenches the thirst and eliminates the waste
products from the body. It tones up the eyes, stomach, liver, heart and
nerves by supplying vitamins and minerals.

Skin Diseases

Fresh juice of apricot leaves is useful in treating skin diseases. It can be
applied with beneficial results in scabies, eczema, sun-burn and itching
of the skin due to cold exposure.




                                    24
3 MARKET INTELIGENCE

3.1 Competitiveness of South African apricot exports

Competitiveness is described as an industry’s capacity to create superior
value for its customers and improved profits for the stakeholders in the
value chain. The driving force in sustaining a competitive position is
productivity that is output efficiency in relation to specific inputs with
regard to human, capital and natural resources. In 2008, South African
fresh apricot exports represented 1.79% of world exports and its ranking
on the world exports was number 10 whereas South African dried apricot
exports represented 0.91% of world exports and its ranking on the world
exports was number 8.

As depicted on Figure 19 below, South African fresh apricots exports are
growing faster than the world imports in the Netherlands, Germany, and
Portugal markets. South Africa’s performance in those markets can be
regarded as gains in dynamic markets.

At the same time South African fresh apricots exports have declined
faster than the world imports in Belgium, United Kingdom, Italy, Kuwait,
Bahrain, Saudi Arabia, and Zambia markets. South Africa’s performance
in those markets can be regarded as a loss in declining markets

South African fresh apricots exports are declining while the world
imports are growing in France, Qatar and Mauritius markets. These
markets are dynamic and South Africa’s performance should be regarded
as an underachievement.




                                   25
Figure 19: Growth in demand for the South African fresh apricots in 2008




Source: TradeMap of the International Trade Centre




                                                     26
As depicted on Figure 20 below, South African dried apricots exports are
growing while the world imports are declining in Germany. South Africa’s
performance in this market can be regarded as gains in declining
markets and should be viewed as achievement in adversity.

At the same time South African dried apricots exports have declined
faster than the world imports in Japan, Netherlands, Australia,
Swirzerland, United Kingdom, United States of America, and New
Zealand markets. South Africa’s performance in those markets can be
regarded as a loss in declining markets.




                                  27
Figure 20: Growth in demand for the South African dried apricots in 2008




Source: TradeMap of the International Trade Centre




                                                     28
Figure 21 below illustrates prospects for market diversification by South
African fresh apricot exporters. The Netherlands and the rest of Europe
hold a bigger market share of South African fresh apricot exports.

In terms of market size, Germany was the largest fresh apricot market in
2008 with just over $103 million worth of fresh apricot imports, or
roughly 26023% of the world fresh apricot market. Second was the
Russian Federation with just over $60 million worth of fresh apricot
imports, or roughly 15.35% market share followed by Italy with just over
$33 million worth of fresh apricot imports, or roughly 8.46% market
share.

Whilst three countries dominate world fresh apricot imports, it is
interesting to note that countries like Lithuania, together with Poland,
Portugal, Slovenia, Czech Republic, and France have experienced higher
annual growth rate in terms of imports from 2004 – 2008. Lithuania
experienced an annual growth rate of 93%. Second was Poland with 39%
annual growth rate followed by Portugal (35%), Slovenia (30%), Czech
Republic (24%) and France (23%). It is important to note that growth by
most of the above-mentioned countries has been off a low base. These
countries represent possible lucrative markets for South African fresh
apricot producers.

It is also important to note that fresh apricot imports from the world to
countries such as Zambia, Oman and the United Arab Emirates have
declined from 2004 – 2008 and as a result those countries have recorded
a      negative    growth     rate     in    fresh    apricot    imports.




                                   29
Figure 21: South African fresh apricots’ prospect for market diversification in 2008




Source: TradeMap of the International Trade Centre




                                                     30
Figure 22 below illustrates prospects for market diversification for South
African dried apricot exporters. Australasian countries (Australia and
New Zealand), Switzerland and Japan held a bigger market share of
South African dried apricot exports.

In terms of market size, the Russian Federation was the largest dried
apricot market in 2008 with just over $55 million worth of dried apricot
imports, or roughly 13.75% of the world dried apricot market. Second
was the USA with just over $51.2 million worth of dried apricot imports,
or roughly 12.62% market share followed by the UK with just over $41.5
million worth of dried apricot imports, or roughly 10.23% market share
and France with just over $35.8 million worth of dried apricot imports, or
roughly 8.82% market share.

Whilst four countries dominate world dried apricot imports, it is
interesting to note that countries like Russia, together with Brazil,
Denmark and India have experienced higher annual growth rate in terms
of imports from 2004 – 2008. Brazil experienced an annual growth rate
of 38%. Second was Denmark with 34% annual growth rate followed by
India (27%). It is important to note that growth by most of the above-
mentioned countries (except Russia) has been off a low base. These
countries represent possible lucrative markets for South African dried
apricot producers.

It is also important to note that dried apricot imports from the world to
countries such as Turkey and Japan have declined from 2004 – 2008
and as a result those countries have recorded a negative growth rate in
dried apricot imports.




                                   31
Figure 22: South African dried apricots’ prospect for market diversification in 2008




Source: TradeMap of the International Trade Centre




                                                     32
3.2 South Africa vs. Southern hemisphere production

Figure 23: Southern hemisphere production of fresh apricots, 1998-
2008
                 120000

                 100000

                 80000
  Tons




                 60000

                 40000

                 20000

                     0
                          1998   1999   2000   2001   2002   2003    2004   2005   2006   2007   2008

         Argentina        28040 28000 24275 24688 25000 25000 25000 25000 25200 25500 25500
         Australia        19881 21483 19875 20639 12355 19742 10658 19698 18000 20000 17327
         Chile            21000 25000 28500 20500 22000 26000 23000 24000 25000 26000 18000
         New Zealand      7400   7400   7400   6000   7000   4500    3914   3678   3700   3800   3500
         South Africa     64217 68157 57222 62495 56509 50069 97774 43741 83639 85000 55475
                                                             Years


Source: FAOSTAT

Figure 23 represents Southern Hemisphere production of apricots. It is
clear that South Africa is the largest producer of apricots in the Southern
Hemisphere context.

It is also interesting to note that the several                     retailers in the UK regard
South African apricots from the Karoo region,                       especially Prince Albert, as
the best tasting apricots in the world. It is                       something that the South
African apricot producers should capitalize                         on in the next couple of
years.




                                                 33
3.3 South Africa vs. Southern hemisphere exports in 2008

Table 15: Southern hemisphere exports of fresh apricots, 2008
Country               Export - Quantity Contribution            to
                      in Metric Tons Southern           Hemisphere
                      (MT)                 Exports (%)
World exports              207 187
Southern Hemisphere          9 968                   100
Chile                        3 090                   31.0
Argentina                     277                     2.8
South Africa                 5 190                   52.1
Australia                     254                     2.5
New Zealand                  1 157                   11.6
Source: International Trade Centre (ITC)

South Africa’ main competitor in the EU market for apricot exports is
Chile. A significant proportion of the Chilean exports are destined for the
USA market. However, during the last couple of seasons the Chilean
volumes to the EU market has increased substantially and as a result,
South Africa experienced fierce competition. The main impact of the
Chilean apricots into the EU market is that it drives prices down. In
future, this competition will probably increase and will depend on the
early/late timing of apricot arrivals, influenced by weather conditions. If
South Africa is late and Chile is early, it will have severe negative impact
on prices.

New Zealand primarily exports to Australia and USA. Australia and
Argentina produces primarily for local markets and exports very little. All
these countries with the exception of Chile pose no serious threat in the
European markets.




                                           34
4 MARKET ACCESS

Barriers to trade can be divided into tariff barriers (including quotas, ad
valorem tariffs, specific tariffs and entry price systems) and non tariff
barriers (sanitary and phytosanitary measures, labels, etc). The main
markets for fruit (including apricots) employ various measures, both
tariff and non tariff to protect the domestic industries. Whilst many of
the non tariff measures can be justified under the auspices of issues
such as health and standards, the tariff measures are increasingly under
the scrutiny of the World Trade Organization (WTO), and as such are
gradually being phased out. Nevertheless, exporters need to be aware of
all the barriers that they may encounter when trying to get their produce
on foreign shelves.

4.1 Tariffs, quotas and the price entry system

Tariffs are either designed to earn government revenue from products
being imported or to raise the price of imports so as to render local
produce more competitive and protect domestic industries.

Quotas can be used to protect domestic industries from excessive
imports originating from areas with some form of competitive advantage
(which can therefore produce lower cost produce). Tariffs and quotas are
often combined, allowing the imports to enter at a certain tariff rate up to
a specified quantity. Thereafter, imports from that particular region will
attract higher tariffs, or will not be allowed at all. This phenomenon is
referred to as tariff-rate quotas (TRQs).

The entry price system, which is used in many northern hemisphere
markets, makes use of multiple tariff rates during different periods when
domestic producers are trying to sell their produce, and lower the tariffs
during their off-season. Alternatively, the tariff rate can be a function of a
market price – if the produce enters at a price which is too low (and
therefore likely to be too competitive), it qualifies for a higher tariff
schedule.

Whilst tariff regulations can be prohibitive and result in inferior market
access, it is often the non-tariff barriers that restrict countries like South
from successfully entering the large developed markets. Many of these
barriers revolve around different types of standards, including sanitary
and phytosanitary standards (SPS), food health and safety issues, food
labelling and packaging, organic produce certification, quality assurance
and other standards and grades.




                                     35
Table 16: Tariffs applied by various export markets to fresh apricots
from South Africa
COUNTRY          PRODUCT          APPLIED    ESTIMATED    APPLIED    ESTIMATED
& TRADE          DESCRIPTION      TARIFFS    TOTAL   AD   TARIFFS    TOTAL   AD
REGIME                                       VALOREM                 VALOREM
DESCRIPTI                                    EQUIVALENT              EQUIVALENT
ON                                           TARIFF                  TARIFF

                                            2008                    2009

EU               Fresh            6.50%       6.50%       7.59%        7.59%
(Preferential    apricots
tariff     for
South
Africa)
Russia           Fresh            3.75%       3.75%       3.75%        3.75%
(Preferential    apricots
tariff     for
GSP
countries)
Switzerland      Fresh            0.00%       0.00%       0.00%        0.00%
(Preferential    apricots
tariff     for
GSP
countries)
Canada           Fresh            5.00%       5.00%       3.33%        3.33%
(Preferential    apricots: For
tariff     for   processing
GSP
countries)
Canada           Fresh            5.00%       5.00%       3.33%        3.33%
(Preferential    apricots:
tariff     for   Imported
GSP              during such
countries)       period
                 specified by
                 order of the
                 Minister    of
                 National
                 Revenue    or
                 the
                 Commissione
                 r of Customs
                 and Revenue,
                 not
                 exceeding 10
                 weeks in any
                 12      month
                 period
                 ending    31st
                 March
USA              Apricots,        0.00%       0.00%       0.00%        0.00%
(Preferential    fresh
tariff     for



                                            36
COUNTRY     PRODUCT         APPLIED    ESTIMATED    APPLIED    ESTIMATED
& TRADE     DESCRIPTION     TARIFFS    TOTAL   AD   TARIFFS    TOTAL   AD
REGIME                                 VALOREM                 VALOREM
DESCRIPTI                              EQUIVALENT              EQUIVALENT
ON                                     TARIFF                  TARIFF

                                      2008                    2009

AGOA
countries)
Mexico (MFN Apricots,       20.00%      20.00%      20.00%       20.00%
duties)       fresh
Bahrain       Apricots,     0.00%       0.00%       0.00%        0.00%
(MFN duties) fresh
Oman (MFN Apricots,         0.00%       0.00%       0.00%        0.00%
duties)       fresh
Saudi         Apricots,     0.00%       0.00%       0.00%        0.00%
Arabia        fresh
(General
tariff)
UAE     (MFN Apricots,      0.00%       0.00%       0.00%        0.00%
duties)       fresh
Australia     Apricots,     0.00%       0.00%       0.00%        0.00%
(MFN duties) fresh
Indonesia     Apricots,     5.00%       5.00%       5.00%        5.00%
(MFN duties) fresh
Singapore     Apricots,     0.00%       0.00%       0.00%        0.00%
(MFN duties) fresh
Malaysia      Apricots,     5.00%       5.00%       5.00%        5.00%
(MFN duties) fresh
Korea         Apricots,     45.00%      45.00%      45.00%       45.00%
Republic      fresh
(MFN duties)
China         Apricots,     25.00%      25.00%      25.00%       25.00%
(MFN duties) fresh
Japan         Apricots,     6.00%       6.00%       6.00%        6.00%
(MFN duties) fresh
Egypt         Apricots,     40.00%      40.00%      20.00%       20.00%
(MFN duties) fresh
Morocco       Apricots,     50.00%      50.00%      49.00%       49.00%
(MFN duties) fresh
Senegal       Apricots,     20.00%      20.00%      20.00%       20.00%
(MFN duties) fresh
Ghana         Apricots,     20.00%      20.00%      20.00%       20.00%
(MFN duties) fresh
Cameroon      Apricots,     30.00%      30.00%      30.00%       30.00%
(MFN duties) fresh
Angola        Apricots,     10.00%      10.00%      10.00%       10.00%
(MFN duties) fresh
Mozambique Apricots,        20.00%      20.00%      0.00%        0.00%
(MFN duties) fresh
Brazil        Apricots,     10.00%      10.00%      10.00%       10.00%
(MFN duties) fresh
Source: Market Access Map



                                      37
South Africa has a preferential trading agreement (PTA) with the EU.
Furthermore, South Africa has access to the US market under the AGOA
which significantly lowers the tariff barriers for South African apricots.
Canada, Switzerland and Russia also have a GSP system in place, for
which South Africa qualifies.

In reality, the tariffs are likely to be far lower for South Africa when
considering the preferential agreements, but at the same time, most tariff
structures are particularly complex, with quotas, seasonal tariffs and
specific tariffs (an amount per unit rather than a percentage of value) all
contributing to many different tariff lines and often higher duties payable
than one might have anticipated initially. One must also bear in mind
that most tariffs are designated to protect domestic industries, and as
such are likely to discriminate against those attempting to compete with
the domestic producers of that country.

One can also see that certain countries wishing to protect their local
industries (presumably in which they feel vulnerable or where large
number of farmers are employed) will raise tariffs to prohibitive levels.
African countries (such as Cameroon, Ghana, Senegal, Morocco and
Egypt), North American countries (such as Mexico) and Far East
countries (such as Korea Republic and China) have reasonably high
tariffs for fresh apricots originating from South Africa.

Table 17: Tariffs applied by various export markets to dried apricots
from South Africa
COUNTRY          PRODUCT       APPLIED    ESTIMATED    APPLIED    ESTIMATED
& TRADE          DESCRIPTION   TARIFFS    TOTAL   AD   TARIFFS    TOTAL   AD
REGIME                                    VALOREM                 VALOREM
DESCRIPTI                                 EQUIVALENT              EQUIVALENT
ON                                        TARIFF                  TARIFF

                                         2008                    2009

EU               Dried         0.00%       0.00%       0.00%        0.00%
(Preferential    apricots
tariff     for
South
Africa)
Russia           Dried         7.50%       7.50%       7.50%        7.50%
(Preferential    apricots
tariff     for
GSP
countries)
Switzerland      Dried         125.52      2.45%       0.00%        0.00%
(Preferential    apricots      $/Ton
tariff     for
GSP



                                         38
COUNTRY          PRODUCT       APPLIED    ESTIMATED    APPLIED    ESTIMATED
& TRADE          DESCRIPTION   TARIFFS    TOTAL   AD   TARIFFS    TOTAL   AD
REGIME                                    VALOREM                 VALOREM
DESCRIPTI                                 EQUIVALENT              EQUIVALENT
ON                                        TARIFF                  TARIFF

                                         2008                    2009

countries)
Turkey           Dried         41.00%      41.00%      43.20%       43.20%
(MFN duties)     apricots
Canada           Dried         0.00%       0.00%       0.00%        0.00%
(MFN duties)     apricots
USA              Apricots,     0.00%       0.00%       0.00%        0.00%
(Preferential    dried
tariff     for
GSP
countries)
Mexico (MFN      Dried         20.00%      20.00%      20.00%       20.00%
duties)          apricots
Brazil           Dried         10.00%      10.00%      10.00%       10.00%
(MFN duties)     apricots
Israel           Dried         20.00%      20.00%      20.00%       20.00%
(MFN duties)     apricots
Saudi            Dried         0.00%       0.00%       5.00%        5.00%
Arabia           apricots
(General
tariff)
Australia        Dried         5.00%       5.00%       5.00%        5.00%
(MFN duties)     apricots
Indonesia        Dried         5.00%       5.00%       5.00%        5.00%
(MFN duties)     apricots
Singapore        Apricots,     0.00%       0.00%       0.00%        0.00%
(MFN duties)     dried
Malaysia         Dried         5.00%       5.00%       5.00%        5.00%
(MFN duties)     apricots
Pakistan         Dried         25.00%      25.00%      25.00%       25.00%
(MFN duties)     apricots
China            Dried         25.00%      25.00%      25.00%       25.00%
(MFN duties)     apricots
Japan            Dried         9.00%       9.00%       9.00%        9.00%
(MFN duties)     apricots
New Zealand      Dried         0.00%       0.00%       0.00%        0.00%
(MFN duties)     apricots
Egypt            Dried         22.00%      22.00%      10.00%       10.00%
(MFN duties)     apricots
Algeria          Apricots,     30.00%      30.00%      30.00%       30.00%
(General         dried
tariff)
Tunisia          Apricots,     150.00%     150.00%     150.00%      150.00%
(MFN duties)     dried
Senegal          Apricots,     20.00%      20.00%      20.00%       20.00%
(MFN duties)     dried
Angola           Dried         15.00%      15.00%      15.00%       15.00%



                                         39
COUNTRY     PRODUCT         APPLIED    ESTIMATED    APPLIED    ESTIMATED
& TRADE     DESCRIPTION     TARIFFS    TOTAL   AD   TARIFFS    TOTAL   AD
REGIME                                 VALOREM                 VALOREM
DESCRIPTI                              EQUIVALENT              EQUIVALENT
ON                                     TARIFF                  TARIFF

                                      2008                    2009

(MFN duties) apricots
Mozambique Dried            20.00%      20.00%      0.00%        0.00%
(MFN duties) apricots
Kenya         Dried         25.00%      25.00%      25.00%       25.00%
(MFN duties) apricots
Source: Market Access Map

South Africa has a preferential trading agreement (PTA) with the EU.
Furthermore, USA, Switzerland and Russia have a GSP system in place,
for which South Africa qualifies. The system lowers the tariff barriers for
South African dried apricots significantly.

In reality, the tariffs are likely to be far lower for South Africa when
considering the preferential agreements, but at the same time, most tariff
structures are particularly complex, with quotas, seasonal tariffs and
specific tariffs (an amount per unit rather than a percentage of value) all
contributing to many different tariff lines and often higher duties payable
than one might have anticipated initially. One must also bear in mind
that most tariffs are designated to protect domestic industries, and as
such are likely to discriminate against those attempting to compete with
the domestic producers of that country.

One can also see that certain countries wishing to protect their local
industries (presumably in which they feel vulnerable or where large
number of farmers are employed) will raise tariffs to prohibitive levels.
African countries (such as Senegal, Kenya, Algeria, Tunisia and Egypt),
North American countries (such as Mexico), European countries (such as
Turkey), Middle East countries (such as Israel) and Far East countries
(such as Pakistan and China) have reasonably high tariffs for dried
apricots originating from South Africa.

4.2 European Union (EU)

The EU has a seasonal tariff structures which are highest during the
European peak harvesting seasons (the price entry system), quotas and
specific tariffs, and various policies that allow, amongst other things,
government organizations to purchase produce should supply rise too
quickly (and thereby maintain prices), and then release this excess back
onto the market as and when supply drops again. The immediate
implication of these policies for South Africa is that an opportunity exists


                                      40
to supply apples to the European market in the off season periods, as the
produce will not compete directly with the European producers and thus
would not be liable to a whole array of tariffs and other protective
mechanisms.

There are other non-tariff barriers, including the phytosanitary and food
health regulations laid down by the EU legislation, marketing standards
and certificates of conformity, and the ever changing demand patterns of
the EU consumers.

4.2.1 Tariff barriers.

The EU applies a system known as entry price system. With this system,
the EU establishes an ‘entry price’ at which produce may enter the EU
market, which is not only based on the market price for the current year
(demand and supply) and for previous years, but also on the prices of the
domestic producers (prices they need to maintain profitability). It is
calculated by the regulatory authorities so that it can be used in
combination with tariffs and quotas to aid EU’s attempts at protecting its
agricultural system. The entry price is the minimum price at which
produce may enter the market. If the price of the produce is lower than
its calculated price, it is liable to have duties imposed upon it over and
above any duties/quotas it might originally attract. Agricultural duties
are applied as follows:

   •   When the value of the imported party is between 92% and 94% of
       the entry price, 8% of the entry price will be added to the normal
       customs duty.
   •   When the value of the imported party is between 94% and 96% of
       the entry price, 6% of the entry price will be added to the normal
       customs duty.
   •   When the value of the imported party is between 96% and 98% of
       the entry price, 4% of the entry price will be added to the normal
       customs duty.
   •   When the value of the imported party is between 98% and 100% of
       the entry price, 2% of the entry price will be added to the normal
       customs duty.

There are tariffs applicable over and above the entry price tariffs,
depending on the produce, where it originates from and whether that
country has any preferential trading agreements with the EU.




                                   41
4.2.2 Non tariff barriers.

Non tariff barriers can be divided into those that are mandatory and laid
out in the EU Commission’s legislature and those that are a result of
consumers, retailers, importers and other distributors’ preferences.

4.2.2.1 Legal requirements

i) Product legislation: quality and marketing

There are number of pieces of EU legislation that govern the quality of
produce that may be imported, marketed and sold within the EU. They
are as follows:

General Food Law which covers matters in procedures of food safety and
hygiene (micro-biological and chemical), including provisions on the
traceability of food (for example, Hazard Analysis and Critical Points, or
HACCP), and it is laid out under regulation EC 178/2002.

EU Marketing Standards which govern the quality and labelling of fruit
are laid out in the Common Agricultural Policy (CAP) framework under
regulation EC 2200/96. These regulations include diameter, weight and
class specifications, and any produce that does not comply with these
standards will not be sold on the EU markets.

Certificate of Conformity must be obtained by anyone wishing to
export and sell fruits in the EU, if that fruit falls under the jurisdiction of
the EU marketing standards.

Certificate of Industrial Use must be obtained if the fruit is to be used
in further processing.

Maximum Residue Limits (MRL) of various pesticides allowed.

ii) Product legislation: phytosanitary regulations

The international standard for phytosanitary measures was set up by the
International Plant Protection Committee (IPPC) to protect against the
spreading of diseases or insects through the importation of certain
agricultural goods. The EU has its own particular rules formalized under
EC 2002/89, which attempts to prevent contact of EU of crops with
harmful organisms from elsewhere in the world.

The crux of the directive is that it authorizes the Plant Protection
Services to inspect a large number of fruit products upon arrival in the
EU This inspection consist of physical examination of a consignment


                                      42
deemed to have a level of phytosanitary risk, identification of any
harmful organisms and certification of the validity of any phytosanitary
certificate covering the consignment. If the consignment does not comply
with the requirements, it may not enter the EU although certain
organisms can be fumigated at the expense of the exporter.

iii) Product legislation: packaging

The EU Commission lays down rules for materials that come into contact
with food and which may endanger people’s health or bring about an
unacceptable change in the composition of the foodstuffs. The framework
legislation for this is EC 1935/2004. Recycling packaging materials are
also emphasized under 94/62/EC, whereby member states are required
to recycle between 50% and 65% of packaging waste. If exporters do not
ship produce in packaging which is reusable, they may be liable for the
costs incurred by the importing companies. Wood packaging is subject to
phytosanitary controls and may need to undergo heat treatment,
fumigation, etc.

4.2.2.2 Non-legal requirements

To access the market, importers must not only comply with legal
requirements set out above, but must also with market requirements and
demands. For the most part, these revolve around quality and the
perception of European consumers about environmental, social, health
and safety aspects of both the products and the production techniques.
Whilst supplying fruit that complies with these issues may not be
mandatory in the legal sense, they are becoming increasingly important
in Europe and cannot be ignored by existing or potential exporters.

i) Social accountability is becoming important in the industry, not only
amongst consumers, but also for retail outlets and wholesalers. The
Social Accountability 8000 (SA 8000) certification is a management
system based on International Labour Organization (ILO) conventions,
and deals with issues such as child labour, health and safety, and
freedom of association, and requires an on-site audit to be performed
annually. The certificate is seen as necessary tool for accessing any
European market successfully.

ii) Environmental issues are becoming increasingly important with
European consumers. Consumer movements are lobbying against
purchasing non-environmentally friendly or non-sustainable produce. To
this end, both governments and private partners have created standards
(such as ISO 14001 and EUREGAP) and labels to ensure that produce
adhere to particular specifications.



                                  43
Although eco-labels (for example, the EU Eco-label, the Netherlands
Milieukeur, the German Blue Angel and the Scandinavian White Swan)
are voluntary, they can afford an exporter a marketing edge, as
consumers wishing to purchase environmentally sound produce demand
products that are easily recognizable.

Another important emerging label is Fairtrade, and includes those labels
offered by Max Haavelaar Foundation, TransFair International and the
FLO (Fairtrade Labelling Organization). Recently a ‘universal’ logo was
adopted based on international fair trade standards developed by FLO,
which covers amongst other things, minimum quality and price, various
processing requirements, compensation of small farmers that covers
sustainable production and living standards, and contracts that allow for
long term planning and development.

4.2.2.3 Consumer health and safety requirements

Increasing consumer conscience about health and safety issues has
prompted a number of safety initiatives in Europe, such as EUREPGAP
on good agricultural practices (GAP) by the main European retailers, the
international management system of HACCP, which is independently
certified and required by legislation for European producers as well as
food imported into Europe (EC 852/2004), and the ISO 9000
management standards system (for producers and working methods)
which is certified by the International Standards Organization (ISO).

The development of public and private standards involves interventions
at multiple points along the value chain. An illustration of the multiple
points and multiple standards that are applied for fresh fruit and
vegetables and for fish is shown in Figure 24. There are controls by
different agents carried out in different ways at different points along the
value chain in response to the requirements of private sector companies,
coalitions of private-sector standards setters and public agencies.
Standards in agribusiness value chains operate, by definition, at multiple
points. They are created, adopted, applied and verified by different actors
(enterprises and institutions) at different points in the value chain.




                                    44
 Figure 24: Food safety and quality control in the fruit and vegetable
 supply chains

                                                                 Control of                   Control of
 Code of practice                        Temperature             compliance                   compliance
 GLOBALGAP                               and humidity            with codes                   with BRC
 quality control by                      check                   of practice
 packing




Producer          Packing           Point of        Transport         Point of         Importer            Retailer
                  station/          departure                         entry
                  Exporter




Quality control              Governmental           Governmental            Private                Private
selection                    SPS/Veterinary         SPS/ Veterinary         specifications/        specifications/
packaging                    control                control                 protocols              protocols
HACCP                        Quality controls       Quality control
                             MRL controls




 Source: UNIDO

 4.3 United States of America (USA)

 4.3.1 Tariff barriers.

 South African exporters have completely free access to the USA markets
 under the Generalized System of Preference (GSP), the GSP for LCDs
 (Least Developed Countries) or the African Growth and Opportunity Act
 (AGOA). South African exporters must always compare with what Chile
 (the main supplier of fruit to the USA and South Africa’s potential rival)
 must pay in terms of tariff duties when exporting fruit to the USA. Chile’s
 access to the USA fruit market is considered to be highly preferential
 under its own Preferential Trade Agreement (PTA).

 4.3.2 Non tariff barriers.

 The USA’s phytosanitary regulation is conducted by Animal and Plant
 Health Inspection Service (APHIS), which is divided into nine sub-
 sections. Plant Protection and Quarantine (PPQ) and Veterinary Services
 (VS) are responsible for issuing permits for commodities and determining
 whether a commodity can be imported. The Policy and Program


                                                           45
Development (PPD) division works with both            these   divisions   in
determining long term plans and procedures.

Some products can get pre-clearance from international Services (IS)
personnel stationed in the country of origin, either at exporting terminals
of site inspections. The PPQ’s main focus is to prevent the spread of
diseases and pests into the USA’s agriculture resources, and it has
personnel stationed at all airports, seaports and border stations that
check imported cargo and oversee the quarantine process. Exporters or
importers must make a request to export/import a commodity, provide
as much information as possible on the product, its region of origin and
its status that is whether there are restrictions or regulations governing
that particular product from that particular region before a permit is
issued, along with the conditions of importation (disinfestations
treatment) or mitigation measures. Denials can be challenged and
governments and companies can request a change in the status of a
prohibited commodity (an investigation must be performed by the PPQ
scientific team), as long as sufficient conditions have changed or a risk
assessment has not been conducted within the last 10 years.

Most approved commodities can enter with inspection alone, but some
may have to undergo mitigating measures including post-harvest
treatments (hot/cold temperature treatments, irradiation or fumigation,
depending on the requirements and which particular treatment is least
harmful). The establishment of specifically and maintained pest-free
areas in a country (which obviously requires extensive co-operation
between the country’s plant health services and APHIS IS division) or
systems approaches (field surveys, random inspections or various on site
treatments.

In additions to phytosanitary regulations, the USDA Food Safety
Inspection Services (FSIS) regulates sanitary practices in the packing of
food products, while the Food and Drug Administration (FDA), which is
part of the US Department of Health, regulates packaging and labelling.
The HACCP protocol is used extensively. The USDA quality standards for
fruits and vegetables provide basis for domestic and international trade
and promote efficiency in marketing and procurement.

4.4 Japan

Japan’s agricultural sector is heavily protected, with calculations from
the Organization for Economic Co-operation and Development (OECD)
estimating that almost 60% of the value of Japan’s farm production
comes from trade barriers or domestic subsidies. Japan uses tariff rate
quotas (TRQ) to protect its most sensitive products, and reserves the
right for trading many of these products (within the quota) for one or two


                                    46
state trading enterprises. However, these extremely protective measures
apply only to some products; others are able to compete more effectively
with outside competition, often on the grounds of higher quality.

Perhaps the biggest barrier to trade with Japan in fruit markets is its
strict phytosanitary requirements, which have often been challenged in
the WTO as having little or no scientific justification. Other measures
that are being challenged include Japan’s use of fumigation on
agricultural products when cosmopolitan pests (already found in Japan)
are detected.

Japan is also increasing its labelling requirements. It now requires fresh
food, including fruit, to be labelled with the place of origin, whilst new
technological (‘smart’) labels that have embedded semi-conductors and
information on just about everything are being adopted in various
agricultural sectors.

Food containing genetically modified organisms (GMOs) need to be
assessed for environmental food safety by the MAFF or the Ministry of
Health, Labour and Welfare (MHLW). At the same time, the MHLW tests
food imports for maximum residue levels from pesticides and as of May
2006, any food with pesticides not on approved list, regardless of the
residue levels, are not allowed entry.

Japanese organic definitions changed in 2001 (they roughly
corresponded to world standard definitions), and any foreign producers
wishing to enter the Japanese market must be certified under the
Japanese standards (not general world standards).

4.5 China

China has a massive system of government support for farmers and
generally rural dwellers (who are lagging behind urban dwellers). To this
end, most of the agricultural sectors are protected and promoted through
a series of subsidies, tax cuts and infrastructure spending policies (as
well as low cost loans, research, land use protection, market stabilization
measures, etc). Part of the protection of its massive farming population,
which for most part consists of small farmers not benefiting from
economies of scale, necessarily occurs in the form of high tariffs and
other restrictions. However China is obliged to reduce tariff levels as a
condition of being a member of WTO. It therefore remains to be seen just
what policies will be adopted going forward, but the general consensus is
that it is a vitally important market to watch, and endeavour to enter.




                                    47
5 DISTRIBUTION CHANNELS

There are roughly three distinct sales channels for exporting fruits. One
can sell directly to an importer with or without the assistance of an agent
(usually larger, more established commercial operations). One can supply
a fruit combined, which will then contract out importers/marketers and
try to take advantage of economies of scale and increased bargaining
power. At the same time combined fruits might also supply large retail
chains. One can also be a member of a private or cooperative export
organization which will find agents or importers and market the produce
collectively. Similar to combined fruits, an export organization can either
supply wholesale market or retail chains, depending on particular
circumstances. Export organizations will wash, sort and package the
produce.

They will also market the goods under their own name or on behalf of the
member, which includes taking care of labelling, bar-coding, etc. Most of
the time, export organizations will enter into collective agreements with
freight forwarders, negotiating better prices and services (more regular
transport, lower peak season prices, etc). Some countries have
institutions that handle all the produce (membership compulsory) and
sell only to a restricted number of selected importers.

Agents will establish contacts between producers/export organizations
and buyers in the importing country, and will usually take between 2%
and 3% commission. In contrast, an importer will buy and sell his/her
own capacity, assuming the full risk (unless on consignment). They will
also be responsible for clearing the produce through customs, packaging
and assuring label/quality compliance and distribution of the produce.
Their margins lie between 5% and 10%. The contract importers of fruit
combines market and distribute the produce of the combines, clear it
through customs and in some cases treat and package it.

Only few exporters have long term contracts with wholesale grocers who
deliver directly to retail shops, but with the increasing importance of
standards (EurepGap, etc) and the year round availability of fruit, the
planning of long term contractual relationships is expected to increase.




                                    48
6 LOGISTICS

6.1 Mode of transport

The transport of fruits falls into two categories namely ocean cargo and
air cargo. Ocean cargo takes much longer to reach the desired location
but costing considerably less. The choice of transportation method
depends, for most parts on the fragility of the produce and how long it
can remain relatively fresh. With the advent of technology and container
improvements, the feasibility, cost and attractiveness of sea transport
have improved considerably. With the increased exports by South Africa,
the number and the regularity of maritime routes have increased. These
economies of scale could benefit South Africa if more producers were to
become exporters and take advantage of the various ports which have
special capabilities in handling fruit produce (for example, Durban’s new
fruit terminal).

6.2 Cold chain management

Cold chain management is crucial when handling perishable products,
from the initial packing houses to the refrigerated container trucks that
transport the produce to the shipping terminals, through to the storage
facilities at these terminals, onto actual shipping vessels and containers,
and finally on to the importers and distributors that must clear the
produce and transport it to the markets/retail outlets. For every 10
Degree Celsius increase above the recommended temperature, the rate of
respiration and ripening of produce can increase twice or even thrice.
Related to this are increasing important traceability standards which
require an efficient controlled supply chain and internationally accepted
business standards.

6.3 Packaging

Packaging can also play an important role in ensuring safe and efficient
transport of a product and conforming to handling requirements,
uniformity,   recyclable    material   specifications,    phytosanitary
requirements, proper storage needs and even attractiveness for
marketing purposes.




                                    49
7 ORGANIZATIONAL ANALYSIS

7.1 Producer and associated organizations

Grower participation and control of their interests in the industry are
structured by means of fruit type producer associations (Section 21
companies), as illustrated on Figure 25.

The main association responsible for the apricot industry is the South
African Stone Fruit Producers’ Association (SASPA). It is a Section 21
company and its objectives are as follows:

  •   To promote the common interest and specific needs of the stone
      fruit producers in South Africa and to act as their official
      representative.

  •   To rationalize and promote the production and marketing of stone
      fruits and stone fruit products.

  •   To encourage and pursue constructive dialogue and mutual
      cooperation with government and other role players.

  •   To foster mutual trust and long term relationships among role
      players and stakeholders.

  •   To establish and promote a reciprocal information system to enable
      stakeholders to make informed market decisions.




                                  50
Figure 25: Structure of the producer interest in the deciduous fruit
industry



    Canned                       PRODUCERS
    Fruit
    Producers
    Association




    SAAPPA            SAT (Section        SASPA             DTD
    (Section 21       21                  (Section 21       (Section 21
    Company)          Company)            Company)          Company)




      DFPT                                                  Joint
      Management                                            Marketing
      Service (Pty)                                         Forum
      Ltd
                                Deciduous
                                Fruit                       Fresh
      Research                  Producers                   Produce
      Management                                            Exporters
                                Trust (DFPT)
      (Section 21                                           Forum
      Company)                                              (FPEF)


                                                           Deciduous
     Statutory         DFPT FIN                            Fruit
     funding           (Section 21                         Industry
                       Company)                            Dev Trust


                                           South African
                                           Plant
                                           Improvement
                                           Organization
                                           Trust




                                     51
7.2   Strengths, Weaknesses Opportunities and Threat analysis

Some of the strengths, weaknesses, threats and opportunities of the
apricot production sector in South Africa are the following:


Strengths                                   Weaknesses

  •   The industry’s export operations        •   Production is largely dependent
      and leading players are well                on climatic conditions which
      established.                                can      only       be      partially
  •   An         efficient         export         manipulated by man through
      infrastructure       exists     and         irrigation.
      market     access      has     been     •   Deteriorating              research
      improved.                                   infrastructure and capacity may
  •   The South African fruit industry            limit        new         technology
      is known for excellent overall              development in the future.
      quality    for     fruit    (strong     •   Saturation of traditional export
      reputation         in         major         markets.
      international markets).                 •   Reliance on the UK and EU as
  •   Sound             communication             main export market.
      mechanisms to majority of               •   Relatively     high    input     and
      industrial participants.                    capital costs.
  •   High level of investment in             •   An element of fragmentation in
      current technology within pack              the industry.
      houses and cold chain facilities.       •   Lengthy supply chain beyond
  •   Industry has all traceability               the pack house.
      systems in place, as required by        •   Lack of industry control on
      accreditation protocols.                    efficiency and productivity in
                                                  supply chain beyond farm gate
                                                  and pack house door.
                                              •   Poor skills and knowledge of the
                                                  new entrants.
                                              •   Delays due to degradation of the
                                                  supporting           infrastructure
                                                  within      the    supply     chain
                                                  (handling facilities at ports,
                                                  roads and energy supply).

Threats                                     Opportunities




                                        52
   •       Increased competition from the         •   Market access initiatives to the
           Southern              Hemisphere           Middle    East,   Asia    (India,
           counterparts like Chile, Brazil,           Indonesia) and China.
           Argentina and Australia.               •   Increasing demand for fresh
   •       Oversupply      of    fruit    into        apples in Africa.
           established export markets.            •   Potential for increased local
   •       Availability    and     cost     of        market consumption.
           irrigation water.
   •       Impact     of   climate     change
           especially in the Western Cape.
   •       Inflation rate with regard to cost
           of labour and farming and also
           packing prerequisites.
   •       Currency variability.


7.3        Strategic challenges

7.3.1 Labour markets

The critical need for labour at harvest time offers seasonal work to
unemployed persons in the immediate vicinity of plantations. In most
countries, workers migrate from one region to another as the harvest
season progresses from early to late. However, in the local scenario,
labourers lack mobility as well as skills to find work outside crop
harvesting.

A major challenge in terms of labour is the lack of skilled labour. At the
same time, farm wage levels do not attract skilled or qualified people to
undertake menial and hard work. Smaller producers, who pay
comparatively lower wages, are more exposed than the larger producers
to the threat of labour shortages.

7.3.2 Infrastructure

Some of the infrastructural challenges are as follows:

       •    Lack of storage capacity at certain times of the year, when apples
            and other fruits are being harvested (mid January until end of
            February).
       •    Hygiene and micro-bacterial quality of water available for use in
            pack houses and domestic purposes on farms.
       •    Poor or no communication between the agricultural sector and
            service providers in terms of planning and future expansion on
            issues such as energy and transport.
       •    Transport from the pack house to the market – road, ship or rail.


                                             53
      •    Logistical systems which are not applied at full efficiency.
      •    Inefficient handling operations at South African ports, giving rise
           to costly delays and breaks in the cold chain.

7.3.3 Other challenges

Producers are being confronted with more regulations to control the
production from farm to fork. These include regulating soil, air, water,
chemical, labelling and safety. On the retailing side pressure mounts to
introduce measures for increased traceability of products. The consumer
wants a safe product produced with socially acceptable environmentally
friendly production methods. Combined with this many consumers are
up in arms about GMO’s and the USA government is introducing a bio
terrorism act that will put even more pressure on exporters to the USA.

Competition for scarce natural resources (land and water) is putting
continued pressure on good farmland that can otherwise be used for
agricultural purposes.

There is a threat of climate change particularly in the Western Cape
Province. Production of apples and other fruits could be adversely
affected by the warming of the winter season due to rising average
temperatures and subsequent loss in chilling hours. Lack of winter
chilling gives rise to delayed foliation and the problem of small fruit of
poor quality. Increased average maximum temperatures in January and
February may result in poor colour development. The risk of sunburn is
also increased.

7.4       Opportunities

The promotion of the consumption of apricot and other fruits should be
implemented. Per capita consumption of peaches at 4kg, in comparison
to Asia’s 13.25kg and the EU’s 17.6kg highlights the scope for possible
increase in sales of the local market.

7.5       Empowerment issues and transformation in the sector

According to Fruit South Africa, progress in this area has been slower
than expected mainly because of lack of understanding on how the Black
Economic Empowerment (BEE) strategy should be applied. Attempts to
establish BEE owned companies have failed and that has impacted
negatively on the perceptions of the future participants in the industry.




                                       54
Figure 26: The apricot supply chain
                                                       Plant
              Research         Breeding                development              Nursery



                                                       Production               Orchard




                                                       Packing                            Cold storage



                                                                                                         Export market
                                      Fresh local
                                      market
               Processing                                                                                Sea freight                 Air freight

                                                                                                         Cold stores, Terminals &
 Chutney       Canning        Juice            Dried                                                     Depots


                                                                                                         Containerized, Conventional
                                                                    Fresh produce     Retailer/          Shipping
                                                                    markets           Informal
                                                                                      markets
                  Process Marketing                                                                      Cold stores, terminals & depots



     Local                   Export                                                 Consumer             Importer, Receiver

     market                  market
                                                                                                         Distribution, Pre-packing


                                                                                                         Distribution


                                                                                          Consumer       Shelf




                                                            55
8 APRICOT SUPPLY VALUE CHAIN

The apricot supply chain is shown in Figure 25. The supply value chain
is a complex linkage of various production and operational role-players.
Other key stakeholders are the producer organizations, organized labour,
NGOs, financial institutions and government.


8.1   Fresh Produce Markets

FPMs are the dominant player and form of wholesaling in the South
African apricot and fresh fruit and vegetable (FFV) sector. However other
wholesale forms do exist including independent wholesalers, contract
buyers, supermarkets, wholesaling subsidiaries, as well as farmer sales
direct to retailers and to consumers.

Being the largest wholesalers, the FPMs have emerged as the FFV price-
setters or, as nicknamed, the “fresh produce stock exchange”. The prices
at the FPMs are arrived at through a bargaining process mediated by
market agents who have a dual objective to collect the best prices (and
hence commission) for sales while ensuring that the highly perishable
stocks are cleared. These prices are then used as reference prices even in
private transactions outside the FPMs.

8.2   Retailers

South African apricot retailers exist in both the formal and informal
sectors. In the former this includes formally registered retail chains,
supermarkets and neighbourhood stores. The latter covers tuck shops
(sphaza), and hawkers. In this environments apricots sales are at
predetermined prices and are typically individually or in small packages.

8.3   Processors

As explained earlier, the processing of apricots consists of canning,
optional fermentation to produce apricot juice, cider, vinegar and pectin.
Distilled apricot cider produces the spirits. They make a popular
lunchbox as well.

There is also a set of further processors not captured in the group above.
These entities use apricots (and apricot products) in food preparations.
This includes caterers, hospitality and other institutions such as
corporate, government institutions like hospitals, prisons, etc.




                                   56
9 ACKNOWLEDGEMENTS

The following industries/organizations are acknowledged.

9.1 Deciduous Fruit Producers Trust (DFPT)
     P. O. Box 163
     Paarl
     7622
     Tel: (021) 870 2900
     Fax: (021)870 2915
     www.dfpt.co.za

9.2 National Department of Agriculture
     Directorate: Agricultural Statistics
     Private X 246
     Pretoria
     0001
     Tel (012) 319 84 54
     Fax (012) 319 8031
     www.nda.agric.za

9.3 Optimal Agricultural Business Systems (OABS)
     P. O. Box 163
     Paarl
     7622
     Tel: (021) 890 2953
     Fax: (021) 890 2915
     www.oabs.co.za

9.4 Trade and Industrial Policy Strategies (TIPS)
     P. O. Box 11214
     Hatfield
     0028
     Tel (012) 431 7900
     Fax (012) 431 7910
     www.tips.org.za

9.5 National Agricultural Marketing Council (NAMC)
     Private Bag X 935
     Pretoria
     0001
     Tel (012) 341 1115
     Fax: (086) 626 4769
     www.namc.co.za



                                  57
9.6 International Trade Centre (ITC)
      www.intracen.org

9.7 United Nations Industrial Development Organization (UNIDO)
     www.unido.org




Disclaimer: This document and its contents have been compiled by the Directorate
Marketing of the Department of Agriculture, Forestry and Fisheries for the purpose of
detailing the apricot industry. Anyone who uses this information does so at his/her own
risk. The views expressed in this document are those of the Department of Agriculture,
Forestry and Fisheries with regard to agricultural industry, unless otherwise stated.
The Department of Agriculture therefore, accepts no liability that can be incurred
resulting from the use of this information.




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