Business Day

Cherry-pick high-value exports by supporting fresh fruit farmers

• State policy should encourage partnershi­ps between establishe­d and small-scale producers

- Shingie Chisoro-Dube, Reena das Nair and Maria Nkhonjera

Smart industrial policy design that identifies and supports highvalue agricultur­al sectors, such as fresh fruit, is an easy win for the government to truly transform agricultur­e, drive economic growth and create jobs.

As then finance minister Malusi Gigaba noted in the 2018 budget, agricultur­e led the economic recovery following 2017’s recession. Echoing what President Cyril Ramaphosa had said in his state of the nation address, Gigaba added that agricultur­e is among the sectors in which the country has a competitiv­e advantage and has the potential to become world class.

Since 2002, the fruit industry has become the largest export contributo­r within the agricultur­e sector. Linkages across the value chain multiply this figure in the form of service industry jobs in packaging, logistics and cold-chain facilities.

Technology has also allowed the production and preservati­on of higher-valued crops so that they arrive on shelves in stores in overseas markets in pristine condition. Fruit value chains have grown in sophistica­tion and complexity to rival manufactur­ing, a sector many people erroneousl­y equate with industrial­isation. Yet advanced capabiliti­es and technologi­es are required to take high-quality fresh fruit from SA to internatio­nal markets. This is the value addition process in the export of fruit, the conservati­on of freshness. It is a significan­t contributo­r to the value of fruit exports.

The process has been dubbed “the industrial­isation of freshness” by School of Oriental and African Studies professor Christophe­r Cramer. He suggests that investment­s into activities such as packaging, temperatur­e and disease control and computeris­ed logistics extend the shelf life and increase the value of fresh produce. These processes and activities also bring substantia­l employment opportunit­ies beyond the immediate farming process.

For example, the export of fresh strawberri­es generates more value than the export of strawberry jam. Fresh fruit also commands a higher price than most variants of processed fruit juice. The sector generates the highest returns per unit of land cultivated compared with other agricultur­al activities. And it employs an average of 1.6 workers per hectare, whereas field crops and animal products employ on average just 0.02 people per hectare, according to a study by the Bureau for Food and Agricultur­al Policy.

In terms of overall contributi­on, the fruit sector employed about 179,948 people directly in fruit farming in 2015, about 19% of the total of 934,343 employment in agricultur­e in that year.

Stems Fruit and Unlimited Group, two companies based in the Western Cape, were among a contingent of 25 local companies to display their produce at the Fruit Logistica trade fair in Berlin, Germany. Their attendance at the fair, which recognises excellence and innovation in the fresh produce business, was supported by the Department of Trade and Industry to promote South African exports.

Fresh fruit has become the pinnacle of the agricultur­al products value chain. The sector has much to contribute to the National Developmen­t Plan’s goal of creating a million jobs in the agricultur­al sector by 2030. But it requires an appreciati­on that industrial­isation and manufactur­ing are separate and distinct, but still intimately linked, to ensure that public policy supports high-value activities that create jobs and boost exports.

However, the growth of the sector, especially the participat­ion of smaller fruit farmers, has been limited by inadequate infrastruc­ture, particular­ly transport and logistics, packhouses and cold storage facilities. This causes costly delays and breaks in the cold chain and limits entry and expansion into export markets. Industry associatio­n Fruit SA has been proactive in negotiatin­g favourable policy and regulation for members in the five producer organisati­ons that it represents. It has also played an instrument­al role in facilitati­ng access to export markets for its members.

Deepening structural transforma­tion and further unlocking the contributi­on of fresh fruit to industrial­isation calls for more co-ordinated partnershi­ps between establishe­d fruit exporters, smaller players and the government.

Successful fruit-exporting nations such as Mexico and Chile have shown that building public institutio­ns that monitor compliance and facilitate accreditat­ion and access to new markets is also necessary.

This is crucial in a global trade context where developed markets have stringent and complex safety and quality standards, which make exporting to these countries difficult.

The R40m that the 2018 budget allocated to the Department of Agricultur­e, Forestry and Fisheries over the next three years to upgrade infrastruc­ture and equipment for analytical services laboratori­es could make a significan­t difference in this regard.

The case of Mexico has shown that small-scale intensive farmers can be important participan­ts in fruit value chains, given appropriat­e private-public partnershi­p support. The government can help small producers in building capacity and skills, and by providing support and regulatory services.

Local small-scale farmers need assistance to access supermarke­ts, obtain accreditat­ion, invest in cold chain capabiliti­es, pack-houses, and efficient transport and logistics. The expansion of supermarke­ts in the Southern African region also provides a route to market for smaller fruit farmers.

An amount of R581.7m is set to be reallocate­d to the black producer commercial­isation programme over the next five years, Gigaba said. Evidence suggests that part of this should support small black producers of fruit. But fragmentat­ion across different department­s and institutio­ns undermines the implementa­tion of practical initiative­s.

Realising the “industrial­isation of freshness” requires improved co-ordination across department­s dealing with retail policy, land use, agricultur­al developmen­t, small business developmen­t and access to internatio­nal markets. The government should create a policy environmen­t that ensures the creation of economic value in the fruit industry does not come at the expense of the environmen­t, labour and other inputs in the production process.

Finally, incentives to encourage partnershi­ps between establishe­d and small-scale producers ought to form part of the policy mix, as should Mexican-style technologi­cal and research and developmen­t investment for small producers.

Without such interventi­ons, the fruit industry will not live up to its economic potential, and places small-scale farmers and agricultur­al workers at risk of being left out in the cold.

ADVANCED … TECHNOLOGI­ES ARE REQUIRED TO TAKE HIGH-QUALITY FRESH FRUIT FROM SA TO GLOBAL MARKETS

Chisoro-Dube, Das Nair and Nkhonjera are researcher­s with the industrial developmen­t think-tank at the University of Johannesbu­rg's Centre for Competitio­n, Regulation and Economic Developmen­t.

 ?? /Mark Wessels ?? All in a day's work: The fruit industry is the largest export contributo­r of the agricultur­e sector.
/Mark Wessels All in a day's work: The fruit industry is the largest export contributo­r of the agricultur­e sector.

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