Few commodities can boast about simultaneous increases in supply and price. But with an ever increasing demand for avocados, this industry has much to celebrate.
The success story of avocados continued at this year’s Subtrop Marketing Symposium held on the 6th of November in White River, Mpumalanga. Furthermore, the litchi and mango industries have recently gained access to new markets, and entry of avocados to Japan and some other major markets is on the cards.
During the Symposium it was made clear that there is a strong focus on expanding market access and increasing consumption. This is especially important for the avocado industry which is experiencing strong growth globally and necessitates strong advocacy to ensure the industry enjoys continuous prosperity.
Dr Tracy Davids, manager of the commodity markets division at the Bureau for Food and Agricultural Policy, provided an outlook for South African agriculture. She noted that, over the coming decade, growth in the value of field crop production is not expected to outpace inflation, whereas the value of horticultural production is expected to grow faster than inflation. This is due to longer term crops established in recent years reaching full production potential, as well as a recovery from the lasting effects of the recent drought conditions.
Paired with the increase in production is an uptick in consumption, both in a growing export market and domestically as improved income levels in the longer term allow greater dietary diversification. This entails a shift from a staple based diet (predominantly maize) to include higher value goods like meat and fruit. This bodes well for the subtropical fruit industry in terms of domestic market growth, but prospects for exports are also strong and will remain the primary driver of growth.
Commenting on global markets, Zac Bard, Executive Manager of Westfalia Fruit Africa, said that the success story of avocados meant that more plantings were taking place and supply was expected to rise further. “We need to prepare for larger volumes in the market going forward, especially since more origins will share the marketing window with South Africa.”
Consumption in the USA and European Union (EU) increased substantially and Bard believed there was even further scope to grow consumption in the EU.
Bard emphasised that the responsible use of scarce resources was receiving more attention.
“Millennials in particular are taking note of the ethics and sustainability around water use in agriculture. Unscrupulous water consumption will create issues in the market. We have a fantastic product, loved by so many. As an industry we need to ensure that growth is sustainable, and be mindful of the potential impact on the environment and the community.
Derek Donkin, CEO of Subtrop, noted the market access success of countries Peru and Columbia where the government has aligned itself with the interests of the industry. He said that since agricultural minister Thoko Didiza has been in office there has been an improvement in gaining traction for access to new markets for subtropical fruit, as both industry and government are actively pursuing export growth which will benefit the economy and people of South Africa.
There are several active applications to access new markets. With regard to litchis, Donkin said that even if South Africa gained access into China, the right cultivars for that market are not being cultivated locally, but this is being addressed by testing of cultivars acceptable to the Chinese palate.
New requirements for sending mangoes to the EU came into effect this year and required additional measures to ensure non-European fruit fly would not be spread. Subtrop, together with the Department of Agriculture, Land Reform and Rural Development, has put systems in place to ensure the continued shipping of fruit.
The South African Avocado Growers’ Association’s (SAAGA) local marketing campaign continues to show good results in driving sales. Instore activations resulted in a 10% increase in sales and the ‘Add an Avo to your meal’ campaign saw avocado consumption rise by 9,4% in the Col’Cacchio restaurants where the campaign was run.
Donkin explained that the objective of SAAGA through their marketing was to build consumer confidence in avocados and find out how the industry can improve in this regard. “Our strategic intent is to grow sales by growing the value proposition. We also want to shift consumers from wanting to buy an avo to needing to buy an avo as part of their daily staples.”
Dr James Lappeman, head of projects at the UCT Liberty Institute of Strategic Marketing, gave a snapshot of the African market and encouraged marketers to come to grips with the complexities of the middle class population as they invest in marketing campaigns.
“Middle class as a concept is complicated and there is no clear cut and dry definition, although it is usually perceived as the segment of people who have disposable income. Each country has a different reference point to define wealth, but there is not enough data to figure out how much money there really is to spend in Africa.
“But there is still healthy growth taking place in a number of places and while Sub-Saharan Africa only has 10% of the world’s working aged population currently, by the end of the century it will grow to just under 40%. Populations in Africa are urbanising and this often brings more prosperity and household buying power. Some 13 African cities will have a combined income of $13 trillion by 2030. “
Regarding global marketing efforts, Trevor Dukes, World Avocado Organisation (WAO) board member, said that there needs to be a stronger focus on the core 11 countries in the EU consuming the majority of supply into Europe. “We will start measuring the direct impact of WAO activities over time and look at our return on investment to see which markets and consumers are giving us more bang for our buck.
“WAO continues to exhaust all avenues to push avocados into the forefront and escalate sales. Thanks to these efforts over the last two and a half years avocados continue to be an iconic superfood.”
Amid growing concerns over climate change, David Farrell, founder of Blue North, lamented that South Africa has a negative carbon story which could add to our uncompetitiveness globally. Furthermore, South Africa’s new carbon tax regime, which may be extended to agriculture from 2023, could see a 30-hectare fruit farmer paying as much as R240 000 at the top end of potential carbon tax price scenarios. To avoid this cost, farmers need to proactively change the way they are farming.
He said that farmers should be planning to reduce emissions from electricity, fuels and fertilizer inputs and start implementing carbon sequestration plans on their farms like soil health and biodiversity restoration, even though for now trading carbon credits was complicated and not yet fully functional.
An increase in production across the country’s fruit crops, is expected to place additional strain on already struggling infrastructure in South Africa’s ports. Mitchell Brooke, logistics development manager at the Citrus Growers’ Association, said that productivity levels across all terminals are less than 30%, resulting in significant delays.
“Although an 18-month recovery plan was put in place in July, not much has been done yet. Reefers that should take a week to leave the ports are taking a month and producers should keep this in mind in terms of market timing.”
Addressing land reform, Prof Ben Cousins, from the Institute for Poverty, Land and Agrarian Studies, said that successful small-scale black farmers should be focussed on to meet land reform targets.
“There are 250 000 market orientated smallholder farmers that are already showing potential. They should be the ones receiving redistributed land as they are the critical mass that would be needed to sway the landscape in terms of land ownership and commercial farming.”
He noted many successful joint ventures between white and black farmers and said that support from existing large-scale producers is key.
Providing a successful model for training a new generation of farmers, Louise de Klerk, CEO of Timbali Technology Incubator, related that competitiveness, productivity and inclusive growth were the key driving factors for success. “We designed an environment where there is order and control and farmers follow a system that can give them a predictable, quality product.”
In dealing with slow rates of transformation, de Klerk said that research has shown that when a new project is started only 13, 5% are early adopters. “The rest slowly follow. It takes time and effort to make a success of something.”