Oak Valley owner and Managing Director Anthony Rawbone-Viljoen says South Africa's dynamic apple industry is "a question of economics, a constant game". He speaks with www.freshfruitportal.com about apple production, diversification, labor, growing conditions, global markets, and the discovery of an exciting new cultivar that may stir up the industry. While Oak Valley is a production farm with 525,000 apple trees of its own, it is also a major shareholder in adjoining businesses that bring in more than ZAR1 billion (US$99.6 million) per annum.

Driving onto the farm, a nexus of apple production in South Africa's Western Cape, one might not expect to discover a budding wine cellar, a specialist acorn-fed piggery, Wagyu and Simmental cattle herds, a fine dining restaurant and a vast cut-flower business in amongst the orchards.

These innovations ride on a long history of innovation and diversification on the farm, instilled by Rawbone-Viljoen's grandfather who purchased the farm in 1898.

"He was an extremely creative farmer – he did all kinds of things. After planting over 4,000 oak trees, he was the first to commercially plant apples and pears in the Elgin Valley," says the founder's grandson.

"Apples, and pears to a lesser extent, have since become the economic engine of this valley and greater area."

He adds that diversifying on-site is pivotal to a secure business strategy, while the business is also affiliated with Tru-Cape, which markets its apples.

"The fruit business is very much tied to external factors such as exchange rate and under-supply and oversupply to markets in Northern hemisphere, although our footprint is much larger now than it used to be.

"Thus we found the need to diversify our business made quite a lot of sense. The flower business hasn't had the vagaries of exchange rate to deal with – except for the plant material that we import."

Vertical integration

Oak Valley's on-site diversification strategy also spirals outward into a collaboration with the growers' association Two-a-Day, in which the company is the largest shareholder with a 15% share.

For example, to absorb the cost of 30% of their total apple production, which is juice-grade, Two-a-Day owns the subsidiary Elgin Fruit which manufactures juice concentrate.

"The other diversification that we have through the Two-a-Day group is APL cartons. This includes four other shareholders, including citrus companies, which means we have a year-round demand. We also manufacture for the commercial market.

"Furthermore we also have a logistics company which started three years ago called Links Supply Chain Management which deals with shipping and logistics."

Cold storage, packing and a technical division are also included and integrated. Ongoing research into new technologies provides shareholders with constant support and cutting edge progress.

Technological advances also include new ways of minimizing cost and environmental damage.

"We've been on the forefront of development of alternative control methods outside of chemical usage," Rawbone-Viljoen says.

"Ideally we would like to grow crops with minimum use of chemicals without having to suffer the pain that organic farming can bring in terms of crop yields and quality."

Labor

New technologies are of great interest to producers, especially in the light of the recent labor-law changes that drastically increased the minimum daily wage from ZAR69 (US$6.87) to ZAR105 (US$10.45) for workers.

"You don’t implement these [technological] changes on a short timeframe. You have to test, strategize, and do your homework. This is what people are doing in response to the 'shock therapy' they received from government – people seek solutions that make economic sense.

"Machines don't go on strike, but we can see that people do. So it's not a very clever solution for South Africa as it puts people out of work. I am not saying R69 a day is fair - it's a terrible level of earning.

"But to do that overnight - and we were never at ZAR69 we were at ZAR85 which is top end - is a blow to the industry."

Growing conditions

Although sunshine is very important for flavor and color, winter chilling is "absolutely critical" for the MD.

"Trees have to be dormant in the Winter months and wake up again in August.

"Obviously, you need water – good quality water, and you need a minimum depth of 60cm (23.6in) well-prepared soil that is properly mixed."

Although seasonality is highly varied for growers, consumers experience a constant supply.

"The long storage time enables you to create a market while you store."

He says ideal apple growing conditions are nearly impossible to find; you have to work with what you have. Perhaps more importantly, growers have to stay up to date with planting trends and global markets.

Global markets and varietal selection - challenges of apple production

According to Rawbone-Viljoen, one of the greatest challenges of apple production is that it is intensely competitive on a global scale. Being ready to carve out and explore upcoming markets is therefore key.

"That's where your strategic planning comes into play. And also – that’s where Africa, the awakening giant, comes in," he says.

"Africa has suddenly started taking fruit of a very high quality specification. They pay better prices than Europeans these days, and they want the best quality."

He says the cost of staying in touch with the buzzing market place must be built-in to the business model.

"You have to replace about 4% of your plantings a year, so there is an inherent cost of taking out old orchards that are not viable anymore, and replacing them with something that has a bigger chance of return.

"It takes seven years before you break even with new plantings, so, to turn the ship around is a bit like turning an ocean liner. Thus you have to keep plugging away at the planting program to match what the market demands."

New innovation

In keeping with Oak Valley’s innovative strategy, Rawbone-Viljoen is very excited about a new variety - as yet unnamed - that has been discovered on the farm.

Currently undergoing testing and soon to enter its trial phase, it has all the fetching qualities of the popular Royal Gala apple, and a brilliant red color to match.

"This apple is going to put the normal Gala on the back foot, because you can have bad coloring on Royal Gala.

"It tastes pretty much like a Royal Gala and of course, Gala makes up 30% of the current world's new plantings of apples, so we are in the hot zone with it. I am confident it will take off."

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