South African Table Grape Industry (SATI) CEO Willem Bestbier is optimistic for the season ahead but is careful not to make too much fuss out of exchange rate benefits, coupled with a market in relatively short supply.

SATI CEO Willem Bestbier

"The rand really weakened significantly against all the hard currencies over the past few months, so that’s a short advantage that we have. We never want to build our business on that kind of a windfall because it’s only short term," he told www.freshfruitportal.com during trade fair Fruit Logistica in Berlin last week.

"Our fuel price of course is dollar-denominated, most of the agrichemicals, our capital equipment in the form of tractors, spraying equipment, even packing material, it's dollar-denominated.

"That’s where there might be a difference between us as a developing country and other developing countries – they might have a much higher local component in a final box of grapes. Therefore it’s a double-edged sword."

The executive believed the currency was actually undervalued, and expected there could be some "fightback" in the rand.

"If you base your business on where the rand is now and say in a year’s time it’s 10-15% stronger, then you’ll be in trouble."

For SATI, the focus is now on more tangible actions that could help the sector, with momentum building since the recent re-opening of the Thai market.

SATI's top international priorities

"A constraint for us still in the Far East is the cold sterilization protocol; it is still quite a stringent protocol, -0.6°C for 22 days so that’s a tough," he said, adding the measure was applied in Thailand and China, as well as in Israel and the U.S.

"The next effort from our side is to get that protocol revised because that will make it much more profitable, or more feasible to export into that part of the world."

He said another priority was gaining market access to South Korea, where other South African fruits and Peruvian grapes have seen a positive market response. In the same region, SATI is hoping for improved access in Japan as well.

"We have access to Japan but only for one variety, and that’s an old-fashioned variety called Barlinka. It’s a black seeded variety.

"It should actually be easy because the commodity is already in there, it’s the expansion of the variety list, and it’s tough to get the Japanese to accept that technicality because they almost regard every cultivar as a different commodity which it is not."

Another challenge for South African table grape exporters is the high tariffs in many Asian countries; competitors like Chile and Australia have free trade agreements with some of them, but South Africa's commitments to the Southern African Development Community (SADEC) mean it cannot only take its needs into account in bilateral negotiations but also those of its neighbors.

"That makes it much more complex than for a country like Australia where they act only on their own behalf.  We also act on behalf of very vulnerable countries in neighboring southern Africa – that’s the crux of the complexity there.

"That South Africa still pays quite a punitive tariff when we export into those [Asian] countries - as an example, the import duties on South African table grapes into Thailand is still 30%, so that’s huge.

"Our competitors, they have either a preferential trade agreement or a free trade agreement. But there is still opportunity."

Working towards more accurate, timely information

In the fast-moving industry that is South Africa's table grape sector, Bestbier also highlighted a new initiative that is hoped will improve information for stakeholders, allowing for better decision making.

To do this, SATI has joined together with exporters to form the Table Grape Joint Marketing Forum, which will meet every second Tuesday at 10am - either in person or via phone lines - to provide updates.

"It's about greater accuracy and to really integrate information. We as a primary producer group look at it from a very basic primary production viewpoint, and then the marketer-exporters bring in aspects from the market," he said.

"We are not allowed to talk about price obviously, but we talk about opportunities, the reality, crop sizes, duration of the crop - was the hail that damaging? Is the weather favorable? That sort of thing.

"That gets fed into a unified, integrated message and also a quantified position that we take in terms of crop expectations."

When asked about the current season, Bestbier said there was a good crop but it was "not close" to what was anticipated in October.

"We are are in a little bit of a short supply situation. We honestly think that there will still be enough fruit to satisfy our commitments so there shouldn’t be any unpleasant surprises as far as that’s concerned," he said.

"The crop is still healthy – it’s warm, it’s dry. There was rain two weeks ago but it rained for two or three days, and then it stopped."

He said the crop quality was good so far and was arriving in markets in good condition.

"I won’t say the market is empty but there seems to be a bit of a supply stress almost; it’s as if there were signs the market needs product. I’m referring to the U.K. and Europe, so that sounds positive for us."

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