by Michael Meiring

EXPORTS

Fruits of the labour

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The fruit-growing and storage industry is one of the Western Cape’s strongest export markets, yet black ownership in this very lucrative sector is still lacking

The fruit industry in the Western Cape is currently one the province, and the country’s, strongest export markets and while black ownership is slowly starting to happen, trend setters in the industry are ensuring that our future owners of colour will be aspiring to excellence.

The Western Cape Department of Agriculture’s Minister Alan Winde has in the past highlighted that the province’s fruit and wine exports are on the rise as Government drives increased market access for the province’s high-quality produce. He among others pointed out that the fruit industry saw increases in the volumes of several crops.

“This year the South African export estimate for apples is approximately 33 million equivalent cartons, which is a 25% increase from the previous year. This is especially significant for our region. In 2014, 82% of all South Africa’s apple exports came from the Western Cape.”

As an example, he said while the stone fruit industry is competing against the large Chilean crops on the global market, Hortgro reports that our fruit is preferred over Chilean exports because of the high quality and taste.

He says the quality of our produce is getting stronger every year and that South Africa is now indeed an international competitor of note.

Key trends in the province’s fruit industry he highlighted in the media were:

  • In 2015 stone fruit volumes have increased significantly. The season is categorised by good quality fruit with high sugar content and good colour;
  • Nationally, nectarine exports are expected to increase by 31% this season, peach exports by 23% and plum exports by 9% compared to last season; and
  • The Western Cape makes up the bulk of South Africa’s total fruit exports in these categories. In 2014, the province produced 93% of nectarine exports, 78% of peach and 96% of plum exports.Winde said the Western Cape Government had a goal to dramatically increase the value add of all exports from its current R16 billion. “If we increase exports by only 5% in certain products, we will increase the volume of produce by R432 million. Larger volumes of produce have the potential to create more employment, changing livelihoods for people in rural areas. The fruit and wine industries are two of our key strategic industries. In a bid to maintain and grow their markets, we are supporting a range of initiatives. To support responsible practices in these industries, we fund ethical trade missions. Ethical industry is of particular importance to European markets.

“In new markets, we co-fund the Asia Fruit Logistica exhibition to further our reach in China and the Far East. Transformation is a key priority of mine and we offer dedicated support to emerging wineries to ensure they feature at international events,” he said.

In the supply chain in the fresh food industry, especially when it comes to fruit and vegetables, the role that warehousing and cold storage play in our economy is often overlooked, at times even being completely forgotten.

And despite the many lucrative gains the industry has to offer, transformation has been slow. Hoverer, a small handful of black people have managed, despite the many transformational challenges, to penetrate the market, and are running well-oiled businesses optimally geared at ensuring that the produce on our shop shelves (and those abroad), arrive in our kitchens untarnished.

H.J. Nicholls & Sons is a black-owned family business that lives up to the province’s sterling reputation when it comes to this lucrative sector. Situated in the fertile Ceres Valley in the Western Cape, the company deals with fruit growing, transport, warehousing and cold storage. At the helm is Nolan Nicholls, a man who is passionate about business, especially when it touches onto the fruit industry in South Africa. And when it comes to operating a family business, Nicholls belies it takes shear drive and dedication—the one generation after the other.

Currently the Managing Director, Nicholls joined his late father, Herman John Nicholls, a fruit hawker at the time, directly after finishing school and till today acknowledges the vital grooming he received from him. “When I joined, my father was a fruit hawker. We rented a small space on the premises of Ceres Fruit Growers (CFG) back then. Most of the second-grade fruit we bought from CFG and the surrounding farms. We bought fruit in bins and unpacked the fruit in smaller cartons. The smaller cartons were packed onto pallets, loaded on trucks and taken to inland markets such as Bloemfontein, Springs, Johannesburg, Klerksdorp, Pretoria, Pietermaritzburg and even Durban.

“Our own trucks transported the fruit to the markets. We transported any kind of loads back to Cape Town. Later we bought our own premises and built our own warehouses. Because of the bigger facilities, we could extend our business by buying more fruit and trucks. Later we built our own cold rooms to store our own fruit. This meant that we could extend our working hours throughout the year," he says.

His younger sister, Charlene Lackay, also joined the company while their father was still running the business and today holds the position of Financial Director. Unfortunately, shortly after their father had a stroke, he had to lay down all responsibilities and handed the business over to them. But taking over a family business is not child’s play, and Lackay says, comparing to starting a new business from scratch, although all systems might be in place in the existing family business, the expectations to produce are high and the pressure is on to maintain not just the financial success of the business, but also its reputation built up by generations before.

Nicholls remembers even after his father’s stroke he would visit the company twice a week and was pleased with their ideas to expand and erect more warehouses and buy more wooden and plastic bins at the time.

“Today all of our warehouses and bins are being rented out at a profitable income. A big part of our business is also maintaining each warehouse, cold room and truck to extend its lifetime.

The important thing of expanding a business is to always have a plan B when your main source becomes unavailable due to economic or other circumstances,” he says.

Nicholls says today most of the big factories have new packing methods, which have a positive effect on the industry, as less fruit are being classified as second-grade (not suitable for export). He says nowadays all kinds of fruit are being sent over the South African border. He cautions that especially the fruit in their industry is becoming more scarce and expensive.

This, according to him, is sometimes not profitable for business especially when you are competing with the high prices paid by canneries. He also points out that the continuous increase in the fuel price has had a negative effect on their transport side of the business, which can make box fruit more expensive in the end.

Looking at cold storage, Nicholls says current trends in the industry revolve around Controlled Atmosphere (CA) and Regulated Atmosphere (RA) cold rooms. According to him, any fruit farm needs a cold room whether CA or RA. “Apples and Pears are stored in CA cold rooms from late February / March and opened from August the same year. Due to the continuously planting of new trees every year the demand for cold rooms will always be high. The problem in our area at the moment is the inefficient electricity supply that prevent people in our industry from building new or more cold rooms,” he says.

When it comes to the most common challenges associated with running cold storage facilities, Nicholls says electricity is a key factor and can be very expensive. He says new machinery is also expensive since it comes from overseas and while electricity might be expensive, little can be done to replace it in cold rooms. He also points out that yearly maintenance of machinery is very important to prevent problems in the long run.

Most people do not think of cold storage and packaging when buying their food in shops. Little do they realise how vital and pervasive the cold storage industry is when looking at how it ties in with the products on the shelf—and the important role of cold storage in the food supply chain.

As Nicholls explains, while fruit are harvested during season, any fruit available after that comes from a cold facility.

Other businesses tied in with cold storage include the likes of canneries as well as local fruit hawkers.

In terms of transformation, most cold storage businesses have traditionally not been very accessible to the black market. He says today, their company is BEE Registered and has the further advantage of being black owned. Nicholls says to build and maintain a cold storage facility can be very expensive. You also have to have fruit and reliable rental agreements in place.

As an example of a more positive shift in the industry he highlights that in Ceres, a local company had erected a cold facility with the assistance of a black empowerment project.

He says that up to date however, his company had no help or advantage from state departments.

“It will be difficult for newcomers to start this kind of business due to the fact that you cannot only rely on a bank loan. A proper cash flow is also a major advantage when you start. You must have knowledge and some experience in the fruit industry to start.

Fruit is scarce and expensive and you must be able to compete with other factories and canneries. It will be difficult to start on your own.

Aspiring black businesspeople who want to enter the industry can be assisted through black empowerment initiatives and continued assistance from government,” Nicholls concludes.

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