South African fruit growers and exporters, like their counterparts in other regions of the world, face enormous obstacles to survival in a fresh produce exporting world that has changed significantly since the arrival of Covid-19, as well as other events that have affected business normality.

It is now clear that there will be another significant cost that they will have to take into account in their planning for the new season, which begins in a few months.

The warning to customers that SAPPI, the South African supplier of cartonboard material, will increase the cost of packaging board products by 20 to 22 percent is a blow to producers who are already are recovering from the impact of increased freight rates, input costs and the current citrus situation in the EU.

This is the opinion of Justin Chadwick, Executive Director of the Citrus Growers Association (CGA) of South Africa.

“It is often said that the product pays, but what happens when the product cannot pay?” Chadwick said. “Throughout the supply chain, input providers and service providers are price takers: they estimate their costs and then add the required margin which is then presented to the customer for payment.

“With all costs in the chain rising by double digit amounts, SAPPI's announcement is seen as opportunistic; most agricultural sectors have indicated that they simply cannot afford such price increases,” he explained.

While this may be directly affecting the Chadwick constituency, it is a problem for all of South Africa's export industries.

Fresh fruit exports account for 35 percent of South Africa's agricultural exports, worth 48.300 billion rand or about US$3.300 billion.

It is about the export of 3,2 million tons of fruit to 100 countries, according to FPEF, the Association of Exporters of Fresh Products of the country.

It is difficult to establish exactly how many boxes are used each year to ship fresh South African produce to local and export markets, but it is fair to assume that it is probably between 500 and 750 million boxes.

That paints a picture of the serious nature of the gains for the fresh produce industry.

Chadwick said that when growers couldn't make enough money for their produce to cover the increases, they had to dig into their reserves if they could, or borrow to cover the cost. If they couldn't, they would just go bankrupt.

“It is time for those throughout the supply chain to reconsider their vision for returns in 2022 and beyond; otherwise they may not have customers for years to come,” Chadwick said.

These views were echoed by leading producers in other industries.

Chadwick noted that South African citrus exporters were now in survival mode. "Input providers and service providers must help them in this survival, that way they will ensure their own sustainability."

He noted that the carton supplier was a good partner for the citrus industry, as the main sponsor of the Citrus Symposium and in carton trials.

“SAPPI has defined its commitment to and support for the citrus industry – now is the time to sharpen our pencils and ensure that the citrus industry continues to go from strength to strength.”

The other fruit export categories are recovering from a wide range of cost increases that affect the delivery of their products to world markets.

Fruit growers and exporters around the world have the same problems, and growers in Europe now also have to deal with droughts and changing weather patterns, recognized as the effect of global warming, which will affect their long-term sustainability and ability to to supply their consumers. the same way as in the past.

Cost burden is an additional factor in the world of fresh produce production that will affect growers around the world.