Who is going to eat South African apples?

And what should growers be doing to prepare for the future? By Anna Mouton.

Rising prosperity in developing countries will boost market opportunities for South African apples over the next twenty years according to data presented by Dr Nigel Cook of Innovapome. But growers must act now to cash in on changing consumer demographics.

The world is getting wealthier

Cook shared data illustrating how trends in average income levels are likely to play out in the near future. The main primary sources of the data are various agencies of the United Nations with analysis based on the work of Swedish academic and Gapminder co-founder Prof. Hans Rosling.

The world population can be classified into four income levels ranging from abject poverty at level 1 to comfortable consumerism at level 4. Most people at levels 3 and 4 live in cities and therefore buy rather than produce food. They represent the target market for South African deciduous fruit growers. This market is currently concentrated in Europe and the Americas.

Rising incomes will elevate far more people to levels 3 and 4 by 2040. Why is this important? “You expect that every orchard that you are going to plant this winter will still be producing food for these people in 2040,” explained Cook. “So you are betting the farm on these consumption patterns.”

He added that the percentage of people at level 3 is expected to soar by 500% in Africa between 2017 and 2040. In Asia, more than 2 billion people are predicted to achieve levels 3 and 4 during this period. And the global percentage of potential pome purchasers — people at levels 3 and 4 — is expected to grow by nearly 140%.

According to Cook, South Africa is not actively marketing apples in the two largest African cities — Cairo and Kinshasa — thereby missing out on 35 million potential consumers. Egypt has about 29 000 hectares of apple production compared to 25 000 in South Africa. This suggests that Egyptians may welcome fresh South African apples counter-season.

“The other obvious big market is India,” commented Cook, “although I understand that logistically India is a difficult space.”

If consumers increase by 140%, it follows that South African apple production also needs to increase by 140% to maintain its current market share. This is unlikely to be achieved at present replanting rates of 3% that translate to orchard lifespans of 33 years.

“I don’t think that the technologies that we are planting today are going to be relevant 20 years from now,” said Cook. “Things are changing too fast.” Hortgro statistics show that 29% of South African apple orchards are 25 years and older — described by Cook as redundant technology.

Give people what they want

Data from the World Apple Review published by world fruit market analysts Belrose Inc. show that consumer preference across apple categories is fairly stable. “One out of every two people on the planet is eating sweet red apples,” said Cook. This category includes Gala and Fuji.

Based on these statistics, South African growers should be planting about 63% sweet red apples, 18% Golden Delicious, 13% tart bicolours, and 6% Granny Smith. Tart bicolours include Braeburn and Kanzi — this is probably the most active category in terms of new varieties.

Growers should avoid producing apples that they know consumers do not want such as visually unappealing or overripe and soft fruit. Cook highlights the importance of taking action on the farm to prevent quality issues. “I had a client tell me that he can pick a lot faster if he buys a few more ladders. My response was, what are you waiting for?”

Better light distribution in the canopy is another essential practice. “This is one of the laws of making money,” said Cook.

When selecting varieties, Cook recommends planting better-coloured strains. He stresses that successful varieties must be able to produce at least 80 tonnes per hectare when full bearing with at least 70% Class 1 pack-outs. There should be zero post-harvest defects.

Better climate adaptation is an important consideration, especially considering increasing temperatures. “We’re closer to the equator than nearly all of our competitors,” said Cook. “We shouldn’t be planting trees that were developed for 55 degrees North.”

Practices for improved profitability

Cook listed ways in which growers could establish more cost-effective orchards. He used real-world figures to calculate that planting clean trees and improved genetics could return an additional cumulative yield of 388 tonnes per hectare over ten years. When extrapolated to all new plantings and all growers in the industry, this adds up to a potential gain of R3.75 million per grower per year.

Growers should also focus on ways to facilitate mechanisation, and consider lowering tree densities to 1500–2000 trees per hectare to manage capital expenditure. “One of the things I’m looking at in this regard is more informally trained fruit walls, specifically in the warmer areas,” commented Cook.

On the post-harvest side, Cook believes that the industry should plant more pick-pack-ship varieties. As the counter-season supplier, South Africa should be exporting a premium product rather than storing fruit for long periods.

Lastly, Cook presented figures to illustrate why he thinks the value chain is broken. For the domestic apple market, the farm-gate price is R2.00 per kg but the retail price is R20.00. “It’s obvious that this needs to change,” he said. “We need to make orchard investment economically feasible if we’re going to maintain our market share.”

Global demographic shifts bode well for the future of the South African apple industry. Data suggest that as many as 3 billion more people will be able to afford fruit by 2040. But 2040 is not far away — as Cook reminded his audience. “It’s time to get organised and time to start planting.”

Image: Dr Nigel Cook, Innovapome. Supplied by Echo Media.