Mapping the economic structure and organisation of selected South African mango export supply chains

Abstract

This dissertation is the outcome of a study to map the economic structure and organisation of two selected mango export chains from South Africa by applying selected supply chain analysis tools. The study is part of an inventory on the export of fresh fruit and vegetables commissioned by the European Commission under the Veg-i-Trade Project Work Package 1. The two selected chains were the Bavaria fresh mango and the Blue Skies freshly cut mango export supply chains. The study sought to understand how food safety and quality standards are shaping the structure and relationships in the two export chains given the prevalence of food scares and scandals. An inventory of the activities and the various actors along the mango export supply chains was made in order to identify the structure and functioning of the chains and the issues and constraints faced with the various quality and safety standards. The objective of the study was to identify the actors and the role they play, determine the governance structure and relationships and identify the quality management programmes and standards employed in the two selected export chains. In addition, the study sought to identify and analyse the different information exchange categories and use of information between the different links along the chains. A qualitative research approach that incorporates case study methodology was used as the inquiry strategy. Through this methodology, the investigation untangled the complexity of the mango export supply chains which is faced with the challenge of maintaining a chain that guarantees adherence to customer specifications and client needs. The study’s findings established that food safety and quality management standards are shaping the structure and organisation of the chains and their stringency has increased with a widened and deepened scope. In addition, the ability to adopt a standard is directly affected by the scale of business operation and standards are technical barriers to entry for small scale mango producers and exporters mainly because of the high certification and operational costs. In reaction to the standards, it was noted that Bavaria and Blue Skies mango export chains are buyer-driven with a high degree of vertical coordination enforced by contracts. The two chains are modular with the use of and strategic positioning of category managers; a high degree of asset specificity and forward integration to reach their markets resulting in a shortened supply chain. Supply chain coordination is carried out on contracted logistics and cold chain services with regulatory functions provided by the Department of Agriculture, Forestry and Fisheries (DAFF) and the Perishable Product Export Control Board (PPECB) in South Africa and agricultural and health inspectors in the United Kingdom (UK). There is also product and process differentiation. It was also noted that compulsory certification of quality and food safety standards is the prerequisite to access export markets. The standards used in the Bavaria and Blue Skies mango export chains are the Hazard Analysis Critical Control Point (HACCP) and Global Good Agricultural Practice (Global GAP). These are used in conjunction with the British Retail Consortium (BRC), Fairtrade, Ethical Trade Initiative (ETI), International Food Standard (IFS) and Linking Environment And Farming (LEAF). Quality audits and inspections are carried out at each supply chain level to ensure safety and adherence to quality requirements. The supply chain actors carry out continuous quality assessment and one way to achieve this was through the application of the Plan-Do-Check-Act (PDCA) cycle. Quality and safety standards have also resulted in improved traceability in the Bavaria and Blue Skies Mango export chains. Traceability systems in the Bavaria and Blue Skies mango export chains are more automated though they are not harmonised, thus Paltrack, XsenseTM, Caretrace and TempTrip. Automated information systems used to share and exchange information are internet and email as well as barcodes which are used with Radio Frequency Identification (RFID) and Electronic Data Interchange (EDI). Manual information systems in use are mainly telephones, facsimile and mobile phones. It was also established that major issues and challenges in the Bavaria and Blue Skies mango export chains are a result of factors that affect mango perishability, mainly post harvest handling procedures thus packaging, transportation, storage, ripening and distribution. If not managed well, poor safety and quality management result in economic losses due to product rejections, product recall and cessation of buyer-supplier relationships.