Competitiveness of the South African deciduos fruit canning industry

Abstract

The purpose of the study is to investigate the competitiveness of the South African deciduous fruit canning industry in the global canned fruit market. The study was done in the Western Cape Province, the province where the deciduous fruit is produced and canned in South Africa. Both local and international literature on the deciduous fruit canning industries was used as part of the analysis. In addition to this, a variety of methods and techniques including descriptive, theoretical, analytical and quantitative were applied. These include: The Balassa’s Revealed Comparative Trade Advantage method, which was used to calculate the competitiveness indices of various canned deciduous fruit products. Time series data on South African and global canned deciduous fruit imports and exports was also used to calculate the competitiveness indices using the RTA method and Excel software. A structured questionnaire was used to collect both qualitative and quantitative data from an array of expert views from key industry stakeholders. These key informants included Chief Executive Officers of various companies and organisations in the fruit canning industry. Data collected was analysed using Excel spread sheet programme, SPSS and the Porter methodology. The competitiveness analysis of this study clearly pointed out that EU subsidies but not SPS conditions, definitely disadvantage the South African fruit canning industry and negatively affect its competitiveness in the EU market. However, it was revealed that the South African deciduous fruit canning industry is competitive on: <ul>(a) labour costs - Being a labour intensive country, South Africa’s labour cost is amongst the lowest when compared with other countries that compete in the EU fruit canning market. (b) product quality - The South African deciduous fruit canning industry has positioned itself world-wide to be the supplier of premium quality and premium priced canned deciduous fruit products. The industry’s second biggest market, Japan, demands mostly premium products, and South Africa is a key player in that market. </ul> Respondents differed in opinion in almost all variables, with the exception of two variables. All respondents viewed starting a new business in the industry is extremely difficult and the trust in the honesty of politicians is very low. <ul> There are variables where 90 percent of all respondents agreed, and these are: (a) The South African fruit canning companies are rated as having the world’s most stringent regulatory standards. (b) Entry to the local market by new competitors at the fruit canning stage of the value chain almost never occurs. (c) The administrative regulations in South Africa are burdensome. (d) Crime in South Africa imposes a significant cost to companies. (e) Companies’ approach to human resources is to invest heavily to attract, train and retain staff. </ul> Due to the nature of the methodology used and varying results that came out, it is difficult for the industry’s competitiveness position to be articulated in one sentence. Copyright