Economic contribution of the plum industry in South Africa

Asanda Molefe1 and Ayabonga Sibulali1

1Economic Services, Western Cape Department of Agriculture

Introduction

Plum fruit is a deciduous stone fruit and is commonly produced in China and Romania. The favourable climatic conditions for producing plum fruits are dry summers, with cool and wet winters. Generally, plums are consumed fresh and in small quantities for the preparation of beverages, jam, canning or dried fruit, i.e., sought after for agroprocessing industry. Plum fruit has become more popular over the years due to the transition to healthy diets that also include varieties of fruits and vegetables (Wangchu, Theja, & Debashis, 2020).

The global consumption of plums is expected to continue growing as the global demand for agricultural products increases and consumers shift from staple foods to more fruits, vegetables and proteins in their daily diets (Wangchu et al., 2020; Sottile, Caltagirone et al., 2020).

Unfavourable climatic conditions pose a challenge in plum production. Recently Norway in Europe was hit by snow leading to 80% loss of their harvest, whilst the produce from Belgium and Italy was smaller due to frost damage (FarmingPortal, 2020). In South Africa the plum industry was also affected negatively by the recent drought in the Western Cape Province (where plums are predominantly produced) resulting in a 12% decline in production between 2017 and 2020. Furthermore, heatwaves in 2019 worsened the situation and there was a drastic decline in plum production in 2020 (Smit & Cloete, 2021; Phaleng & Tshitiza, 2019).

Plums are high-value products that contribute to the growth of agriculture supporting the National Development Plan (NDP) through economic growth and employment (NDP, 2012). The Western Cape Province as a major player in the horticultural sector, has the potential to scale the production of plums in response to market demand. This article presents an overview of the performance of this industry in South Africa, starting with major players globally, domestic production and key trade partners, and finally its contribution to the economy and employment. In addition, the competitiveness of South Africa’s plum industry using Relative Trade Index receives attention.

Production performance of the SA plum industry

Plum fruit is produced in different parts of the country, however, the Western Cape remains the dominating region due to its favourable climatic and weather conditions. The total area under plum production in South Africa is 5 348 hectares (Hortgro, 2021). The Western Cape accounted for over 98% (5 413ha) of this area under plums.

In 2021, the area under production of plums declined by 103 hectares from 2020. In 2021, a total volume of 101 969 tons of plums was produced, with over 50% increase in production compared to 2020 as shown in Figure 1 (on next page). Of the total plum production in 2021, a share of 80% was meant for the export market, while 20% was absorbed by the domestic market and processing industry.

South Africa’s most planted plum cultivars are Angeleno, Laetitia, Ruby Sun, African delight, Fortune, Ruby Star and Songold (Hortgro, 2021). Between the 2020 and 2021 seasons, plum production became economically unviable as the producers experienced financial losses driven by increases in cost of production inputs (Kriel, 2022). The average total production cost currently stands at R309 290/ha relative to the average total production cost in 2014, which was R181 670/ha. Further, the average net farm income of plum has declined from R63 601/ha in 2014 to R8 714/ha in 2021 (Kriel, 2022).

In 2020, logistical issues, including the shortages of shipping containers and backlogs at the seaports, led to a price drop as the plum fruit arrived simultaneously in global markets. Worryingly, over the past five years farmers have been reluctant to invest in further development and expanding their markets (CBI, 2021).

The South African plum industry contributes significantly to employment. In 2021, the industry employed 6 051 people, whilst the Western Cape is believed to have employed more than 95% of the total number as the dominating area of plum production (Hortgro, 2021).

Table 1 shows the top 10 major exporters and importers of plums. In 2021, the top exporters in volume terms were Chile (134 656 tons), Spain (116 298 tons) and South Africa (81 958 tons) (ITC, 2022). As indicated in Table 1, South Africa ranks third among the top exporters with an annual compound growth rate of 11.08% in the past five years (2016-2021). Moreover, South Africa’s plum industry showed significant year-on-year growth both in value (66.9%) and volume terms (71%).

South Africa’s plum industry market performance

The South African plum fruit industry is export-oriented, with a share of 80% of the product going to the international markets yearly.

Figure 2 shows South Africa’s and the Western Cape’s the plum export in value terms and the relative share of the Western Cape to national plum exports for the past twenty years. The Western Cape plum export share trend followed that of the country, as most plums are from the Western Cape.