Scenario development to support strategic planning in the south african table grape industry

Ntombela, Sifiso Mboneni (2010-03)

Thesis (MScAgric (Agricultural Economics))--University of Stellenbosch, 2010.

Thesis

ENGLISH ABSTRACT: The South African table grape industry has evolved significantly in the last two decades. Ever improving supply chain technologies, post-harvest technology innovation, and more efficient production inputs have all stimulated the production of table grapes in all five South African production regions. While the industry in general is well developed, from the late 1990s the competitiveness status of the South African table grape industry has been negative as far as international competitiveness is rated. Prior to this, from 1961 to 1998, the industry had recorded positive trends in competitiveness. The recent decline, from as early as the 2000s, in the competitiveness of the industry can be attributed to rising competition from alternate Southern Hemisphere suppliers, increasing production costs and export costs, as well as inadequate market diversification. As a result of its negative competitiveness status, the table grape industry wants to diversify its export markets in order to improve and protect the industry‟s position in the global table grape markets. The objective of this study is to investigate the viability of specific export market diversification scenarios. The aim is to evaluate the potential impact on the table grape industry if export volumes were to be relocated from traditional to emerging markets, and the potential risk if the industry were to maintain the current market distribution. The study developed a deterministic farm-level model based on accounting principles as a tool for simulating and analysing the impact of changes in markets on the financial viability of farms under different scenarios. A scenario development process is adopted in this study as it offers the possibility of integrating various kinds of data in a consistent manner, and it can represent the views and expectations of several stakeholders simultaneously. Three scenarios were developed: (i) Scenario 1 presents the continuation of current market distributions (i.e. 85% of South African exports are marketed in Europe and another 15% are distributed to other global markets); (ii) Scenario 2A depicts a situation where export volumes are slowly redistributed to emerging markets; and (iii) Scenario 2B presents a situation where export volumes are rapidly redistributed to emerging markets. The targets for both Scenarios 2A and 2B are to market 60% of South African exports to Europe and 40% to other global markets. Scenarios 2A and 2B are driven by similar factors, including improving industry information, globalisation, increasing competition, and table grape prices An analysis of factors shaping the table grape export sector shows that the industry can no longer afford to send large export quantities predominantly to its traditional markets, due to increasing competition and diminishing market prices. Furthermore, the analysis shows that continuing with the current market diversification will have a negative impact on the industry, as farm returns, employment and farm units will decline under this scenario. The results suggest that the industry would be better off if export volumes were redistributed away from Europe to other markets.

AFRIKAANSE OPSOMMING: Gedurende die laaste twee dekades het die Suid Afrikaanse Tafeldruif Industrie met rasse skrede vooruitgegaan. Dit kan grootliks toegeskryf word aan verbeterde tegnologiese ontwikkeling en innovasie in die voorsieningsketting en na-oes tegnologie arenas, asook aan meer doeltreffende produksie insette wat produksie toenames in al vyf die Suid Afrikaanse produksie areas gestimuleer het. Alhoewel die industrie relatief goed ontwikkeld was sedert sy ontstaan, was die kompeterende status daarvan meestal negatief sedert die 1990‟s, gemeet aan internasionale kompetisie. Daar was egter tussen 1961 en 1998 ook positiewe mededinging tendense. Die onlangse verlaagde vlakke van mededingendheid van die industrie (veral sedert die vroeë 2000‟s) kan toegeskryf word aan verhoogde kompetisie vanaf ander Suidelike Halfrond verskaffers, verhoogde produksie- en uitvoerkoste, asook aan onvoldoende mark diversifisering. As gevolg van die negatiewe mededingendheid status, wil die tafeldruif industrie sy uitvoer markte diversifiseer om te verseker dat die industrie sy posisie in die globale tafeldruif mark kan beskerm. Die doel van hierdie studie is dus om die lewensvatbaarheid van spesifieke uitvoer mark diversifisering scenario‟s te ondersoek. Daarmee saam is die potensiële impak op die industrie ook bepaal vir (a) „n hoë persentasie uitvoer volumes wat verskuif vanaf tradisionele markte na ontluikende market, of (b) wat die risiko sal wees indien die huidige markverspreiding vlakke behou word. Die studie ontwikkel „n deterministiese plaasvlak model, gebaseer op rekeningkundige beginsels, om as hulpmiddel te dien vir die simulering en analise van die impak van verandering van teikenmarkte op die fnansiële lewensvatbaarheid van plase onder verskillende omstandighede. „n Scenario intwikkelings proses word in hierdie studie aangeneem aangesien dit toelaat vir die integrasie van verskillende tipes data op „n eenvormige wyse, terwyl dit ook die sieninge en verwagtinge van verskeie rolspelers terselfdertyd kan verteenwoordig. Drie scenario‟s word ontwikkel naamlik (i) Scenario 1: Dit verteenwoordig die huidige mark verspreiding (85% van Suid Afrikaanse uitvoere word in Europa bemark terwyl 15% versprei word na ander globale markte); (ii) Scenario 2A: Hier word die situasie uitgebeeld indien uitvoer volumes stadig herverdeel word na ontluikende markte; en (iii) Scenario 2B: Hier word die situasie uitgebeeld indien uitvoer volumes vinnig herverdeel word na ontluikende markte. Die teikens vir beide Scenario 2A en 2B is om 60% van die Suid Afrikaanse uitvoere in Europa te bemark en 40% in ander globale markte. Beide scenario‟s word deur dieselfde faktore gestu wat onder andere verbeterde industrie inligting, globalisering, verhoogde kompetisie en produk pryse insluit. „n Ontleding van die vormende faktore van die tafeldruif uitvoer sektor toon dat die industrie nie langer kan bekostig om hoë uitvoer volumes na die tradisionele markte te stuur nie, as gevolg van sterker kompetisie en krimpende markpryse. Die ontleding toon ook verder dat, indien voortgegaan word met die huidige mark diversifiserings model, die industrie negatief beïnvloed sal word in terme van verlaagde plaas inkomste, werkverskaffing en die aantal boerdery eenhede. Die uitslae dui dus daarop dat die industrie beter daaraan toe sal wees indien die huidige uitvoer volumes herverdeel kan word na ander (nie-Europese) markte.

Please refer to this item in SUNScholar by using the following persistent URL: http://hdl.handle.net/10019.1/4160
This item appears in the following collections: