MARKET ANALYSIS REPORT NO 1 OF 2015: APPLE

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Mildred Ray
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1 MARKET ANALYSIS REPORT NO 1 OF 2015: APPLE INTRODUCTION The following text is a review of the apple marketing environment. This analysis is updated on a quarterly 1 basis. The interval covered in the current issue is from quarter 4 of 2013 to quarter 4 of This period is subdivided into five, three-month long quarters. The key issues discussed in the review are the trends in producer prices, production volumes and gross values, sales in the National Fresh Produce Markets (NFPMs), and volumes and gross values of both exports and imports. During the period under review the average producer price increased by 2.63%, production decreased by 13.28%, sales at the National Fresh Produce Market decreased by 11.34%, exports decreased by 15.5% and imports decreased by 100%. 1. AVERAGE PRODUCER PRICES OF APPLES Average producer price of apples for period under review are presented in figure 1. Apples reached an average producer price of R per ton during the fourth quarter of This was a 5.75% increase as compared to the last quarter (quarter 3, 2014) average price and 2.63 % more as compared to last year (quarter 4, 2013) at the same time. Given the current unsettled world economy, weaker economies in western countries and fluctuating fuel prices it makes it more difficult to predict future price movement. One can observe that apples total production is usually higher during the first quarter and second quarter and average prices are usually at their lowest during this period. Prices are normally at their highest during quarter 3 and quarter 4 and this may be attributed to minimal harvest that occurs during this period. Thus one can expect prices to drop during the first quarter as production peaks up. 1 Quarter 1 (January to March), Quarter 2 (April to June), Quarter 3 (July to September), Quarter 4 (October to December) 1

The key issues discussed in the review are the trends in producer prices, production volumes and gross values, sales in the National Fresh Produce Markets (NFPMs), and volumes and gross values of

2 Average price (Rand/Ton) Figure 1: Average producer price of apple Source: Statistics and Economic Analysis, DAFF 2. TOTAL DOMESTIC PRODUCTION OF APPLES Price (Rand/Ton) Quarters Figure 2 shows the quarterly apple production between quarter 4 of 2013 and quarter 4 of 2014 period. Apples worth the value of R749 million were produced during the fourth quarter of This value is 26% lower compared to the last quarter (quarter ) which was R1.01 billion and 11% lower compared to last year at the same time (quarter ). Apple production decreased from tons in quarter 3 of 2014 to tons in quarter 4 of 2014, recording a quarterly average drop rate of %. The apple production at the end of quarter was 30.11% lower than the previous quarter (quarter ) and 13.28% lower compared to previous season at the same time (quarter ). As it can be seen on the graph, apple production normally starts increasing in quarter 1 reaching its peak during quarter 2 of each year and start declining thereafter. Thus one can expect production to increase in the next coming quarter. 2

95 Quarters Figure 2 shows the quarterly apple production between quarter 4 of 2013 and quarter 4 of 2014 period.

3 Volume in Tons Gross value in Rands (millions) Figure 2: Quartely production and gross value of apple Volume in Tons Gross Value (R million) Quarters Source: Statistics and Economic Analysis, DAFF 3. SALES AT THE NATIONAL FRESH PRODUCE MARKETS (NFPMs) Figure 3 shows the total volume and average prices for apples sold at South African National Fresh Produce Market (NFPMs). A total volume of tons were sold at NFPM during the fourth quarter of 2014, meaning out of the totally produced apples in South Africa 36% were sold at NFPM. This is 12.56% lower than the previous quarter (quarter 3, 2014) and 11.34% lower than the previous season at the same quarter (quarter 4, 2013). On a broader scale, the variation in total volumes sold at the NFPM is too small due to year round availability of apples which is favoured by cold storage facility. All together, the apple average price at the NFPM was R per ton. The price was 15.62% higher compared to last quarter average price and 15.58% higher compared to last year at the same quarter. The average price trends of apples at NFPM within the period under analysis is consistent with very good prospects of it not fluctuation above or below normal in the next coming quarter. 3

SALES AT THE NATIONAL FRESH PRODUCE MARKETS (NFPMs) Figure 3 shows the total volume and average prices for apples sold at South African National Fresh Produce Market (NFPMs).

4 Volume in Tons Average price (Rand/Ton) Figure 3: Quartely sales and average prices of apples at NFPMs Volume in Tons Price in Rands/Tons Quarters Source: Statistics and Economic Analysis, DAFF 4. EXPORTS AND IMPORTS Figure 4 and Figure 5 below illustrate the quarterly export and import volumes and values for apples during the period under review. During the fourth quarter of 2014, South Africa exported tons worth R 591 million. This was a 43.12% decrease compared to last quarter and 8% decrease compared to last year at the same quarter of last year. Of the total exported apples, Africa remained the largest export destination for South Africa in terms of apples. Approximately tons of apples worth R 448 million were exported to Africa. Asia absorbed 18% (9 688 tons) followed by Europe and America at 3% (1 tons) and 1% (502 ton) respectively. South Africa imports apples during third and fourth quarter of every season due to low production levels. Therefore one can expect imports of apples to rise in the next quarter. No imported were recorded during the quarter. 4

EXPORTS AND IMPORTS Figure 4 and Figure 5 below illustrate the quarterly export and import volumes and values for apples during the period under review.

5 Volume in Tons Volume in Tons Figure 4: Quartely exports of apples Volume in Tons Value in Rands (million) Years Source: Quantec Easydata Figure 5: Quartely imports of apples Volume in Tons Value in Rands (Thousands) Years Source: Quantec Easydata 5

03 Years 80 60 40 20 Source: Quantec Easydata Figure 5: Quartely imports of apples 45.0 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.

6 6. GROWTH, VOLATILITY & STABILITY ANALYSIS Table 1 presents the results of growth and coefficient of variation estimations. They were calculated using quarterly statistics and covered the same five-quarter period under review beginning in quarter 4 of 2013 and ending in quarter 4 of The coefficient of variation is a measure of volatility or stability. When the coefficient of variation is less than one, the variable in question is said to be relatively stable, meaning that there were minimal changes. When the coefficient of variation is more than one, it is said to be volatile, meaning there were major changes during the period under review. Table 1: Apple industry growth rates & variation coefficients (Quarter 4, 2013 Quarter 4, 2014) Category Subcategory Growth Rate (%) Coefficient of Variation Producer price Price Production Gross Value (GV) Volume Sales at NFPMs GV/Price Volume Export Gross Value Volume Import Gross Value Volume Source: Calculated from data from Statistics and Economic Analysis and Quantec As shown in the Table 1 above, the apple industry experienced a negative growth rate from quarter 4 of 2013 to quarter 4 of 2014 in terms of both volumes and values. All variables with exception of producer price, and gross value of sales at NFPMs grew negatively during the fourth quarter of The table also shows various levels of volatility at different levels of the apple industry s quarterly figures over the same period (quarter 4 of 2013 to quarter 4 of 2014). Low volatility was indicated by the coefficients of variation that were less than one (<1). All variables, with the exception of exports, have values less than 1, which means that on a weighted variance scale, they displayed minimal changes during the five quarters under review. 6

The coefficient of variation is a measure of volatility or stability.

7 6. ACKNOWLEDGEMENTS Acknowledgement is given to the following information sources: Directorate: Statistics and Economic Analysis Quantec Easydata For more information contact: Director: Marketing Department of Agriculture, Forestry and Fisheries Private Bag X 15 Arcadia 0007 Tel: (012) Fax: (012) MogalaM@daff.gov.za Website: Deputy Director: Commodity Marketing Tel: (012) Fax: (012) ElvisNak@daff.gov.za Senior Agricultural Economist Tel: (012) Fax: (012) JulyM@daff.gov.za Disclaimer: This document and its contents have been compiled by the Department of Agriculture, Forestry and Fisheries for the purpose of detailing apple industry. Anyone who uses this information does so at his/her own risk. The views expressed in this document are those of the Department of Agriculture, Forestry and Fisheries with regard to agricultural industry, unless otherwise stated. The Department of Agriculture, Forestry and Fisheries therefore, accepts no liability that can be incurred resulting from the use of this information. 7

za For more information contact: Director: Marketing Department of Agriculture, Forestry and Fisheries Private Bag X 15 Arcadia 0007 Tel: (012) 319 8455 Fax: (012) 319 8131 E-mail: MogalaM@daff.gov.

Any comments and suggestions on the content of the publication are most welcome.

Any comments and suggestions on the content of the publication are most welcome. PREFACE The agro-processing industry is among the sectors identified by National Development Plan (NDP, 2011), Industrial Policy Action Plan (IPAP, 2015) and Agricultural Policy Action Plan (APAP, 2015)