Trending

Tiger Brands' closure of its canning factory puts 90 tons of peaches, apricots, pears at risk

Business Insider SA
A shot of canned pineapples in production line on conveyor belt awaiting to be seamed by can seamer. Getty Images.
A shot of canned pineapples in production line on conveyor belt awaiting to be seamed by can seamer. Getty Images.
  • Tiger Brands is shutting its fruit canning plant in the Western Cape as it moves out of its deciduous fruit operations.
  • That will spell trouble for local fruit farmers, leaving little alternative use for about 90 tons of their produce.
  • The canning association expects immediate losses to reach R1 billion.
  • Tiger Brands had an offer from 160 producers to purchase that factory, but they need up to R300 million in additional funds within 60 days to seal the deal.
  • For more stories go to www.BusinessInsider.co.za.

Masses of fruit, as much as 90 tons of peaches, apricots, and pears in the Western Cape are at risk and will have nowhere to go following Tiger Brands' decision to close its Langeberg and Ashton canning factory.

Between 70 to 90 tons of fruit spread across 2,250 hectares of canning orchards will be placed in jeopardy with limited alternative destinations available, Jacques Jordaan, CEO of the Canning Fruit Producers' Association, told the Business Insider South Africa.

Jordaan expects the associated financial losses to be no less than R1 billion.

The decision to close the canning factory follows Tiger Brands' exit out of its deciduous fruit business two years ago. At the time, the company said it planned to focus on manufacturing and distributing everyday branded food and beverages, which is better aligned with its portfolio.

The company said the Langeberg and Ashton food division produces purees and canned fruit primarily for the export market in an industry riddled with the impacts of trade barriers and heightened competition in the local produce market. Coupled with that, fluctuations in exchange rates and global crop yields added further volatility, Tiger Brands said in a statement.

The Langeberg and Ashton canning plant has been operating for over 70 years and is the largest, and one of only two, in the country. The factory, initially two separate canning facilities, were consolidated into one following Tiger Brands' acquisition of the plants. It has been producing product for Tiger Brand's Koo brand and other international names, prominently Silverleaf and GoldReef.  

A consortium of 160 producers has been locked in negotiations with Tiger Brands to acquire the factory, but they require an additional R200 to R300 million for the deal to go through in less than 60 days, Christo Rheede, executive director at Agri SA, said in a statement.

Rheede said the knock-on effect of the closure would be disastrous for 300 producers who don't have alternate markets for their produce.  

Jordaan said that diverting the fruit to the local fresh produce market would cause an oversupply and put pressure on the industry.

"They can't export it; to put it in the local market, it will flood the local market. The only other canning factory; Rhodes in Tulbagh, that factory is the smaller one of the two, and they're already running over capacity,” said Jordaan.

He added that the factory already took in 25% lower cling peach volumes last year, forcing farmers to either send the fruit to the informal industry or destroy it.

"There's a more than 100% oversupply [of peaches], so the prices will just drop. Eventually, the producers would have to remove that 2,250 hectares of orchards," he said.

"The medium-term problem is, if they survive, what are they going to plant there, so they would probably plant wine grapes, citrus, apples in some cases, so basically, you're putting industries that are already under pressure, more under pressure," he said. 

Get the best of our site emailed to you every weekday.

Go to the Business Insider front page for more stories.

Rand - Dollar
15.83
-0.1%
Rand - Pound
19.43
-0.2%
Rand - Euro
16.72
-0.3%
Rand - Aus dollar
10.97
-0.0%
Rand - Yen
0.12
-0.4%
Gold
1,834.73
+0.4%
Silver
21.38
+1.1%
Palladium
1,953.82
+3.9%
Platinum
917.01
+0.6%
Brent Crude
113.12
+2.7%
Top 40
59,993
0.0%
All Share
66,349
0.0%
Resource 10
64,422
0.0%
Industrial 25
76,590
0.0%
Financial 15
15,623
0.0%
All JSE data delayed by at least 15 minutes Iress logo