Identifying seasonal export opportunities for selected South African fruit and nut crops

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Identifying seasonal export

opportunities for selected South African

fruit and nut crops

A Jansen van Vuuren

orcid.org/0000-0003-0184-8452

Dissertation accepted in fulfilment of the requirements for the

degree

Master of Commerce

in

International Trade

at the

North-West University

Supervisor: Prof EA Steenkamp

Co-supervisor: Dr EF Idsardi

Graduation: May 2020

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ACKNOWLEDGEMENTS

This dissertation would not have been possible if it weren’t for the guidance and support of so many people.

To Prof Ermie Steenkamp and Dr Ernst Idsardi, my supervisors, thank you for all your time, knowledge and guidance. But most of all thank you for your support and encouragement.

To various staff members at The School of Economics at the NWU Potchefstroom Campus, thank you for the encouraging words and support throughout this journey. To my friends and fellow Masters students, thank you for the all coffee and support throughout the year.

Ultimately, a special thank you to my family, especially my parents and my sister, for their support and love.

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ABSTRACT

…

The fruit and nut sector is an important export industry for South Africa. In 2017, the sector was South Africa’s seventh largest exporting sector, which contributed to 3.8% of the country’s total exports and had a 4% year-on-year growth rate for the period of 2013 to 2017. South Africa was the tenth largest exporter of fruit and nuts in the world in 2017 and the country contributed to 2.8% of world exports.

Counter-seasonal trade of fruit and nut crops has become more significant, due to consumers’ demand for year-round fresh produce and to supplement their domestic production in the off-season. South Africa’s main export destinations for fruit and nuts in 2017 were the Netherlands, the United Kingdom, Hong Kong, the United Arab Emirates, and Russia, all of which are located in the Northern Hemisphere.

Given the seasonality of certain fruit and nut crops, it is possible that there are unexplored export opportunities for South Africa, during the months when competitors in the Northern Hemisphere are out-of-season. When using annual trade data in international market selection methods, these seasonal export opportunities for specific fruit and nut crops might be overlooked.

Therefore, the primary objective of this study is to identify underutilised seasonal export opportunities for selected South African fruit and nut crops by applying monthly data to a market selection framework.

The market selection framework applied to achieve this objective consisted of three phases, based on selected filters of the Decision Support Model which was first developed by Cuyvers, De Pelsmacker, Rayp and Roozen in 1995.

Phase 1 identified potential import markets based on monthly import size and growth (Phase 1.1), as well as market concentration (Phase 1.2). In addition, South Africa’s monthly supply was analysed in Phase 2, to determine in which months the country was a sustainable exporter of the selected fruit and nut crops. In Phase 3, the import demand and export supply was matched. Monthly potential export values were calculated for the selected product-country combinations and evaluated against actual South African exports (Phase 3.1). Finally, the market access in each potential product-country combination was identified (Phase 3.2).

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In this study, a total of 228 potential seasonal export opportunities (product-country combinations) were identified. Amongst these seasonal export opportunities, 64 are in new and 164 in existing markets. The majority of potential seasonal export opportunities were identified in Europe, specifically, Eastern and Southern European markets.

The countries with the highest total underutilised seasonal export opportunities for all the products included in this study were Romania, Hungary, Croatia, Austria, Bulgaria, Luxembourg, Latvia, Serbia, Estonia and the United States of America. The three crops with the largest total underutilised seasonal potential are apples, grapes and lemons. This study, therefore, provides insight into possibly overlooked seasonal export opportunities in markets where the main competitors are out-of-season. It also gives guidance to South African policymakers and agri-businesses on new opportunities for market expansion and priority markets for enhancing market access.

Keywords: international market selection, underutilised seasonal export opportunities, fruit and nut crops, product-country combinations, South Africa.

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OPSOMMING

Die vrugte-en-neut-sektor is 'n belangrike uitvoerbedryf vir Suid-Afrika. Die sektor was Suid-Afrika se sewende grootste uitvoersektor in 2017, wat 3.8% bygedra tot die land se totale uitvoere, met 'n jaar-op-jaar groei van 4% vir die periode van 2013 tot 2017. Suid-Afrika was ook die tiende grootste uitvoerder van vrugte en neute ter wêreld in 2017 en het bygedra tot 2.8% van die wêrelduitvoere.

Die teen-seisoenale handel van vrugte- en neutgewasse het meer beduidend geword vanweë verbruikers se vraag na vars produkte deur die jaar en om hul binnelandse produksie in die buiteseisoen aan te vul. Suid-Afrika se belangrikste uitvoerbestemmings vir vrugte en neute in 2017 was Nederland, die Verenigde Koninkryk, Hongkong, die Verenigde Arabiese Emirate, en Rusland, wat almal in die Noordelike Halfrond geleë is. Gegewe die seisoenaliteit van sekere vrugte- en neutgewasse, is dit moontlik dat daar onbekende uitvoergeleenthede vir Suid-Afrika bestaan gedurende die maande waarin die mededingers in die Noordelike Halfrond buite seisoen is. Dit is moontlik dat hierdie seisoenale uitvoergeleenthede vir spesifieke vrugte- en neutgewasse misgekyk word wanneer jaarlikse handelsdata in internasionale markkeuse-metodes gebruik word. Die primêre doel van hierdie studie was dus om die onderbenutte seisoenale uitvoergeleenthede vir geselekteerde Suid-Afrikaanse vrugte- en neutgewasse te identifiseer, deur maandelikse handelsdata toe te pas op 'n markkeuseraamwerk.

Die markkeuseraamwerk wat gebruik is om hierdie doelwit te bereik, bestaan uit drie fases wat gebaseer is op geselekteerde filters van die Decision Support Model, wat aanvanklik ontwikkel is deur Cuyvers, De Pelsmacker, Rayp and Roozen in 1995.

Fase 1 het potensiële invoermarkte geïdentifiseer op grond van die maandelikse invoergrootte en groei (Fase 1.1), asook die markte konsentrasie (Fase 1.2). Verdermeer is Suid-Afrika se maandelikse aanbod geanaliseer in Fase 2 om te bepaal wanneer die land 'n volhoubare uitvoerder van die geselekteerde vrugte- en neutgewasse was. In Fase 3 is die vraag na invoere en die aanbod van uitvoere gekorreleer. Die maandelikse potensiële uitvoerwaardes is bereken vir die geselekteerde produk-land kombinasies en is beoordeel teen die werklike Suid-Afrikaanse uitvoerwaardes (Fase 3.1). Laastens is die marktoegang in elkeen van die produk-land kombinasies geïdentifiseer (Fase 3.2).

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In hierdie studie is daar altesaam 228 moontlike seisoenale uitvoergeleenthede (produk-land kombinasies) geïdentifiseer. Daar is seisoenale uitvoergeleenthede in beide 64 nuwe en 164 bestaande markte geïdentifiseer. Die meerderheid van die seisoenale uitvoergeleenthede is in Europa geïdentifiseer, veral markte in Oos- en Suid-Europa. Die lande met die hoogste totale onderbenutte seisoenale uitvoergeleenthede vir al die produkte wat by hierdie studie ingesluit is, was Roemenië, Hongarye, Kroasië, Oostenryk, Bulgarye, Luxemburg, Letland, Serwië, Estland en die Verenigde State van Amerika. Die drie gewasse met die grootste totale onderbenutte seisoenale potensiaal is appels, druiwe en suurlemoene.

Hierdie studie bied derhalwe insig in die moontlike seisoenale uitvoergeleenthede in die markte waar die belangrikste mededingers buite-seisoen is. Dit gee ook leiding aan Suid-Afrikaanse beleidmakers en landboubesighede oor nuwe geleenthede vir markuitbreiding en prioriteitsmarkte, vir die verbetering van marktoegang.

Sleutelwoorde: identifisering van internasionale uitvoermarkte, onderbenutte seisoenale uitvoergeleenthede, vrugte- en neutgewasse, produck-land kombinasies, Suid-Afrika.

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ABBREVIATIONS

CA Controlled atmosphere

DAFF Department of Agriculture, Forestry and Fisheries DSM Decision Support Model

DTI Department of Trade and Industry

ETI Enabling Trade Index

EU European Union

FPEF Fresh Produce Exporters’ Forum GDP Gross Domestic Product

HHI Herfindahl-Hirschmann Index

HS Harmonized System

IDC Industrial Development Corporation ITC International Trade Centre

LPI Logistic Performance Index NDP National Development Plan NPC National Planning Commission

NTM Non-tariff Measures

QLFS Quarterly Labour Force Survey RCA Revealed Comparative Advantage RMA Revealed Import Advantage

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SAMAC Southern African Macadamia Growers’ Association SoNA State of the Nation Address

StatsSA Statistics South Africa

UN United Nations

WCO World Customs Organisation

WEF World Economic Forum

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LIST OF TABLES

Table 1-1: Selected fruit and nut crops with seasonal export patterns ... 9

Table 2-1: Intensive and extensive margins ... 18

Table 4-1: Categories of product-country combinations ... 71

Table 5-1: Seasonal export opportunities for South African oranges ... 81

Table 5-2: Trade barriers in the underutilised export markets for oranges ... 83

Table 5-3: Seasonal export opportunities for South African lemons ... 84

Table 5-4: Trade barriers in the underutilised export markets for lemons ... 85

Table 5-5: Seasonal export opportunities for South African grapefruit ... 86

Table 5-6: Trade barriers in the underutilised export markets for grapefruit ... 87

Table 5-7: Seasonal export opportunities for South African apples ... 88

Table 5-8: Trade barriers in the underutilised export markets for apples ... 90

Table 5-9: Seasonal export opportunities for South African pears ... 91

Table 5-10: Trade barriers in the underutilised export markets in pears ... 92

Table 5-11: Seasonal export opportunities for South African peaches including nectarines ... 93

Table 5-12: Trade barriers in the underutilised export markets for peaches including nectarines... 94

Table 5-13: Seasonal export opportunities for South African plums and sloes ... 95

Table 5-14: Trade barriers in the underutilised export markets for plums and sloes ... 96

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Table 5-16: Trade barriers in the underutilised export markets for avocados ... 98 Table 5-17: Seasonal export opportunities for South African grapes ... 99 Table 5-18: Trade barriers in the underutilised export markets for grapes ... 100 Table 5-19: Seasonal export opportunities for South African macadamia nuts .... 101 Table 5-20: Trade barriers in the underutilised export markets for macadamia

nuts ... 101 Table 6-1: Research objectives of the study (stated in Section 1.4) ... 108

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LIST OF FIGURES

Figure 1-1: South Africa’s monthly export of peaches including nectarines in

2016 and 2017 ... 4

Figure 1-2: South Africa’s monthly export of peaches to its top export destinations between 2017 and 2019 ... 5

Figure 1-3: Romania’s monthly import of peaches from its top suppliers between 2017 and 2018 ... 6

Figure 1-4: The total monthly imports of Romania and exports of South Africa of peaches between 2017 and 2018 ... 7

Figure 3-1: Output of South Africa’s agricultural sub-sectors ... 28

Figure 3-2: Gross value of South Africa’s horticulture’ fruit sectors production ... 29

Figure 3-3: Export destinations of the selected fruit and nut crops in 2017 ... 30

Figure 3-4: Map of fruit-producing regions in South Africa ... 31

Figure 3-5: Global production of oranges in 2016... 32

Figure 3-6: Global production of lemons in 2016 ... 33

Figure 3-7: Global production of grapefruit in 2016 ... 34

Figure 3-8: The export trend of South Africa’s oranges in comparison with main competitors in 2016 ... 35

Figure 3-9: The export trends of South Africa’s lemons in comparison with the main competitors in 2016 ... 36

Figure 3-10: The export trend of South Africa’s grapefruit in comparison with main competitors in 2016 ... 36

Figure 3-11: South Africa’s monthly export of oranges, lemons and grapefruit between 2013 and 2017 ... 37

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Figure 3-12: South Africa’s top ten export destinations for oranges ... 38

Figure 3-13: South Africa’s top ten export destinations for lemons... 39

Figure 3-14: South Africa’s top ten export destinations for grapefruit ... 40

Figure 3-15: Global production of apples in 2016 ... 40

Figure 3-16: Global production of pears in 2016... 41

Figure 3-17: The export trend of South Africa’s apples in comparison with main competitors in 2016 ... 42

Figure 3-18: The export trend of South Africa’s pears in comparison with main competitors in 2016 ... 43

Figure 3-19: South Africa’s monthly export of selected pome fruit between 2013 and 2017 ... 44

Figure 3-20: South Africa’s top ten export destinations for apples ... 44

Figure 3-21: South Africa’s top ten export destinations for pears ... 45

Figure 3-22: Production trends of peaches including nectarines in 2016 ... 46

Figure 3-23: Production trends of plums and sloes in 2016 ... 47

Figure 3-24: The export trend of South Africa’s peaches including nectarines in comparison with main competitors in 2016 ... 48

Figure 3-25: The export trend of South Africa’s plums and sloes in comparison with main competitors in 2016 ... 49

Figure 3-26: South Africa’s monthly export of selected stone fruit between 2013 and 2017 ... 50

Figure 3-27: South Africa’s top 10 export destinations for peaches including nectarines ... 50

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Figure 3-29: Production trends of avocados in 2016 ... 52

Figure 3-30: The export trend of South Africa’s avocados in comparison with main competitors in 2016 ... 53

Figure 3-31: South Africa’s monthly export of avocados between 2013 and 2017 ... 53

Figure 3-32: South Africa’s top ten export destinations for avocados ... 54

Figure 3-33: Global production of grapes in 2016 ... 55

Figure 3-34: The export trend of South Africa’s grapes in comparison with main competitors in 2016 ... 56

Figure 3-35: South Africa’s monthly export of grapes between 2013 and 2017 ... 57

Figure 3-36: South Africa’s top ten export destinations for grapes ... 57

Figure 3-37: Global production of macadamia nuts in 2018 ... 58

Figure 3-38: The export trend of South Africa’s macadamia nuts in comparison with main competitors in 2016 ... 59

Figure 3-39: South Africa’s monthly exports of macadamia nuts, in shell between 2013 and 2017 ... 60

Figure 3-40: South Africa’s top ten export destinations for macadamia nuts ... 61

Figure 3-41: Selected South African fruit and nut crops’ export process ... 61

Figure 3-42: South African grapes’ export timeframe from farm to market ... 62

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CHAPTER 1:

INTRODUCTION

1.1 Background and motivation

Exports are an important determinant of economic growth and development (Hultman, 1967:148). Countries benefit from exports through the availability of foreign exchange inflow, the increase of productivity, and economies of scale (Sheridan, 2012:6). As a result, these effects may lead to increased innovation and employment in countries (Sheridan, 2012:7).

1.1.1 South Africa’s economy

The National Treasury’s 2018 budget review estimated that South Africa’s economy had an expected growth of 1.5% for 2018 and 1.8% for 2019 (South Africa, 2018:16). However, according to the World Bank (2018b), due to South Africa’s high population growth and stagnant growth in Gross Domestic Product (GDP) in recent years, the country has been struggling to reduce its high levels of poverty. In addition, South Africa remains dependent on commodity prices for imports and, especially, exports (World Bank, 2018b).

In 2012, the South African National Planning Commission (NPC) implemented the National Development Plan (NDP), which aims to decrease the current high levels of poverty and reduce inequality in the country by 2030 (South Africa, 2012:24). Certain economic targets have been set by the NDP, including that South Africa achieves an average GDP growth rate of over 5% by 2030, raise income levels above the poverty line and substantially reduce inequality (South Africa, 2012:110). Furthermore, the current high level of unemployment should be reduced from 27.3% (StatsSA, 2018a) to 6% by 2030 (South Africa, 2012:110).

Presently South Africa has a weak local demand and low confidence levels amongst domestic consumers and businesses (IDC, 2017:1). Increased exports may positively influence South Africa’s production and employment, which can ultimately contribute to higher levels of economic growth and job creation in the country (IDC, 2017:3). South Africa should, therefore, take advantage of improving conditions in global markets and increase their export, especially in the country’s current economic situation (IDC, 2017:3).

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Export promotion starts with accurate international market selection and determining the export potential of a country’s products in a prospective market (Kravchenko, 2014:36). The utilisation of the country’s export potential can create more job opportunities and stimulate economic growth. The Industrial Development Corporation (2017:1) estimated that exports contribute directly to 1.23 million jobs in South Africa. This accounts for 10% of the country’s total employment, while indirectly1, exports contribute to 2.53 million or 21.4% of the country’s overall employment (IDC, 2017:1).

1.1.2 South Africa’s agricultural sector

South Africa’s agricultural sector’s potential, in terms of job creation and economic development, still remains underdeveloped (South Africa, 2019:6). South Africa’s agriculture sector contributed 2.2% to the country’s total GDP in 2017 (DAFF, 2018a). Although this is a relatively small contribution, the sector remains an important labour-intensive employer in the economy and displays increasing backwards and forward linkage with other sectors in the economy (Greyling, 2015). It is also a significant provider of foreign exchange through exports (DAFF, 2018a).

According to the Quarterly Labour Force Survey (QLFS) from Statistics South Africa (StatsSA), South Africa’s agriculture sector contributed to 739 000 jobs in the first quarter of 2013 (StatsSA, 2013:7), which increased to 849 000 jobs in the fourth quarter of 2018 (StatsSA, 2018b:2). In addition, the NDP aims to create more jobs in the agriculture sector, totalling 1 million jobs by 2030 (South Africa, 2012:124).

The agricultural sector contributed 5.1% of the country’s total employment in the fourth quarter of 2018, in comparison to the mining sector’s 2.6% and construction’s 9% (StatsSA, 2018b:2). However, the mining sector had a -3.6% year-on-year growth in employment between 2013 and 2018, compared to the agricultural and construction sector’s respective growth of 2.8% and 7.7% in employment for the same period.

Furthermore, South Africa’s agriculture sector’s exports increased from R72.5 billion in 2013 to R127.9 billion in 2017, which amounted to 10.8% of the country’s total exports in 2017 (DAFF, 2018b:80). Horticulture, which consists of fruits, vegetables, flowers and ornamentals, forms an important part of the South African agricultural sector (Barrientos

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& Visser, 2013:2; Labaste, 2005:3). In 2012 South Africa’s gross production of horticulture products was R47.7 billion, which grew to R74.2 billion in 2017 (DAFF, 2018b:75), amounting to a year-on-year growth rate of 9.2% for the period. The country’s fruit2 production made up 64.8% of the overall horticulture production in 2017, while vegetable3 and nut production contributed 27.4% and 4.3% respectively (DAFF, 2018b:76). The fruit sector had a year-on-year growth production rate of 10.5% from 2012 to 2017 (R29.2 billion to R48 billion) The fruit industry has been among the most dynamic sectors in international agricultural trade (ITC, 2019a). Trade in this sector is stimulated by the rise in consumers’ income, the growing interest in the variety of products, freshness, and year-round availability (Diop & Jaffee, 2005:237). South Africa’s fresh fruit sector is, in particular, a prominent export sector, whereas the country’s vegetable production is largely for consumption in the domestic market (Barrientos & Visser, 2013:3).

1.1.3 South Africa’s counter-seasonal fruit and nuts exports

Products in the fruit and nuts sector are classified under the Harmonized System4 (HS) Chapter 8 (ITC, 2019a). South Africa’s fruit and nuts sector is the largest contributor in value to the country’s agricultural exports. The fruit and nuts sector was South Africa’s seventh largest exporting sector in 2017, with an export value of R45.1 billion (ITC, 2019a). The sector’s exports showed a year-on-year growth rate of 4%, from R25.3 billion in 2013 to R45.1 billion in 2017 (ITC, 2019a). South Africa was the tenth largest exporter of fruit and nuts in the world in 2017 and the country contributed to 2.8% of world exports. South Africa’s main export destinations for fruit and nuts in 2017 were the Netherlands (20%), the United Kingdom (14.7%), Hong Kong (8.3%), the United Arab Emirates (5.6%), and Russia (4.9%) (ITC, 2019a), all of which are located in the Northern Hemisphere. Over the past decade, although intraregional trade still dominates the global trade patterns of fruits and vegetables, extra-regional trade has become more important, especially for off-season fresh fruits (Huang, 2004:iii). An example of extra-regional trade is the counter-seasonal imports by the Northern Hemisphere from the Southern Hemisphere. The counter-cyclical seasons of the two hemispheres are the main reason

2_{Horticulture fruit include viticulture, citrus fruit, subtropical fruit, deciduous and other fruit, as well as dried}

fruit.

3 The value of South Africa’s horticulture production of vegetables include potatoes.

4_{The Harmonized System is an international nomenclature defined by the World Customs Organisation}

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for the increased global North-South (and therefore extra-regional) trading patterns (Huang, 2004:iii).

This study investigates the seasonality in South African fruit and nut crops and its export opportunities. South Africa’s peaches (including nectarines) (HS080930) can be used to illustrate the product’s seasonality and potential seasonal export opportunities.

South Africa was the fourteenth largest worldwide exporter of peaches (including nectarines) in 2017, with an export value of R434.8 million (ITC, 2019a). South Africa’s exports of peaches represent 1.5% of total world exports in this product. As shown in Figure 1-1, South Africa’s exports of peaches (including nectarines) illustrate a seasonal export pattern. South Africa, therefore, only has a certain window of opportunity to export this product.

Figure 1-1: South Africa’s monthly export of peaches including nectarines in 2016 and 2017

Source: Author’s own calculations based on data from the ITC (2019a)

The South African peach and nectarine season runs from October until April (ITC, 2019a) (see Figure 1-1). South Africa produces 22 different varieties of peaches and 25 different varieties of nectarines for exportation (FPEF, 2019b:51, 55) (more detail on the

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seasonality of the products selected for analysis in this study will be discussed in Chapter 3 and Appendix A).

As illustrated in Figure 1-2, South Africa’s top export destinations for peaches (including nectarines) are located in the Northern Hemisphere.

Figure 1-2: South Africa’s monthly export of peaches to its top export destinations between 2017 and 2019

The United Kingdom was South Africa’s largest export market, which imported 30.8% of the country’s peaches (including nectarines) in 2017. South Africa’s other main export markets for peaches (including nectarines) were the Netherlands (30.2%), the United Arab Emirates (12.6%), Saudi Arabia (4.4%) and France (0.7%) (ITC, 2019a).

To illustrate the seasonal import patterns in a specific market, Figure 1-3 shows Romania’s monthly import of peaches from its top suppliers between 2017 and 2018.

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Figure 1-3: Romania’s monthly import of peaches from its top suppliers between 2017 and 2018

The majority of Romania’s peaches (including nectarines) were imported from Northern Hemisphere, European suppliers, namely Greece (58.5%), Italy (11.1%), Spain (9.8%), Germany (8.5%), and Serbia (0.1%). Figure 1-3 clearly shows that Romania imports almost no peaches when the Northern Hemisphere suppliers are out-of-season between October and April.

As illustrated in Figure 1-4, South Africa’s export season for peaches runs from approximately October to April. Therefore, South Africa could be a potential counter-seasonal supplier of peaches (including nectarines) to Romania.

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Figure 1-4: The total monthly imports of Romania and exports of South Africa of peaches between 2017 and 2018

It is clear that a window of opportunity opens up for South Africa to export peaches to Romania from October to April when Northern Hemisphere competitors are out-of-season. This example illustrated that there could be export opportunities for seasonal fruit and nuts in specific months that may be overlooked when only considering total annual values in market selection analyses.

Market selection methods are used to identify potential export markets (see Section 2.4). These methods use mostly annual data, however, for some products or industries it might be necessary to use monthly data, in order to take seasonality into account. As seen in Section 2.6, the literature on seasonality and counter-seasonal trade is very limited. A previous study by Cameron, Viviers and Steenkamp (2017:140) focused specifically on the South African fruit and nut sector (HS08) and identified export opportunities for all products in the sector, using yearly data (see Section 5.8). The concept of seasonality has, therefore, not been incorporated yet in similar, previous studies within the South African context.

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1.2 Problem statement

Given the seasonality of certain fruit and nut crops, it is possible that there are underutilised export opportunities for South Africa during the months when competitors in the Northern Hemisphere are out-of-season in the markets.

When using annual trade data in international market selection methods, these export opportunities for seasonal fruit and nut crops can be overlooked.

1.3 Research questions

From the problem statement, the following research question can be formulated: Where are the seasonal export opportunities for the selected South African fruit and nut export products and to what extent are they utilised?

1.4 Research objectives 1.4.1 Main objective

The main objective of this study is to identify underutilised seasonal export opportunities for selected seasonal fruit and nut export crops of South Africa.

1.4.2 Specific objectives

The specific objectives of this research are to:

i. provide an overview of the literature on the importance of export growth, accurate international market selection, factors influencing exports and reasons behind seasonal trade;

ii. provide an overview of the seasonality, export markets, competitors in the markets and logistics behind exporting the selected South African fruit and nut products; iii. adapt selected filters of the market selection model, Decision Support Model

(DSM), to facilitate seasonal data, in order to identify monthly export opportunities for specific South African fruit and nut crops;

iv. evaluate South Africa’s utilisation of and market access into the markets (product-country combinations) with seasonal export potential; and

v. provide recommendations for both the industry and further research regarding the seasonal export opportunities identified.

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1.5 Research methodology

In the empirical study, South Africa’s seasonal agricultural export opportunities will be highlighted using selected filters of an international market selection method called the Decision Support Model which was first developed by Cuyvers, De Pelsmacker, Rayp and Roozen in 1995. Instead of analysing annual data, this study will use monthly UN Comtrade data to identify seasonal export opportunities for selected agricultural products. The products included in this study were selected5 from South Africa’s top 20 fruit and nuts (HS08) exported products, which displayed a seasonal export pattern (see Table 1-1).

Table 1-1: Selected fruit and nut crops with seasonal export patterns

No. HS08

classification

Product Season SA’s top 3 export

markets (Share in SA’s exports

%) Competitors in the markets (Share in world exports %) 1 HS080510 Fresh or dried oranges March to December Netherlands (19%) China (9.1%)

United Arab Emirates (7.5%)

Spain (25.3%) United States of America (12.9%) Egypt (10.9%) 2 HS080610 Fresh grapes October to

May Netherlands (38.5%) United Kingdom (22.7%) Hong Kong (6.3%) Chile (14.8%) United States of America (10.9%) Italy (10.3%) 3 HS080810 Fresh apples January to

December United Kingdom (18.8%) Malaysia (11.1%) Bangladesh (7.5%) China (19%) United States of America (12.8%) Italy (12.7%) 4 HS080550 Fresh or dried lemons6 January to November

United Arab Emirates (15.4%) Netherlands (11.5%) Russia (10.9%) Spain (24.4%) Mexico (15%) Turkey (8.6%) 5 HS080830 Fresh pears December to

December

Netherlands (21.4%) Russia (11.1%) United Arab Emirates (10.6%) China (20.5%) Belgium (10.1%) Argentina (9.7%) 6 HS080540 Fresh or dried grapefruit March to October Netherlands (23.3%) Japan (18%) China (11.4%) China (21.1%) United States of America (9.3%) Israel (8.7%) 7 HS080261 Fresh or dried macadamia nuts, in shell March to December Hong Kong (63.5%) Viet Nam7_(27.3%) Australia (32%) Hong Kong (12.5%) Guatemala (6.8%)

5_{Products were selected based on their export value in 2017, as well as, whether the products illustrated}

a seasonal export pattern.

6_{HS080550 - Fresh or dried lemons "Citrus limon, Citrus limonum" and limes "Citrus aurantifolia, Citrus}

latifolia"

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No. HS08 classification

Product Season SA’s top 3 export

markets (Share in SA’s exports

%) Competitors in the markets (Share in world exports %) United States of America (6.4%) 8 HS080940 Fresh plums and sloes October to January Netherlands (36.9%) United Kingdom (23%) United Arab Emirates (11.1%) Chile (16.3%) Spain (13.3%) United States of America (8.5%) 9 HS080440 Fresh or dried avocados February to November Netherlands (66.6%) United Kingdom (20.4%) Spain (6.5%) Mexico (29.8%) Peru (10.9%) Chile (10%) 10 HS080930 Fresh peaches, including nectarines August to April United Kingdom (52%) Netherlands (15.6%) United Arab Emirates (13%)

Spain (40%) Italy (8.6%) China (6.3%)

Source: Author’s own illustration based on data from the ITC (2019a)

The method consists of three phases (see Figure 4-1).

Phase 1 includes two parts, which follows filter 2 and filter 3.1 of the Decision Support Model (DSM). Phase 1.1, focuses on the import demand-side and evaluates the size and growth of imports for every product-country combination under consideration, on a monthly basis (see Section 4.2.1). In Phase 1.2, the import markets’ levels of market concentration will be analysed (see Section 4.2.2).

Phase 2, considers the export supply-side and identifies the months in which South Africa has a revealed competitive advantage in exporting the selected fruit and nut crops (see Section 4.3).

Finally, in Phase 3 the markets selected in both Phases 1 and 2 will be considered export opportunities for South Africa which will be further evaluated. In Phase 3.1, the monthly potential export value for each selected product-country combination will be calculated and evaluated against actual exports (see Section 4.4.1). In Phase 3.2 market access in these selected markets will be evaluated, which involves gathering information on trade barriers (e.g. tariffs, non-tariff measures, logistical efficiency, quality of infrastructure and customs and border efficiency) that may prevent South Africa from utilising the seasonal export opportunities (see Section 4.4.2).

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1.6 Chapter outline

The chapters in this study are presented as follows:

The first chapter provides a background, research problem, objectives, research method and outline of the study.

In Chapter 2, the literature review will provide an overview of the importance of export promotion and international market selection. Furthermore, the chapter will provide an overview of the factors affecting international trade, as well as the influence of seasonality on fruit and nuts’ exports

Chapter 3, will provide an overview of South Africa’s production, current export markets, seasonality, competitors in the markets, and logistics of the selected seasonal fruit and nut products included in this study.

In Chapter 4 the research method and monthly trade data analysed to identify specific seasonal export opportunities for selected seasonal fruit and nut products will be explained.

In Chapter 5, the results of the study, the underutilised seasonal export opportunities identified for the selected South African fruit and nut products, will be discussed.

Finally, in Chapter 6, a summary, conclusion, and recommendations arising from this study will be given.

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CHAPTER 2:

LITERATURE REVIEW

2.1 Introduction

In Section 1.1, the background on the importance of exports and how exports may influence the economic growth of a country was provided, as well as the importance of South Africa’s agriculture exports, specifically the fruit and nuts sector. The sector not only contributes significantly to the country’s export value but also employment opportunities.

Chapter 2, will provide an overview of the literature on the importance of export promotion for a developing country. In addition, a brief background of the theories of why nations trade and why countries participate in counter-seasonal trade will be explained. Furthermore, the importance of exports to economic growth, and specifically the importance of exports for South Africa, will be discussed in Sections 2.3 and 2.4. Finally, the importance of international market selection (see Section 2.5), the factors influencing international trade (Section 2.6), as well as the influence of seasonality on fruit and nuts’ exports (Section 2.7) will be explained

2.2 Theories on why nations trade

Due to the fact that trade has played a vital role in the development of countries, various theories have been formulated to explain why countries participate in international trade. According to Leontief (1953:332), countries trade with each other because it enables them to participate in the exchange of products, as well as to profit from the international division of labour.

The aim of this section is to provide a brief summary of the international trade theories, in an attempt to explain why countries engage in seasonal trade of fruit and nuts.

2.2.1 Classical trade theories

Mercantilism was the dominant trade theory in Europe from the 15th_{to the 18}th_centuries,

which resulted in the emergence of the first free trade policies. The mercantilist trade theory encouraged the state to regulate trade (Van Marrewijk, Ottens & Schueller, 2012:52). This was done with the aim of promoting a country’s wealth and growth,

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maximising levels of employment, achieving a favourable balance of trade, and protecting the country’s industries (Van Marrewijk et al., 2012:52).

The mercantilist view pursuits wealth and growth by focusing on increasing the country’s “bullion”, namely gold reserves (Aizenman & Lee, 2007:4). This was done through policies that recommended that trade rather be regulated through the restriction of exchange transactions (Viner, 2016:4). Therefore, mercantilism focused on increasing exports and export growth rates, while limiting imports into the country (Aizenman & Lee, 2007:5). In 1776, Adam Smith introduced his theory of absolute advantage and the benefits of trade due to specialisation. Smith believed people trade with one another to further their own gains, otherwise, they would not pursue it. However, Smith’s trade theory shows that not only one person, but a whole society can benefit from international trade (Schumacher, 2012:56-57).

The division of labour formed the basis of Smith’s theory of international trade. As a result, the more advanced a country’s division of labour is, the more products it can produce with the same amount of labour (Schumacher, 2012:58). A country, therefore, has an absolute advantage when it can produce a similar product more cost-effectively than another country (Van Marrewijk et al., 2012:53). Therefore, a country should export products in which it has an absolute advantage and import products in which they do not (Schumacher, 2012:62). As a result, consumers will buy products from the countries offering the lowest prices. Smith’s theory of absolute advantage opposed mercantilism’s intervention of the state in trade.

At the beginning of the 19th_{century, Ricardo’s theory of competitive advantage was used}

to explain the motivation behind international trade. According to Ricardo’s theory, countries could benefit from trade even when they do not have an absolute advantage (Leontief, 1953:332). Countries derive the benefits of trade from the comparative difference in opportunity costs of either producing the products themselves or importing the products (Van Marrewijk et al., 2012:55).

Ricardo’s theory of comparative advantage explained that two countries benefit from trading with each other, through specialisation based on their productive differences (Costinot & Donaldson, 2012:453; Van Marrewijk et al., 2012:55). For example, country A is relatively better at producing clothes than wine, in comparison with country B. One

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of these two countries will completely specialise in the production of goods in one of the two sectors. Therefore, country A will produce clothes while country B produces wine (Costinot & Donaldson, 2012:453). Thus, when engaging in trade, the production of all goods needs to be evaluated in relation to the other producers of the same goods. 2.2.2 Neo-classical trade theories

During the early 20th_{century, the neo-classical economic school of thought was brought}

about by economists Eli Hecksher and Bertil Ohlin. Similar to Ricardo’s theory, the Heckscher-Ohlin theory also used specialisation to explain international trade patterns. However, Ricardo’s theory stated that countries specialise in the production of products, in which they have a comparative advantage (Morrow, 2010:137; Van Marrewijk et al., 2012). While Heckscher-Ohlin’s theory was that a country’s comparative advantage is determined by its resources or abundance of production factors (Morrow, 2010:137; Van Marrewijk et al., 2012).

In addition, the Hecksher-Ohlin theory explained that countries are either capital-intensive or labour-intensive (Krugman & Obstfeld, 2009:54). Therefore, countries will specialise in the production of products for which they have relatively abundant production factors (Morrow, 2010:137).

2.2.3 New trade theories

Over the last few decades, the international trade environment has become more interconnected as globalisation increased. As a result, earlier trade theories have become ineffective in explaining why countries engage in trade.

Since the 1980s, countries began importing products similar to those produced in their domestic markets, resulting in intra-industry trade (Krugman & Obstfeld, 2009). Therefore, the new trade theories were based on the assumption that countries can still participate in trade even in the absence of comparative advantage. In addition, the new trade theory incorporated transportation costs and spatial factors of production, which contributed to the theory’s concept of “geographical economics” (Van Marrewijk et al., 2012). Furthermore, the theories also explain how a country’s exports can be influenced by spatial economic activities and geographical clustering (Krugman & Obstfeld, 2009).

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This is due to the fact that the new trade theory analyses trade within an industry and not a country. As a result, the theory strengthened the policy case for trade by identifying new sources of gains for industries. For instance, an increase in efficiency due to an increase in the scale of production (Ciuriak, Lapham, Wolfe, Collins-Williams, & Curtis, 2011:3). Also, welfare gain from consumers due to the lower costs of imports and having access to an increased variety of products.

2.2.4 New-new trade theory

The 21st_{century brought along major developments in trade theory, with the introduction}

of the new-new trade theory. The theory focusses on the importance of firms rather than sectors when analysing the challenges and the opportunities countries face when trading (Ottaviano, 2010). Although the new-new trade theory shares many of the features of the 1980s new trade theories, it also incorporates firm different characteristics within and across industries, specifically with regard to productivity (Ciuriak et al., 2011:3).

The new-new trade theory uses the traditional concept of comparative advantage to identify industries in which a country is stronger (or weaker) than its trading partners. It, therefore, identifies industries where a country’s relative costs of production are low (or high) in comparison to its trading partners (Ottaviano, 2010).

To conclude this section, within the context of this study, it is important to note that there is no specific reference in the trade theories to why countries participate in the counter-seasonal trade. However, global trade in counter-seasonal products can be linked to a few trade theories.

Due to seasonality, importers in the Northern Hemisphere are depended on suppliers of fresh, seasonal products from the Southern Hemisphere during the off-season. The trade between the Northern and Southern Hemisphere in these seasonal products can thus be explained by the classical theory, namely Ricardo’s theory of comparative advantage. Countries in the Southern Hemisphere have a comparative advantage when producing and exporting seasonal crops in the Northern Hemisphere’s off-season.

In addition, the counter-seasonal trade of seasonal crops can be explained by the new trade theory. Countries in the Southern Hemisphere trade with countries in the Northern

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Hemisphere due to consumers’ demand. Consumers have a demand for an increased variety of seasonal crops which are not locally produced during the off-season.

2.3 The importance of export for a developing country

As mentioned in Section 1.1, the value of export growth may vary for both developed and developing countries (Samen, 2010:5). According to Hultman (1967:148), exports form an essential part of a country’s total output and is an important determinant of economic growth.

On a macro level, exports help countries to generate foreign exchange, increase their productivity and economies of scale, and provide them with the opportunity to explore broader markets (Samen, 2010:5; Sheridan, 2012:6). This may lead to an increase in innovation and employment (Sheridan, 2012:7). On a micro-level, exporting firms are more efficient than non-exporting firms (Samen, 2010:5).

Therefore, through the development of exports, countries would be able to build their foreign exchange reserves, increase their international competitiveness, and ultimately increase their economic growth (Edwards, Rankin & Schoer, 2008; Shankarmahesh, Olsen & Honeycutt, 2005:203). In order to achieve this, the country’s exporters must become more productive and efficient (Awokuse, 2008; Edwards et al., 2008:80). Productivity and efficiency may lead to the creation of employment opportunities and the reduction of poverty levels, which may eventually lead to a higher standard of living for the residents of the country (Gokmenoglu, Sehnaz & Taspinar, 2015:472; Shankarmahesh et al., 2005:203).

However, many developing countries, including South Africa, are dependent on commodity exports, which include horticulture exports. Horticulture exports are vulnerable to external shocks, which may cause price volatility (Combes & Guillaumont, 2002:26; Samen, 2010:2). These external shocks may include natural or climate shocks like floods or droughts, financial shocks like the instability of financial markets, or shocks to trade like the instability of prices or demand in the importing markets (Combes & Guillaumont, 2002:25).

If, on the other hand, export growth of a country’s horticulture sector can be achieved, it may affect economic growth indirectly through efficient resource allocation and

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production, greater capacity utilisation, and the exploitation of economies of scale (Awokuse, 2008:162; Gokmenoglu et al., 2015:472).

2.4 Importance of exports and accurate international market selection for South Africa

In 2012, the South African National Planning Commission (NPC) implemented the National Development Plan (NDP), which aims to grow the country’s traditional exports by 6% and non-traditional exports by 10% a year until 2030 (South Africa, 2012:61). The NDP aims to increase the country’s level of employment and income by expanding and diversifying exports to increase foreign exchange earnings, amongst others (South Africa, 2012:120). In order to reach these goals, it is important that the country’s Department of Trade and Industry (DTI) achieves their specific strategic outcome-orientated goals (DTI, 2017). The DTI aims to increase South Africa’s exports by building regional and global relations, and by increasing the country’s trade competitiveness (DTI, 2017:46).

According to Foster (2006), there is a positive relationship between exports and growth in Africa. However, Aditya and Acharyya (2015:390) observed that in order to obtain economic growth, developing countries benefited more from export diversification, while developed countries performed better when following export specialisation strategies. Export diversification has been used to successfully develop emerging economies, as it creates a broad base for export-led growth (Nicita, Shirotori & Klok, 2013:1). According to Hummels and Klenow (2005), export growth can produce more positive outcomes if the country increased the variety of products exported, in comparison to only exporting a greater volume of the same products.

Additional to product diversification, geographical export diversification also leads to higher growth prospects (Aditya & Acharyya, 2015:390; Ali, Alwang & Siegel, 1991:6; Hesse, 2009:2; Matthee, 2015:8).

Despite the South African government’s attempts of increasing non-traditional export by encouraging export diversification, the majority of the country’s export growth is due to growth in the intensive margin (Matthee, Farole, Naughtin & Rankin, 2016:184).

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Intensive margin growth is exhibited when countries increase the exports of their existing products to their current markets (see Table 2-1). While under extensive margin growth, countries either export new products to old markets, old products to new markets, or new products to new markets (Ali et al., 1991:7; Hesse, 2009:6; Matthee, 2015:8; Reis & Farole, 2012:4). Berthou and Fontagné (2008); Evenett and Venables (2002); Nicita et

al. (2013) found that the extensive margin contributes more to export growth, while others

found it true for the intensive margin (Amiti & Freund, 2008; Bingzhan, 2011). Table 2-1: Intensive and extensive margins

Old markets New markets

Old product Intensive margin Extensive margin

New product Extensive margin Extensive margin

Source: Reis and Farole (2012:55)

According to Matthee et al. (2016:195), the intensive margin is the more important contributor to South Africa’s export growth. The intensive margin explained 77% of the country’s export growth over the period 2002 to 2012 (Matthee et al., 2016:195). Although export growth has occurred in South Africa, it has not been significant enough.

In this study, the export potential of the selected South African fruit and nut crops will be analysed in both existing and new export markets to identify underutilised export opportunities (see Chapter 5).

However, before a country can promote its exports to international markets, it is important that the correct potential export markets are selected.

According to Rahman (2003:119), one of the main reasons for countries’ exports failing is the selection of incorrect markets. Usually, these incorrect markets are selected through the use of inadequate or inappropriate market evaluation methods (Papadopoulos, Chen & Thomas, 2002:165; Rahman, 2003:119).

Therefore, to ensure exporters avoid unnecessary costs, it is vital that their export strategy focuses on the optimal allocation of resources to ensure the success of the exports (Shankarmahesh et al., 2005:204). An effective export strategy identifies markets

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with the highest export potential, while inadequate market selection may influence the performance in the market and be costly for exporters (Papadopoulos et al., 2002:166). 2.5 Factors impacting export performance

A country’s export performance is affected by various elements, from the production environment to the export products’ access to the international markets (UNCTAD, 2005:49).

Previously, countries producing primary commodities would export only the surplus of the commodities produced in order to finance their imports of other products (Rowe, 1965:2). However, due to consumers’ growing interests in a variety, counties have been producing with the intention of exporting the products (Diop & Jaffee, 2005:237).

According to Abrams (1980:3), a country's export capacity is related to its total production capacity, which in turn is related to the country’s national income. A country’s supply capacity will, therefore, determine its ability to participate in international trade. This may differ from country to country, depending on the development of the country’s external factors.

The growth in the Gross Domestic Product (GDP) of an exporting country, can be an indicator of future potential and sustainability (Majeed, Ahmad & Khawaja, 2006:1268). The main components of a country’s supply capacity are factors affecting the production costs of exports (UNCTAD, 2005:57). As a result, a country’s exports will increase with the profitability of producing and selling products (Sawyer & Sprinkle, 2019:1960). Also, a country’s exports will be affected by the importing country’s income and demand. The higher the country's income, the greater its demand will be for imported goods (Abrams, 1980:3). The price of the commodity will, therefore, reflect the potential growth in production as well as the growth in demand for the exported product (Trostle, 2008:1). According to Sawyer and Sprinkle (2019:1960), the relationship between the quantity and the price of the goods exported is, at least in theory, simultaneous.

The supply capacity and import demand for the exported product is also affected by the countries’ locations. A country’s location is expressed in terms of its proximity to the rapidly growing import markets (Redding & Venables, 2004:96). Therefore, the greater

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the distance between the countries, the higher the trade costs and the greater the trade time will be. As a result, it is likely that these countries will be more resistant to trade with one another (Abrams, 1980:4; Bergstrand, 1985:478-479; World Trade Organization, 2012:105). Distance can thus be seen as a barrier to trade. An importing country’s demand is likely to be geographically concentrated, it creates a spill-over effect between countries in a region (Redding & Venables, 2004:96).

Trade between countries is also affected by trade costs, such as the cost of transporting goods across countries’ borders (Portugal-Perez & Wilson, 2008:2). The transport costs of trade increase exponentially with distance. For instance, the transport costs will be higher for landlocked countries than countries neighbouring each other (Portugal-Perez & Wilson, 2008:2; World Trade Organization, 2012:106). According to Anderson and Van Wincoop (2004:704), the median transport costs of a landlocked country is 55% higher than a coastal country’s median transport cost. Landlocked countries are affected by a high cost of freight services, as well as a high transportation time, due to the distance and the multiple borders (Marteau, Raballand & Arvis, 2007:23; Portugal-Perez & Wilson, 2008:2).

Transport cost is the most significant component of trade cost, as it influences not only a country’s export performance but also its competitiveness (Moïsé & Le Bris, 2013:4). The variation of countries’ transport costs may account for the differences in their competitiveness in international markets (Bougheas, Demetriades & Morgenroth, 1999:170). As a result, countries can be isolated from participating in global trade by their remoteness, poor transportation, and infrastructure (Limao & Venables, 2001:451; Marteau et al., 2007:23).

However, transportation costs are inversely dependent on the development of the country’s transport and infrastructure systems (Bougheas et al., 1999:170). According to Limao and Venables (2001:452), both transportation and communication infrastructure are important to consider in evaluating the quality of a country’s infrastructure. Infrastructure may also capture trade facilitation factors, such as the percentage of paved roads in a country, kilometres of railway, and telephone lines (Fugazza, 2004:2; Limao & Venables, 2001:472). Infrastructure is an important supply capacity element and therefore has a significant and positive impact on a country’s export potential (Fugazza,

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2004:2). The quantity and quality of a country’s physical infrastructure are expected to influence the volume and the cost of trade in a country (Bougheas et al., 1999:170). In addition, the cost and documentation needed to cross a border and the effectiveness of customs procedures also affect trade in terms of costs and time (World Trade Organization, 2015:44).

As a result, high trade costs have a negative effect on the extent to which countries participate in international trade. Trade costs increase the price of imported goods, lowering producers’ competitiveness in the market, resulting in the final exported products being more expensive than competitors’ products in the market (Portugal-Perez & Wilson, 2008:2).

Policy instruments like tariffs and non-tariff measures (NTM) can also restrict the trade of products (Anderson & Van Wincoop, 2004:691). Tariffs are import taxes that are imposed on products to restrict their trade, create revenue and protect local producers in a market (Moïsé & Le Bris, 2013:11; Portugal-Perez & Wilson, 2008:6), while NTM refers to policy interventions like import quotas, export restraints, government procurement, technical barriers to trade, sanitary measures and rules of origin (Moïsé & Le Bris, 2013:11). Trade can also be hindered by the cost associated with exchange rate variability. This is the difference between the amount expected and the amount received in a transaction due to fluctuating exchange rates (Abrams, 1980:4; Anderson & Van Wincoop, 2004:712).

A country’s competitiveness in a market can be defined as its ability to face competition in the market. Additionally, competitiveness would also be the exporting country’s ability to sell products that meet the demand requirements (price, quality, quantity) of the importing country (Latruffe, 2010:5).

To summarise, a country’s access to foreign markets is a critical determinant of its export performance (UNCTAD, 2005:49). A country’s ability to access a market is directly related to the characteristics of the importing country, namely the size of the market, trade costs, transport and communication infrastructure, customs and border efficiency, tariff and non-tariff barriers, as well as the competitors in the market.

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Since the focus of this study is on seasonality, the following section investigates the influence of seasonality on exports of fruit and nut crops.

2.6 The influence of seasonality on the exports of fruit and nut crops

The international trade of fruit and nuts has expanded at a higher rate than the trade in other agricultural commodities (Huang, 2010:60). This is caused by the increase in consumers’ income, as well as their interest in a greater variety of products and the convenience of year-round availability (Diop & Jaffee, 2005:237).

Due to the seasonality of fruit and nut crops, importers in the Northern Hemisphere are depended on countries in the Southern Hemisphere for the import of off-season fresh fruit and nuts (Huang, 2010:60). For developing countries, like South Africa, the trade in these products has been more attractive for producers due to the increased global demand (Diop & Jaffee, 2005:237). However, according to Huang (2013:i), there is a balancing seasonal relationship between imports and domestic products. Countries import fruit and nut crops to supplement their domestic production in the off-season (Huang, 2013:i). The literature on seasonality and counter-seasonal trade of fruit and nut crops is very limited, highlighting the important contribution of this study. The following subsections provide an overview of what has been written on the topic. Because of the limited nature of the literature on seasonality, this section draws heavily on Huang (2010; 2013).

2.6.1 The seasonal trade flow and supply of fruit and nut crops

The growing consumer demand for year-round, high-quality fresh fruit is influencing the global trade of these products (Huang, 2010:69,70). The Southern Hemisphere has been the counter-seasonal exporter of fresh fruit and nuts to the Northern Hemisphere’s consumers since the mid-1980s (Huang, 2013:4).

For example, China is one of the largest global producers of fruit, but the country is not a significant exporter due to its domestic demand and consumption (Diop & Jaffee, 2005:238; Huang, 2010:63). The strong domestic demand is driven by the growth in consumers’ income and the large and fast-growing urban population (Diop & Jaffee, 2005:238). As a result, emerging economies like China’s agricultural imports increased

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exponentially, in comparison with Europe’s, whose agricultural imports grew at a slower rate (Beckman, Dyck & Heerman, 2017:iii).

Seasonality is an important feature in the global trade of fruit and nut crops. The supply of counter-seasonal fruit and nut crops by the Southern Hemisphere is, thus, influenced by factors like the production climate, the distance to markets, the price of the products, technology, and trade agreements (Huang, 2010:70).

The different varieties of seasonal fruit and nut crops have diverse production and storage requirements. Some products can be grown in a variety of climates and locations, while other products can only be produced in a few locations. In addition, some products, like apples, can be stored for a while before consumption, while products like grapes have a shorter shelf life (Huang, 2010:71). The geographical distance is, therefore, significant to determine the trade of fruit and nut crops. As a result, the price of counter-seasonal products will be influenced by a variety of production costs, as well as the method of transportation, which is determined by the distance between the exporter and the destination country (Huang, 2010:71; Jahiel, Andreas & Penot, 2014:3).

Through the use of technology, exporters have been able to export their fruit and nut crops to consumers globally at affordable prices. Technology is responsible for advances in the transportation of these products, which helped to reduce delivery time while maintaining the products’ required quality of freshness and reducing shipping costs (Huang, 2010:72). Specifically, improvements in technologies like controlled atmosphere (CA), has extended the shelf life of perishable products like fruit (Huang, 2010:74). Through the use of CA, exporters are able to slow the ripening process, delay discolouration and allow perishable products like peaches and avocados to preserve its freshness. These products would not have remained fresh in ordinary refrigeration during transportation (Huang, 2010:74).

Lastly, policies affecting trade is increasing in complexity. As a result, global agricultural trade’s growth may be restricted. The trade of fruit and nut crops can be hindered by trade barriers like seasonal tariffs (Beckman et al., 2017:i).

For example, before entering into the North American Free Trade Agreement in 1994, Mexico faced seasonal tariffs when exporting grapes to the United States of America. The United States of America’s seasonal tariffs were $2.12 per cubic meter from 1 July

Identifying seasonal export opportunities for selected South African fruit and nut crops