Business / Business News

Alex Mitchley
2 minute read
3 Feb 2016
3:12 pm

Fruit production sector suffers a loss

Alex Mitchley

“The international demand for South African wines has declined due to fears of smoke damage.”

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The Western Cape regional fruit production sector has suffered losses amounting to R720m, with the wine industry suffering damage to the tune of R20m alone due to drought and fires.

Beverley Schäfer MPP Chairperson of the Standing Committee of Economic Opportunities, Tourism and Agriculture said this was revealed during today’s committee briefing on the impact of drought and fires on agriculture in the Western Cape.

“National government must take head of this reality and declare the region a disaster area. The Stellenbosch region has seen a 33% drop in rainfall during winter 2015, with surrounding regions facing similar challenges,” said Schäfer.

VinPro, a service organisation for 3 600 South African wine producer and cellar members, advised the committee that the South African wine industry has seen a 15% drop in wine production in 2015.

While wine producers have managed to keep the increase in the cost of wine production at 8%, it will most likely rise by 10 – 15% as of 2016.

“The dip in production and rise in production cost in addition to the current fires and drought, is expected to result in further losses for the sector, which employs 300 000 people nationally and contributes 3.5% to the national GDP.”

According to the committee, the impact of the fires extends beyond the damage to vineyards.

“The international demand for South African wines has declined due to fears of smoke damage.”

This despite the fact that local winemakers have the facilities to treat the grape for smoke damage, thus eradicating the impact on the flavour.

HORTGRO, the horticultural knowledge group advised the committee that the R 720m loss will have a devastating humanitarian impact as the most vulnerable will see food prices soar beyond their reach.

The committee said that despite the massive financial losses there is no immediate threat to farm worker employment.

“However, a number of farmers who are in the red, may exit the industry. This jeopardise farm worker jobs the long term.”

“Recovery will not be quick as some affected regions will take years to recover. The full extent of the damage caused by the drought and fires will be assessed in the weeks to come. As such, the Standing Committee will continue to engage with stakeholders to get a grasp on the full extent of the damage.”