Tiger Brands exit deciduous fruit business following strategic review, closure spells disaster for industry

SOUTH AFRICA – Tiger Brands’ decision to close down its fruit canning operations, Langeberg & Ashton Foods (L&AF), in the Western Cape, South Africa has sent waves of panic among stakeholders.

The canning factory has been in operation for more than 70 years and supplies fruit for Tiger Brands’ KOO brand as well as international brands like Silverleaf and GoldReef.

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It is the biggest of its kind in South Africa and is one of only two fruit canning factories in the country.

According to reports by Engineering News, it has played a vital role in enabling South African canned fruit to occupy the niche position it does in the world market, ranked amongst the top seven fruit canning countries globally by production, bringing in hundreds of millions of rands in foreign currency.

Agricultural association Agri SA is warning that the closure of the facility will have disastrous implications for the province’s farming communities, and disrupting crucial value chains.

“Given the essential contribution of this facility to the national and provincial economies, government needs to provide assistance by partnering with the parties to facilitate investment in the facility,” Agri SA said.

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The country’s largest food producer, has embarked on the labour consultation process on the future of the deciduous fruit business.

In May 2020, Tiger Brands announced its intent to exit the deciduous fruit business following a strategic review as it focused on manufacturing, marketing and distributing everyday branded food and beverages.

Although the company received a non-binding indicative offer from the Growers Consortium in October 2020, the consortium were unable to secure funding required to operate the L&AF business as a going concern by the deadline of 31 March, 2022.

However, the consortium will require an additional R200-million to R300-million to close the deal.

Given the latest announcement from Tiger Brands, these producers will need to secure the necessary funds in less than 60 days.

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“Without support from government and cooperation from Tiger Brands, the producers’ initiative will fail, and the fallout will be catastrophic,” Agri SA said.

The factory’s main inputs are cling peaches, bulida apricots and bon chretien pears, which are sourced from 2 250 ha of canning fruit orchards.

These orchards have been planted specifically in the Klein-Karoo, Ashton, Robertson, Bonnievale, Breërivier, Wolseley and Ceres areas for the purpose of canning.

If the factory closes as Tiger Brands intends, about 300 farmers will be left with no alternative market for their fruit because the only other fruit canning factory in South Africa, owned by food producer Rhodes Food Group, is already running at full capacity.

The farmers would have to destroy their orchards so that they can perhaps use the land for farming alternative products.

Tiger Brands has indicated that 250 permanent jobs and 4 300 seasonal jobs would be affected at the peak of the season.

Moreover, the factory supports much of the Ashton community, which would now face socioeconomic ruin. The factory is the biggest single source of income for the Langeberg municipality.

In addition to factory workers, the facility provides employment for thousands of farmworkers in Ashton and in the fruit production regions. More than one permanent job opportunity is associated with each hectare of fruit orchard, with 2 250 permanent farm workers’ livelihoods now in jeopardy.

Additional seasonal labour is used for winter pruning, thinning, summer pruning and harvesting.

“At a time when job creation and economic growth are desperately needed for the maintenance and recovery of the national economy, the agroprocessing sector cannot afford this closure,” Agri SA said.

The association said that it was essential for Tiger Brands to negotiate with fruit producers and factory workers to find the best possible solution for all the affected stakeholders.

“With the Agriculture and Agro-Processing Masterplan now in place, it is vital that government take up its role in supporting the growth of this important employer for the Western Cape,” Agri SA said.

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