Date published: 2005/08/14
The BBC says:
The South African grape industry says it is in crisis.
While exports have been hit by a strong rand and production damaged by bad weather in certain areas, farmers cite British supermarket price wars as a major reason for financial hardship and bankruptcies.
They say that in many cases supermarkets are demanding high standards of production, while not paying the price it costs them to produce the grapes.
According to the South African Table Grape Industry, 65% of the country's grape producers are now operating at a loss. Many are being kept afloat by bank loans or credit from their exporters.
It is estimated that one in five grape farmers in the Orange River region of the Northern Cape has gone bust, and it is feared that many more are set to go the same way.
Gerhard Oosthuizen is one of the farmers in Orange River to have recently gone bankrupt.
His farm had been in his family since 1920, but now the vines are being ripped up and the land sold at auction. He is clearly distraught at the thought of leaving it.
The bulk of his crop went to UK supermarkets and he said that up to five years ago he was paid the equivalent of about £5 (60 rand) for each 4.5 kilo box.
However, the price has since dropped and he now gets as little as £2 a box, despite each box costing more than £3 to produce. As he was producing 175,000 boxes a year, the losses were considerable.
"I went to the UK in February and saw the prices at which people buy grapes in supermarkets and I was stunned to see at what price they sell grapes compared with the price they get grapes," he says. "They are making quite a lot of money. I think it's slightly unfair."
Many farmers are particularly critical of supermarket special promotions, such as 'buy one get one free' or sudden big price reductions, which can result in them being paid even less than expected.
It is a common complaint that the grapes can already have been shipped and arrive in stores before the supermarket has decided the price it will charge the shopper - and therefore what it will pay the farmer.
This sounds odd. Are the farmers really claiming that Tescos and Sainsburys are just arbitrarily deciding the price after the goods are already shipped? What kind of business allows its customers to do that? And if it really does happen, the supermarkets might as well have permanent "buy one get one free" offers, or indeed they might as well give the grapes away for free and pay the farmers nothing. Even anything nearly along the lines implied in the article sounds highly illegal and it's hard to imagine the British government would not press charges. (Various bits of government might be in the pockets of the supermarkets but it's hard to believe the police and CPS are.) There is also a global market in grapes. If the UK companies really behave so badly it is obviously time for the farmers to find an alternative buyer (the US, Scandinavia, China, etc.). No doubt the farmers of the world are at the rough end of global trade, but by (it seems) garbling the story the BBC leaves its readers none the wiser.
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