Agriculture Pineapples
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Pineapples Description of the Industry
Cacadu District Municipality is currently home to an emergent pineapple industry, with the district contributing 124, 000 tons (2009) of pineapples to the South African market.
The Eastern Cape together with KwaZulu-Natal are the two main pineapple growing areas within South Africa. Within the Eastern Cape, the Cacadu District is home to this industry, with pineapple growing especially concentrated in the Ndlambe Local Municipality. The Cacadu District Municipality derives social and economic benefit from the pineapple industry as it is a labour-intensive sector that is almost exclusively grown in this region.
There are two varieties of pineapples that are commercially grown in South Africa - the Cayenne and the Queen. CDM grows both varieties; however the crop that is the most suited for canning and is also the larger of the two is the Cayenne pineapple. The pineapple grows on the central stem of the plant with only one fruit borne on each plant.
Within CDM, pineapples take approximately 1-1.5 years to flower after the planting has taken place. The first ratoon crop is usually harvested after 18 to 24 months after the planting of the crop while the two crop cycle can take up to four years. Commercial pineapple plants are only harvested two to three years, because the fruit begins to get smaller with each year of plant life.
Over the last two years the pineapple industry in the Eastern Cape has been undergoing a re-structuring process in order to rejuvenate this sector of the economy. The transformation of this industry has been a long awaited process as pineapple farmers have been experiencing negative growth, with pineapple growers leaving the industry due to an inability to gain price increases since 1998. A number of factors have played a role in the decline of this industry including exposure to the exchange rate volatility, cyclical pricing and high input costs.
Pineapples are eaten fresh or processed into dry products, for making juice, jam, and wine. They can be used as tenderizers, and they are of medicinal use due to their bromeline content. The focus in the Cacadu District is on producing pineapple concentrate.
Turnaround Strategy
The turnaround initiative is being spearheaded by Ndlambe Natural Industrial Products (NNIP), in partnership with local pineapple farmers, and with the support from the provincial government. This initiative has already assisted farmers with realizing a greater price for their pineapples compared to three years ago where this was not a likely situation. The value-added opportunities at the new pineapple plant as a result of NNIP and extensive research over the last two years have managed to realize the vast potential that the pineapple industry has to offer.
The pineapple fruit has the following opportunities:
The pineapple plant has the following opportunities:
The NNIP discovered they could make dietary fibre. This discovery will create a profitable method of dealing with industry waste, whereas the industry was previously selling roughly 30, 000 tons of waste a year to dairy farmers at approximately R3 a ton. The research identified that this waste could be sold in dietary fibre packages for about R15 to R25 per kg, turning the idea into a million rand a year income stream.
Previously the process of eliminating the accumulated plant waste, i.e. the leaves and stumps, was a costly process. As a result of the discovery that the leaves are able to function as a dietary fibre, textile fibre and microcrystalline cellulose and the extraction of bromelain from the stumps (a high-value enzyme that aids digestion, has anti-inflammatory properties and can be used in alternative medicines) have allowed the transformation of this industry.
The NNIP is also aiming to invest in an anaerobic digester, whereby the pineapple waste is inserted ,which speeds up the decomposition of the plant matter and produces methane gas. This is a highly expensive capital investment as the digester will cost approximately R400 million. The methane gas is then captured, scrubbed and can be converted with the help of gas turbines into electricity and steam. The power facility is estimated to produce 8 watts of power, one more than Port Alfred in the Ndlambe Municipality currently uses.
The electricity generated from this process can then be sold back to the grid creating carbon credit revenue. The steam generated from this process is purified water, which will transform into approximately 250-million litres of water, which will be filtered back into the Bathurst electricity grid. Within the CDM potential for pineapple farming is now evident with the rejuvenation of this industry and the ability of the pineapple to grow in certain areas where other crops struggle without irrigation. Pineapple growers now have the potential to realize greater prices for their crops, as well as receive profit from disposing of the pineapple waste products.
Global and National Market Trends
Within South Africa the quantities of pineapples sold on the fresh produce markets decreased from 23 529 in 2008 to 22 860 in 2009; however during this year pineapples accounted for approximately 65% of the total intake of subtropical fruit for processing.
About 95% of South Africa‘s pineapples are exported, mainly to Europe and a few to South America, where approximately 2.4 million cartons of canned pineapples are exported annually. In addition, 31,000 tons of fresh pineapples are sold on the domestic market and 500,000 cartons exported yearly. The exchange rate volatility, cost the pineapple industry about R22-million last year. CDM exports the majority of its pineapples or transports them to East London, where the pineapples are processed into pineapple concentrate for local and export markets.
Area Identified
Within the Cacadu District, pineapples are mostly cultivated in the Ndlambe Local Municipality. The estimated total production areas of pineapples during 2008/09 is approximately 14 000 hectares.
Figure 1: Potential Pineapple Production Areas in CDM
Source: Cacadu District Municipality
Industry Associations
The main function of the Pineapple Growers Organisation (PGA), based in Bathurst in the Ndlambe LM, is pineapple research and to source agrochemicals for the local pineapple industry. The association also keeps abreast of international pineapple research, plant breeding cultural methods. Currently the organisation is researching: organic production, Integrated Pest Management, the breeding of superior clones and the evaluation of various new chemicals.
Ndlambe Natural Industrial Product Pty Ltd (NNIP) facilitates the sector’s turnaround, working collaboratively with the Eastern Cape Department of Agriculture and Rural Development, the Pineapple Growers’ Association, and the Eastern Cape Pineapple Industry Workers’ Trust. Numerous established and emerging farmers across a wide demographic and geographic scale within the Ndlambe region will benefit as a result of the initiative.
Land and Climatic Characteristics
As this fruit is indigenous to the tropics, the crop requires areas where the climate is warm, humid and free from extreme temperatures (25 °C being optimal). Pineapples can be grown in a variety of soil types but prefer mildly acid soils (pH 5.5-6.5). However, there are certain requirements for successful pineapple production, which include:
Land for pineapple farming is chosen on the basis of elevation, aspect, soil and drainage. The amount of fertilizer required for maximum yield is determined by regular soil and leaf analysis. The fruit grows well near the seacoast as well as inland, as long as temperature ranges from 15.5 to 32.50 C. Low temperature, bright sunshine and total shade are harmful. It can grow successfully up to 1525m above sea level.
Pineapple plants grown at high altitudes bear fruits, which are more acidic than those cultivated at lower altitudes. Growing pineapples in humid areas gives a better yield. However, if proper care is taken, it is possible to grow a healthy crop even in temperate regions. A pineapple plant produces fruit once in a lifetime and thereafter dies.
CDM has ideal pineapple growing conditions as it contains the Ndlambe LM which has been growing pineapples for several decades and where the pineapples are continuing to thrive in this area with the most suitable land and climatic conditions.
Infrastructure
Although pineapples are grown mostly under rain-fed conditions, supplementary irrigation can help in production of good sized fruits in areas having optimum rainfall. Irrigation can also be helpful in the establishment of off-season planting to maintain a year-round production of fruits for canning factories. Therefore in lower rainfall areas or during low rainfall years and hot weather, irrigation (wherever the existing facilities are) ensures a good crop of pineapple. Therefore access to water is essential.
There needs to be adequate road and transport networks, with effective transportation to guarantee the delivery of the products which are all affected by temperature and length of travel. Access to electricity and facilities for storage and staff are essential to ensure the effective running of the facility.
The Ndlambe region is well connected to Port Elizabeth and East London by the R72 (currently undergoing upgrades) and rail links which provide adequate access to markets by efficient transport linkages.
Human Resources
The harvesting period is labour intensive and due to the fact that unskilled labour is sufficient for this phase, it is quite easy to find human capitol to complete the phase. There is however still a need for skilled agricultural workers and technicians at the processing stages.
Expected Return on Investment
Only after two years will pineapple growers realize their first profit, 1ha is able to produce on average 30 tons of pineapples, which, in 2005 were sold at R2,410.00 per ton locally. The overall profit earned for the second year of production minus the pre-harvest and harvest costs amounts to approximately R45, 108.64. (see operating costs below).
Key Constraints
§ The industry has experienced an extended period of negative growth and restructuring.
§ Risky industry since over the last 10 years pineapple industry has been an economically unstable sector.
§ There is a relatively long waiting period to obtain the first crop.
Opportunities:
§ Investors who enter this market will only realise first crop over 2 years, during this time the industry rejuvenation process should start to see results.
§ Pilot studies will have been completed and potential buy-in from customers will strengthen this industry.
§ Pineapple waste has new uses in the Eastern Cape.
§ Pineapple prices have been increasing and the industry is once again growing.
§ CDM, more particularly the Ndlambe LM is the most suitable area for pineapple growing and has a competitive advantage within the industry.
Useful Contacts:
References:
Cacadu District Municipality, State of the Environment Report, 2005
Fairfood sector report pineapple, 2009
National Department of Agriculture, Cultivation of Pineapples, 2000
Agricultural potential of the Cacadu District Municipality, 2006
Trade and Investment South Africa, 2009
Personal Interview with Ndlambe Natural Industrial Product Pty Ltd, 2010
National Department of Agriculture, Trends in the Agricultural Sector,2009
Information Indemnity
§ All information contained within this profile was accurate at time of publishing.
§ The information contained within this report is intended only as an industry profile and does not assume to take the place of information contained within a business plan, pre-feasibility study or feasibility study.
§ The Cacadu District and service providers are not liable for any damages caused by the use of the information contained within this report.
§ The purpose of this profile is to both promote the area for investment and inform investors of relevant issues. It is advised that investors, who wish to pursue an investment within Cacadu DM, should use this profile as a basis to conduct further research.
Annexure 1
The following costs incurred and income received is based on a classic case example; which outlines the potential budget for a pineapple enterprise. This functions to provide investors with broad categories of costs experienced, however further research in terms of feasibility studies and business plans will need to be carried out in order to determine the relevant costs and income according to the specific enterprise entered into.
Operating Costs
The table below illustrates how profit is only realised after the second year of production once the pineapples have reached the mature age for harvesting processes.
Table 1: Year 1 and 2 operating costs
Source: State of the Environment for Cacadu District Municipality, 2005
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