Fruit Juice Association takes first steps towards self-regulation

The first South African Fruit Juice Association Conference held in Somerset West on 26 January attracted a wide cross-section of individuals from the fruit industry.

Jill Atwood-Palm, general manager of The South African Federation of Consumer Associations (SAFCA) presented a national and macro perspective of the fruit processing industry in SA. She discussed how the association works with the government and co-ordinates programmes and initiatives.

Atwood-Palm explained that in 2010 the Ministry of Economic Development launched a New Growth Path (NGP), which effectively became the overall macro-economic policy. Its target is to create five million new jobs by 2020 and deepen domestic/regional markets. The ministry wants to widen markets for SA goods, through a stronger focus on exports to the region and other rapidly-growing economies.
Phase 2 of the Industrial Policy Action Plan (IPAP2) is a central tool in the NGP job creation strategy with a broad approach to industrialisation and agro-processing being a key component of IPAP2.
She added that the purpose of the Department of Trade and Industry’s agro-processing unit is to facilitate optimal development in the following ways:
-    Job creation
-    Poverty alleviation
-    Rural development
-    Transformation
The priorities are to place mature agro-processing sub-sectors on a high growth path through competitiveness, enhancement, brand development and processing innovation (growth, localisation and protection).
The fruit industry model shows that 85% of fruit is exported to the EU, East and Far East, the US and Canada.
Atwood-Palm described the plus points of the SA fruit industry as:
-    Being well established
-    Offering reliable supply and quality
-    Possessing strong manufacturing capabilities
-    Having experienced manufacturers
-    Providing premium quality and strong, reputable brands
-    Offering highly nutritional products
-    Being Proudly South AfricanBlendtonel_SDE
She listed the industry’s main challenges as:
-    The exchange rate
-    High local output costs (monopolistic pricing, regulatory pricing, unreliable and expensive road/rail transport, high port charges and low performance)
-    High cost of capital
-    Erosion of the local market through uncontrolled and non-conforming imports, a surge of imports, and lack of monitoring of compliance with regulations
-    Low confidence in the farming sector (tree pulling)
-    Market access is restricted by uneven playing fields in the global market, as well as high import duties and duties regulations.
“These factors are beyond SAFCA’s direct control and are inhibiting growth, but fall within the spectrum of government interventions.”
In his presentation Rian Geldenhuys, director of trade law chambers CTSA called for trade remedies against dumped products, subsidised products, and the influx of imports.
Geldenhuys explained that in the local market the role of IPAP2 (phase 2 of the Industrial Policy Action Plan) is to:
- Develop the agro-processing industry
- Play a role in terms of tariff policies by promoting high value products, while lowering the tariffs on the inputs. The onus, however, lies with the private sector to apply for these tariffs as the government only facilitates the process
- A National Food Control Agency can help the industry to achieve the lock in/lock out benefits provided by standards via various regulations affecting fruit juice.
He explained that the World Trade Organisation (WTO) not only deals with tariff barriers but also non-tariff barriers such as SPS (health) or TBT (technical) standards, which are barriers to entry in the export market. “Private standards are also an issue in the export market, and both of these can be influenced at WTO/government level,” he added.
Company law
Geldenhuys said that IPAP2 fingers the agricultural industry for investigation under the company’s act, but that the company’s commission is not against co-operation, as long as it does not become competitive. He urged association members to pay attention to prohibited practice, which includes:
- Fixing prices
- Dividing markets
- Collusive tendering
- Minimum price maintenance
- Charging excessive prices, and refusing access to essential facility, including forbidding a supplier to deal with a competitor, or selling goods below cost, etc.
He added the companies/associations can apply for exemption if their activities are potentially anti-competitive.
Consumer protection
Geldenhuys highlighted the fact that the CPA affects many aspects of dealing with consumers and is important for SAFJA in terms of:
-  Labelling and trade descriptions (may not be false, misleading or deceptive, and you may not state you have someone’s approval if you don’t).
- If you provide goods you must provide a written record which must contain certain information
- You can’t market in a false/misleading way
- Non-compliance can result in an up to 10% turnover fine
Labelling and advertising
The labelling and advertising regulations for foodstuffs (R146) come into effect on 1 March and are extensive. The main points that the fruit industry needs to be cognisant of are:
-    Labelling size
-    Property identity of the foodstuff
-    Identity of the country of origin
-    Date marking (best before, etc)
-    Prohibited statements
-    Negative claims
-    Nutritional information
-    Showing compound ingredients - additives/allergens, etc
Billy Makhafola, executive officer of Agricultural Products: Standards Act for the Department of Agriculture, Forestry & Fisheries (DAFF) discussed the challenges involved and the way forward for the industry.
The challenges
-    Enforcement by inspection services, which is insufficient due to lack of analysis
-    The unavailability of official profiles of SA fruit juices
-    Laboratories/equipment to verify percentage of juice content and authenticity are not available locally and it’s costly to send samples overseas
-    Industry is very fragmented, but the recent formation of the SAFJA will overcome this.
The way forward
-     We need to modernise regulations, but there is no quick fix, and it is not good enough if we only amend the current regulations. We need to be able to introduce new regulations based on international Codex standards
-    We must restore 100% fruit juice as fresh/unsweetened
-    Local analysis of samples and profiling of SA fruit juices must become a priority
-    The onus will be on industry to provide DAFF with proof of compliance, which means more self-regulation by industry to be supplemented by DAFF monitoring. - Melissa Jane Cook