On the 9th of June Tiger Brands shocked personnel producers and clients by giving notice of a 60-day consultation period with the intention of closing down their canning factory in Ashton in the Western Cape. Few people realise the real impact that this decision would have on the community, producers, the industry and agro-processing in the Western Cape.
This is a huge concern for Agri SA. The Langeberg and Ashton factory is the biggest in South Africa and one of only two fruit canning factories. The world-class factory plays a vital role in enabling South African canned fruit to occupy the niche position it does in the world market. South Africa is ranked in the top seven canning fruit countries in the world by production, and the factory brings in hundreds of millions of Rands in foreign currency.
Government needs to provide assistance
The producers have made urgent requests to the Western Cape and National Governments to intervene in this matter. 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.
Tiger Brands initially decided to divest from this factory two years ago. At that point, a consortium of 160 producers began negotiations with Tiger Brands to acquire the factory, but the consortium will require a further R200 – 300 million to close the deal. With the latest announcement from Tiger Brands, these producers have been placed in a nearly impossible situation – they must secure the necessary funds in less than 60 days. Without support from government and cooperation from Tiger Brands, the producers’ initiative will fail, and the fallout will be catastrophic.
The factory is the life support of the Ashton community
The factory’s main sources are Cling Peaches, Bulida Apricots and Bon Chretien pears from 2 250 ha of canning fruit orchards. These orchards have been planted specifically for canning in the Klein-Karoo, Ashton, Robertson, Bonnievale, Breërivier, Wolseley en Ceres areas. Were the factory to close, approximately 300 farmers would have no alternative market for these fruits as the other fruit canning factory in South Africa, owned by the Rhodes Food Group, is already running at full capacity. These farmers would have to destroy the orchards.
The impact of the announcement is already being felt as labour brokers report that their teams are sitting at home as producers stopped pruning after the Tiger announcement. In media statements Tiger Brands indicated that 250 permanent jobs and 4 300 seasonal jobs are affected at the peak of the season. The factory is the life support of the Ashton community and without it the community faces socio-economic disaster. The Langeberg and Ashton factory is also the biggest single source of income for the Langeberg Municipality.
Closure of the factory would be a socio-economic disaster
In addition to factory workers, the facility provides employment for thousands of farmworkers in Ashton and in the production regions. Just over one permanent job opportunity is associated with each hectare of fruit orchard and 2 250 permanent farm workers’ livelihoods are now in jeopardy. Additional seasonal labour is utilised for winter pruning, thinning, summer pruning and harvest.
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. The factory initially consisted of two separate factories owned by the producers and a local entrepreneur. Tiger Brands subsequently bought these factories and consolidated them into one.
Agri SA is concerned that the closure of the factory would be a socio-economic disaster for the region, with ripple effects throughout the value chain. At a time when job creation and economic growth are desperately needed for the maintenance and recovery of the national economy, the Agro-processing sector cannot afford this closure.
It is essential that Tiger Brands comes to the negotiating table with the producers and workers at its factory to find the best possible solution for all the affected stakeholders. And with the Agriculture and Agro-Processing Masterplan now in place, it is also vital that government take up its role in supporting the growth of this important employer for the Western Cape.