BFAP and the Hortgro pome and stone fruit base year and outlook modelling

Welcome to the industry- and farm-level analysis and outlook for Hortgro pome and stone fruit, prepared and regularly updated by the Bureau for Food and Agricultural Policy (BFAP). BFAP, founded in 2004, serves the agro-food, fibre and beverage sectors in South Africa and Africa. Our purpose is to inform better decision-making by providing unique insights gained through rigorous analyses, supported by credible databases, a combination of integrated models and considerable experience. Over the course of 18 years, the Bureau has developed a very distinct value proposition to deliver a holistic solution to public sector and private clients active in the agricultural sector and related value chains. This offering is complemented through BFAP’s investment in the Integrated Value Information System (IVIS), a geo-spatial platform which further enhances BFAP’s product offering by providing enhanced systems-solutions to the integration of data and insights visualisation to support strategic-decision-making along multi-dimensional value chains.

The BFAP Group consists of a team of experienced experts with a range of multi-disciplinary skills including agricultural economics, food science, mathematics and data science, engineering, supply chain management, socio-economic impact assessment, systems technology, and geo-informatics. In addition, we fundamentally believe that a competitive and thriving agricultural sector with its related value chains is built on long-run partnerships. Hence, BFAP has developed a well-established network of local and international collaborators and partners in the public and private sector. As a team and as a network, we pool our knowledge and experience to offer the best possible insights and access to a unique high value network.

The BFAP Group utilises globally recognised techniques and modelling systems to analyse the food, fibre and beverage sectors. The current BFAP modelling system covers more than 50 commodities, each supported by:

• in-depth study of natural resources and input-output markets, production systems and farming business operations, offering the ability to evaluate the competitiveness and sustainability of farming systems
• end-to-end value chains analysis, tracking product flow, efficiencies and margins along the chain
• commodity markets scenario modelling and forecast to quantify future outcomes, evaluate risk, identify growth opportunities and assess impacts of changes in the macro-economic, business and policy environment
• analysis of the consumer and retail space to provide insights on food price impacts and food security
• credible analysis, monitoring and evaluation of rural and socio-economic development related to the food, fibre and beverage industries

The extensive integrated database and modelling frameworks enables BFAP to analyse and generate long-run projections and unpack alternative future scenarios for agricultural commodity markets and within the main sub-sectors (grain, livestock, and horticulture).

In this output, BFAP provides an industry outlook that considers both industry specific information, such as planted area, yields, market distribution and prices, and macro-economic factors that play a role in market demand and supply. The partial equilibrium model considers the drivers of global and domestic demand, and the supply from South Africa and global competitors to determine a market equilibrium price for the different marketing channels.

Considering a set of indices representing the likely movement of prices of inputs and produce over a 10-year outlook period, BFAP links farm level profitability to a baseline set of assumptions to create a baseline outlook for the industry. To quantify the potential impact on farm level profitability, a baseline farm level financial simulation study was conducted for the base year, which is informed by data collection and ground truthing through visits to a purposively selected group of producers in each region. The base year is simulated over the outlook period by linking inputs to the appropriate cost indices, revenue to the appropriate commodity price indices, and yields to the commodity specific projections. Thus,a base year profitability measurement with a certain risk profile is projected for a 10-year period relying on reasonable assumptions. Throughout the analysis, profitability is measured at EBITA level.

Whilst a baseline projection considers a single outcome under ‘normal conditions’, assessing risks within a broader spectrum of potential upswings and downswings bears more fruit. Whilst cost management at farm and packhouse level is important in realising positive returns, it is less volatile than produce prices, yields and pack-out percentages. The biggest drivers of variation in a given year’s farm level returns in the export orientated fruit industries are a result of the aforementioned variables. Consequently, bands of potential positive and negative deviations from the baseline projection in these variables are determined from historic data. These bands are used to run 500 iterations of random variability to stress test the baseline projection. The impact of freight rates is incorporated into the export price variable, as export prices are considered at FOB level in the modelling framework.

Below is a high-level list of components that are typically incorporated in the modelling framework

Component	Description
Whole farm financial simulation budgeting model	Farm size, orchard age distribution, cultivar selection and performance.
Production & establishment cost	Cost drivers in establishment of new orchards and production cost, which is incorporated by considering a production cost curve that aligns with yields.
Total yield & distribution by market segment	Tonnes per hectare per orchard and the share of produce into each market segment (Export | Local | Processing).
Establishment plan & replacement age	Incorporating planned expansion of area and the planned replacement age for different orchards.
Profitability per hectare	Considers the elements applicable in a whole farm budget to project a set of profitability indicators per hectare under a certain set of assumptions on variables such as exchange rate, price inflation and the prototype farm setup of area, cultivars and cost.
Variable income probability indicator	Considers historic variability in yield, pack-out %, local and export prices per carton and the relationship between these variables to establish the probability of a better or worse financial performance than the baseline.
Model results	Results presented as a probability distribution of what may happen to farm-level profitability over the projection period, with worst and best case scenarios included.
Alternative scenarios	The tool can be used to model alternative scenarios, such as additional establishment or changing the replacement age. The effect of these changes can then be compared to the baseline to inform decision-making.

For the farm level modelling, the following regions were investigated and the abbreviations thereof are as follows:

Sub-sector	Regions
Pome fruit	Elgin, Grabouw, Vyeboom and Villiersdorp (EGVV); Langkloof; Witzenberg
Stone fruit	Industry, Boland, Berg River, Klein Karoo, Cape Winelands, Witzenberg

Perspectives on topical risks in the export orientated fruit industries

South Africa’s fruit industry is a vital contributor to the agricultural economy, generating R144.6 billion in gross production value (GPV) in 2024 and employing over 924 000 workers. Exports remain the backbone of this sector, with fresh fruit accounting for 75% of the R102.45 billion export value. Yet, the industry faces a complex risk environment that threatens its competitiveness and long-term sustainability.

Trade and Regulatory Risks

Tariff and non-tariff barriers are escalating, particularly in BRIC markets where duties on fruit from South Africa typically range from 5% to over 40%. The absence of preferential trade agreements compounds these challenges. Even in traditionally favourable markets like the EU, evolving regulations under the Agri-Food Vision pose significant threats. The removal of key plant protection products could increase production costs and reduce export shares, with severe profitability impacts for commodities heavily reliant on EU markets like pears and stone fruit. In addition, the tariffs imposed by the US results, changes the game for exporters to the US – it has been one of the fastest growing markets for plums in recent years, and now the viability of servicing that market is under threat.

Logistical Inefficiencies

Infrastructure bottlenecks in ports and rail systems remain a critical constraint. Quantification exercises conducted in the past year revealed that between 2018 and 2023, container vessel arrivals at the Port of Cape Town dropped by a third, causing delays that cost the table grape industry R4.7 billion and the apple and pear sector R1 billion annually. Citrus losses totalled R5.27 billion in 2024, including waste and lost revenue. These inefficiencies erode farm-gate returns, undermine global reputation, and limit the industry’s ability to capitalise on biological production potential. Increases in claims in stone fruit over the last couple of years are also likely linked to problems at Cape Town port – which is both linked to weather conditions (particularly wind and fog) and operational performance (equipment availability and labour productivity). Despite ongoing efforts by the industry to collaborate with Transnet and improve the situation, the 2025/26 season has once again been marred by similar challenges.

Cost Pressures and Profitability Risks

Input costs have surged over the last 10 years: electricity up 146%, labour up 93%, and chemicals up 92% since 2015. While fruit prices rose 74% over the same period, future export price growth is projected below of just keeping pace with CPI (4.38%) for most commodities. Labour costs, expected to grow at 5%, will outpace price gains, squeezing margins. Without productivity improvements and cost-effective practices, profitability will decline, especially for mature industries with limited price upside.

Climate Variability and Biological Constraints

Adverse weather events – drought, frost, hail – continue to disrupt yields and pack-outs, as seen in the Langkloof in 2024, and in the Witzenberg region on both stone fruit and pome fruit in recent years, with the 2025/26 crop affected in the Robertson region. Area expansion has plateaued post-2020, reflecting heightened risk and capital constraints. Future growth will depend on intensification and innovation rather than land expansion, switching between crops, e.g., replacing peaches with nectarines, emphasising the need for improved yields, prices and/or pack-out rates.

Startegic Imperatives

To mitigate these risks, stakeholders must prioritise trade diplomacy to secure preferential agreements and address SPS barriers, infrastructure reform to improve port efficiency and shift from road to rail, and on-farm innovation to boost productivity and resilience against climatic and regulatory shocks.

The outlook remains cautiously optimistic, but systemic risks, if left unaddressed, has the potential to erode competitiveness and stall progress toward inclusive growth and foreign exchange earnings.

2024 and 2024/2025 Season overview

From a volume perspective, the past season was an excellent one, with record yields logged across various commodities and regions. Pockets of challenges existed, which also reflects in the financial performance. Claims in the market place as a result of unsound arrivals, was a challenge, with port performance also playing a role in that. Good weather conditions, with good quality and volume contributed to good performance of certain commodities in certain production regions, like pome fruit in the EGVV and Witzenberg regions, stone fruit in the Witzenberg region, and plums and peaches in the Berg River region. Some Langkloof producers and Klein Karoo producers experienced a mix bag. With the cost base significantly higher than before, the risk profile of production shifted – small changes in weather conditions, production practices, port performance and marketing conditions – are more likely to have an adverse impact on margins.