An enquiry into the competitive performance of the South African deciduous fruit canning industry

Thesis (PhD)--Stellenbosch University, 2024.

ENGLISH SUMMARY: This study investigated theoretical constructs to best define, measure and analyse competitive performance of the South African deciduous fruit industry, focusing on the canning/processing function. The enquiry stretches from early 1960s to the early 2020s. This represents a long-term perspective with various factors impacting on industry competitiveness, including the global oil crises, mid 1970s; political-economic sanctions, 1980s; democratisation and economic deregulation, 1990s; the financial crises and economic meltdown of 2008/9; the recent Covid pandemic; and international strife and wars. The study was grounded in new trade theory (NTT), the competitive advantage concept, and the Porter diamond model, which was extended in the study to include international trade and socio-economic transformation factors impacting the South African deciduous fruit industry. This new theoretical construct was referred to as the Porter 7 model, containing seven determinants of competitiveness. A constructivist enquiry approach was applied, employing ‘mixed method’ data gathering and analysis through qualitative and quantitative approaches. Conventional approaches to qualitatively measure competitive performance – RCA, revealed comparative advantage and RTA, relative trade advantage – were complemented by the more recent normalised revealed comparative advantage (NRCA) and extended to a newly developed application, the normalised relative trade advantage (NRTA). The analysis focused on global, industry and firm level applications. Competitiveness is defined as “the sustained ability of an industry to attract investment by trading products in the global marketplace, whilst continuously striving to earn returns greater than the opportunity cost of scarce resources engaged”. This definition allows for comparisons with direct competitors and alternative industries. The quantitative measurements showed that the South African deciduous fruit canning industry globally sustains highly competitive performance – out-performed only by Greece and Chile. It also consistently outperforms other competing South African sub-sectors such as wine and horticultural crops. Recently however, since 2015, a decline has been recorded for the industry. Through surveys and Delphi sessions with industry executives and experts, 134 factors impacting competitiveness were identified and rated on a five-point Likert scale. The rated factors were grouped into the seven determinants of the Porter 7 model. The two most enhancing determinants were “business strategy, structure and rivalry” and “related and supporting industries”. Factors related to “government support and policy” and “transformation and social development” were viewed as constraining. Upon reviewing the qualitative and quantitative results, the study concludes that the competitive landscape for the South African deciduous fruit canning industry is competitive but has been becoming less so from 2015 onwards. Twenty-seven industry-level strategic proposals have been formulated to enhance competitive performance. An institutional structure to improve industry-based dialogue and structured private-public interactions is recommended, supported by an improved strategic intelligence database and “dashboard”, tracking competitiveness performance, linking into the recently accepted National Agriculture Processing Master Plan. Major focus areas for improved sustained competitiveness are listed as emerging markets; the institutionalising of a participative “deciduous fruit canning industry competitiveness strategy (DFCCS)”; improved value chain collaboration; dealing with social transformation; technological innovation; and gaining productive trade agreements. An agenda for continued research in institutional structure and value chain strategy is proposed.

AFRIKAANSE OPSOMMING: Die studie ondersoek die mededingende prestasie van die Suid-Afrikaanse inmaakvrugtebedryf sedert die vroee 1960’s. Dit verteenwoordig ’n langtermyn perspektief met verskeie faktore wat die mededingendheid van die bedryf impakteer. Dit sluit in die globale olie krisis in die 1970’s, politieke en ekonomiese sanksies van die 1970’s - 1980’s, demokrasie en ekonomiese deregulering in die 1990’s en verskerpte globale mededinging, die finansieel/ekonomiese krisis in 2008/2009, en die onlangse COVID-19 pandemie asook internasionale oorloe met drastiese impakte op marke en logistiese stelsels. Mededingendheid is gedefinieer as die volgehoue vermoe van die bedryf om beleggings aan te trek deur produkte in die globale mark te verkoop, terwyl daar deurlopend nagestreef word om opbrengste bo geleentheidskoste te genereer. Hierdie definisie maak vergelykings met direkte globale mededingers as ook alternatiewe plaaslike industrie moontlik. Die studie is gegrond in die nuwe handelsteorie (New Trade Theory) en die mededingende voordeel begrip, met ’n nuut geskepte analitiese konstruk wat die Porter diamant model uitbrei om sosio-ekonomiese transformasie faktore, wat die Suid Afrikaanse inmaakbedryf direk beinvloed, in te sluit (nl. die Porter 7 model). Die gevestigde benaderings van Balassa (onthulde vergelykende voordeel – revealed comparative advantage – RCA), Vollrath (relatiewe handelsvoordeel – relative trade advantage – RTA), en Yu et al (normaliseerde onthulde vergelykende voordeel – normalised revealed comparative advantage – NRCA) is tesame met ’n nuut ontwikkelde empiriese metingsformule – die normaliseerde relatiewe handelsvoordeel (normalised relative trade advantage – NRTA) – gebruik om internasionale mededingendheid empiries te meet. Die Porter 7 model het verklarende kommentaar op hierdie prestasiemetings gelewer. Die bevindings van hierdie studie beklemtoon dat die Suid Afrikaanse inmaakbedryf, tenspyte van die vele genoemde gebeure oor tyd heen, steeds internasionaal hoogs mededingend presteer, met slegs Griekeland en China wat tans meer mededingend is. Die inmaakbedryf is plaaslik meer mededingend as ander sterk uitvoergerigte bedrywe soos vars vrugte en wyn, alhoewel ’n afname in mededingendheid sedert 2015 voorkom. Deur bedryfsopnames en groepbesprekings is 134 faktore wat die mededingendheid van die bedryf beinvloed geidentifiseer, gemeet en geevalueer aan die hand van die Porter 7 model. Die bedryf se sakestrategiee, struktuur en produkte, gesamentlik met die mededingendheid van die ondersteunende bedrywe binne die waardeketting, is as die sterktste faktore ondersteunend tot volgehoue mededingendheid gelys. Regeringsondersteuning en beleid en toepassings in sosio-ekonomiese transformasie is geidentifiseer as die mees stremmende faktore. Sewe en twintig industrievlak strategiese voorstelle is geformuleer om die mededingendheid van die bedryf te versterk. ’n Institusionele struktuur word ook voorgestel om strategiese dialoogvoering binne die bedryfswaardeketting asook met regeringsagentskappe te verbeter en om gestruktureerde privaatsektor regerings samewerking te bevorder in lyn met die Nasional Landou Prosesering Meester Plan (2018). Prioriteits fokus areas vir verbeterde mededingendheid sluit in die ontginning van nuwe ontluikende markte gesamentlik met verbeterde handelsooreenkomste met die gevestigde mark, verbeterde waardeketting strategiee en samewerking, ’n pro-aktiewe en gestruktureerde hantering van sosio-ekomomiese transformasiepogings, en ’n sterker fokus op die toepassing van tegnologiese innovasie en modernisasie.

Doctorate