Update on the impact of the drought in the South Africa

RFG’s manufacturing base is diversified across South Africa and Swaziland, with six of the 15 production facilities located in the drought-affected Western Cape region:

  • Ready meals Western Cape Groot Drakenstein
  • Dairy Groot Drakenstein
  • Flexible packaging (baby food) Groot Drakenstein
  • Fruit products Western Cape Tulbagh
  • Juice products Wellington
  • Pulps and purees Wellington

RFG is committed to reducing water usage where possible, without compromising production. Water supply contingencies have been implemented in recent months and are currently being extended. This includes access to groundwater through boreholes being drilled at all these facilities to supplement municipal water and facilitating access to storage dams adjacent to the production sites.

The water supply situation has been compounded by the restriction being imposed on the industrial use of boreholes from 1 February requiring a 45% reduction in usage.

In terms of raw materials and inputs, all RFG’s deciduous fruit (peaches, apricots, pears and guavas) products are manufactured in the Western Cape which is the only area in South Africa where this fruit is grown commercially. A major portion of the export products are manufactured in the Western Cape.

We are dependent on the agricultural suppliers in the region for our fruit. Many of them have their own water contingencies in place and have taken remedial action by thinning out the fruit on their trees to maintain quality, although yields will be impacted.

The deciduous fruit production cycle is currently in progress (canned fruit, pulps and purees). The apricot season was successfully completed in December with the planned volumes being produced. The peach harvest started slightly later than usual, and the fruit received to date has been of a reasonable quality, although the fruit is smaller than normal. We are not yet midway through our peach production but at this stage, there is no reason to believe that there will be any significant reduction in volumes received or that costs will be any worse than last year. Pear harvesting is also progressing well but this is still at an early stage. The extent to which the drought in South Africa may impact the quality of the balance of the harvest remains uncertain. The harvesting of guavas only commences in April but this is the smallest of the four fruits in terms of production volumes.

There is no doubt that the drought and water restrictions pose a serious challenge for RFG. However, based on the group’s water action strategy and contingency plans, management believes that the business will be able to maintain production at all the facilities in the event of a ‘day zero’ shut down of access to municipal water supplies, without compromising quality or food safety standards.