Business, Economics and Jobs

Why Europe's ash is good for South African diners


JOHANNESBURG, South Africa — Piles of fine-looking fruit are stacked on the shelves in the local Pick and Pay supermarket, the nicest fruit available here for years, and at prices that are amazingly low.

It is South Africa's best export produce, usually shipped out to European markets where the fruits and vegetables earn foreign currency important to South Africa's economic health. But today the perishable produce is available to South African shoppers because of the closure of European airports for nearly a week.

In a world so interconnected, the Icelandic ash cloud hanging over Europe, invisible to the naked eye, has brought to a standstill a huge proportion of international trade in this country of 50 million people at the tip of Africa.

Ostrich meat, pears, flowers, organic beef, seafood and virtually everything perishable is flown out daily on overnight flights to Europe and then on to markets around the world.

"To not fly into the eurozone for one day is a nightmare for our business, but now it's been one week. It will take us a long time recover from this," said Elton Abraham, the export manager of Grinrod Logistics, one of the biggest exporters in South Africa.

Air freight takes a back seat to passengers during times of crisis, and even now that flights are resuming, Abraham believes that the best case scenario will get Grinrod's export products delivered in Europe by May 1.

"When it's gone, it's gone, we can't recover, and our suppliers can't recover money lost from perished consumables, because they can't produce double what they lost to get that cash back," said Abraham.

Forest Ferns employs 160 workers on their farm near Tsitsikamma, on South Africa's Garden Route on the southwestern coast. They airfreight 20 tons of fresh ferns a week for flower arrangements in Europe. 

"We have just come out of the worst drought in 120 years," said C.J. Muller, Forest Ferns' managing director. "This year it finally broke, and we were doing well, but now, with this volcano, our business is gone." Forest Ferns does 90 percent of its business in Europe.

Like many medium-sized exporting businesses in the country, Forest Ferns does not make enough money to weather a long-term loss, and its fears are echoing throughout the farming sector.

South Africa's farming is not the only business that has been affected. Flights from Europe that bring executives for meetings are gone. Air mail systems like Federal Express and DHL have been halted, meaning shipping lists, purchase orders and other necessary documents for international business are not being sent. Ships leaving South Africa have no clearance papers to clear their goods into Europe.

But South Africa has something that most of the rest of Africa does not: a strong domestic market, supported by a strong currency that has weathered the financial crisis in relatively good shape. So it is here that most of these perishable goods are being sold, and some producers are able to recover at least some of their losses.

According to Grinrod's Abraham, South Africa has the capacity to soak up most of the commodities destined for overseas markets for about three weeks. "South Africa is lucky, unlike Kenya, we have a strong domestic market, but more than three weeks of no air freighting and we will start to see producers fail. It would be a catastrophe."

If producers fail, it will be the workers, on little pay and no savings, who will feel the brunt of the crisis. And if this crisis carries on much longer, explains Muller of Forest Ferns, "we will have to downsize. That is the last thing we want to do, but it will happen if this situation does not improve in the next three weeks."

Academics at Johannesburg's University of Witwatersrand who study and map South Africa's export earnings were unavailable because they were at a conference in Europe, and like countless thousands, they are stuck there, waiting for the ash cloud to clear so they can fly home and start summing up the South African cost of Iceland's volcano.