Tiger Brands is tipped to pull the plug on its fruit-canning factory in the Western Cape within two months as it struggles to find a buyer with deep enough pockets, prompting a frightened reaction from producers and an agricultural industry body.

A consortium of 160 producers has been negotiating with the owner of Albany bread, Oros and Tastic to buy the deciduous fruit business Langeberg & Ashton Foods factory but fell R200m-R300m short, according to industry body Agri SA.

“With the latest announcement from Tiger Brands, producers have been placed in a nearly impossible situation. They must secure the necessary funds in less than 60 days,” said Agri SA, adding it was concerned the closure of the factory would be a socioeconomic disaster, with ripple effects throughout the value chain.

In operation for more than 70 years to supply fruit for the Koo brand, as well as international brands such as Silverleaf and GoldReef, Tiger Brands has over the past two years been struggling to secure a buyer for the Langeberg-based factory.

The decision to sell followed a strategic review to better align Tiger’s portfolio and to focus on manufacturing, marketing and distributing everyday branded food and beverages.

Tiger Brands did not respond directly to questions over the closure or the amount sought but confirmed to Business Day that a consultation process in line with labour laws was under way with permanent and seasonal employees due to the lack of a buyer.

“It is anticipated that the consultation process with affected employees will be completed within 60 days,” Tiger said.

But Agri SA expects “catastrophic” fallout for the community, producers and agroprocessing in the Western Cape if the factory closes down.

The business employs 250 permanent employees, while seasonal employment fluctuates throughout the year and peaks at about 4,300 workers during the apricot-processing season for about three weeks.

The factory is one of only two fruit canners in SA and processes peaches, apricots and pears.

The closure of the largest employer in the Langeberg municipality would have an effect on dozens of orchards that were planted for canning in Little Karoo, Ashton, Robertson, Bonnievale, Breërivier, Wolseley and Ceres.

Tiger Brands said it was also engaging with government departments “in attempts to explore available and sustainable commercial solutions”.

Tiger Brands’ latest half-year earnings report shows that the business makes about R700m in sales but none of that flowed to the bottom line, with losses widening to R54m from R52m in the six months to the end of March.

Affected by surging steel and aluminium prices, load-shedding and port inefficiencies, SA’s canning industry has been hard hit on multiple fronts. While there was a brief upswing in demand for canned fruit at the start of the pandemic when people were stocking up their pantries, that has since fallen, with cash-strapped and health-conscious consumers opting for cheaper fresh fruit.

With Denene Erasmus

BusinessLIVE