Geoforum 30 (1999) 6170

Agro-commodity chains, market power and territory: re-regulating South African citrus exports in the 1990s
Charles Mather
Department of Geography & Environmental Studies, University of the Witwatersrand, Private Bag 3, PO Wits, 2050, Johannesburg, South Africa Received 3 March 1998; in revised form 20 September 1998

Abstract Using the liere or agro-commodity chain framework, this paper examines the organisation and restructuring of South African citrus exports. It argues that the single desk exporter of South African citrus, Outspan International, has exercised considerable market power over citrus production through state regulations and the control of infrastructure for exports. This power has provided the foundation on which it has built a global market strategy and points to the important link between Outspans local market power and its global market strategies. A second theme in the paper is the territorial conguration associated with the liere which has both territorialised and deterritorialised citrus production in South Africa. The re-regulation of the citrus liere in the 1990s will force Outspan to restructure its global strategy. A new regulatory environment which opens the way for the fragmentation of the citrus liere is also likely to usher in a new territorial conguration of citrus production. 1999 Elsevier Science Ltd. All rights reserved.
Keywords: Global marketing; Agro-food industry; Citrus; liere; South Africa

1. Introduction Research and writing on agro-food systems in the 1990s suggests that the globalization of agriculture is both complex and contested (Whatmore, 1994; Le Heron, 1993). There are, for instance, important dierences between the globalization of manufacturing industries and the nature of globalization in agriculture (Watts, 1996; Watts and Goodman, 1994). Global food companies tend not to source as widely nor do they show the same kind of integration that is characteristic of the global automobile industry (Watts and Goodman, 1997). There is also growing evidence that the impact of global food systems is geographically varied and that it may be contested in particular localities. Gouveia's (1994) research in Nebraska and Chases study (Chase, 1997) in Brazil highlight the contingent and often unpredictable impact of global food systems in particular regions (see also Raynolds, 1997; Jussaume, 1998). Given the complexity of globalisation in the agro-food sector, Watts and Goodman (1997, p. 14) call for an approach which locates commodity chains on a ``much more nuanced and heterogenous map of commodity lieres''.

This paper hopes to contribute to this `nuanced and heterogeneous map' by exploring the relationship between the re-regulation of South African agriculture and fresh citrus exports from this country. The liere framework is used to examine how a global player that until very recently controlled all South African citrus exports Outspan International has responded to the local re-regulation of agricultural markets. This framework, which has been used to examine agro-commodity chains in South Africa (Bernstein, 1996; Amin and Watkinson, 1997) and elsewhere (Boyd and Watts, 1997; Page, 1997), stresses issues of power and control between agents operating in the commodity chain. Unlike neo-classical approaches to food systems which focus on the eectiveness of marketing strategies in achieving a balance between supply and demand, the liere approach is concerned with the historical transformation of relations between institutions, organisations and individuals in the production of food and bre products. The central argument of the paper is that Outspan Internationals global strategy in a highly competitive and not entirely `free' international food trade en-

0016-7185/99/$ see front matter 1999 Elsevier Science Ltd. All rights reserved. PII: S 0 0 1 6 - 7 1 8 5 ( 9 8 ) 0 0 0 3 3 - 5

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vironment 1 has depended on its ability to exercise domestic market power over the 1200 independent farmers using its export infrastructure. In other words, the company's global market strategies must be understood in the context of its domestic power over the South African citrus liere. The source of its power has been a combination of state protection, which it enjoyed for almost 60 years, as well as its control over the infrastructure for citrus exports. The strength of the link between local power and global strategy is such that the re-regulation of South African agriculture in the 1990s is forcing Outspan to consider new global strategies. The importance of the South African states regulatory structure for this company, in the past and in the future, supports research based in other contexts on the continued role of the state despite the apparent `deregulation' of agricultural markets (Page, 1996; Raynolds, 1996). The South African case study also provides an insight into why some transnational agro-food companies continue to depend on locally based production (Goodman and Watts, 1997); in Outspans case, it sources locally because this has allowed it to exert considerable inuence over production practices. A second theme in the paper is the territorial conguration associated with the liere. The South African citrus chain was organised in a way that erased ecologically diverse citrus growing regions (cf. Goodman and Watts, 1994). In the 1990s, the re-regulation of domestic citrus marketing, thanks partly to the vociferous opposition to Outspans single desk by a group of renegade growers, may involve a process of territorialisation with the re-emergence of separate citrus lieres in ecologically distinct citrus growing areas. It is probable that the reconguration of the chain will lead to regional institutions and practices in the manner described by FitzSimmons (1997a, b). The spatial implication of these changes also recalls the point made by Marsden et al. (1996, p. 371) who see the ``...spatial (re)conguration of national and international networks of production, consumption and regulation as contested sites of institutionalized political and economic power''. The rst section of the paper examines Outspan International and its role in the South African citrus liere. In part two, the focus shifts to a discussion of the reregulation of citrus marketing in the 1990s, the challenge to Outspan from a group of growers opposed to the company's single desk, and the response by the agribusiness to this challenge. The last part of the paper
South Africa and the European Union have been negotiating a free trade agreement over the past two years. At the time of writing they had nished the 20th round of talks without reaching agreement. Signicantly, the major stumbling block over an agreement has been the issue of South Africa's agricultural exports. Under pressure from local farmers, the EU is unwilling to include food and bre products under the free trade agreement.
1

explores Outspan's power in more detail and the likely impact of this new regulatory environment on the conguration of South African citrus markets. 2. Outspan International Outspan International has until very recently occupied the position of single-desk export agent for an industry which sells R1.4 billion worth of citrus in more that 50 countries. While the company only contributes 7% of the total fresh citrus exports traded annually, it dominates the counter-season trade from the southern hemisphere with 50% of the total supply (Dixie, 1995). The other main competitors in the south are Argentina, Australia, Brazil and Uruguay. Despite the companys small contribution to the total world trade in fresh citrus, it is dependent on citrus exports: its gross income in 1995 was R626 million, 88% of which was earned from exports. The company exports for over 1200 white growers in South Africa as well as farmers in Zimbabwe, Swaziland and Mozambique. Outspan also markets citrus produced by black growers on development projects in the former bantustans of the Ciskei, Bophuthatswana, kaNgwane, Venda and Gazankulu and is currently involved in the restructuring of these parastatals. This restructuring has principally involved the fragmentation of the estates into plots for smallholder farmers. Outspans handles the oranges, grapefruit, lemons and other citrus from more than 18 million trees packed in 174 cooperative and estate pack-houses. Citrus is planted on over 44,000 hectares of land in a wide variety of dierent climatic regions in Southern Africa which allows farmers to produce, and Outspan to market, many dierent cultivars and varieties of fruit. As is the case with other southern hemisphere agro-exporting countries (Friedland, 1994), South African farmers use their counter-season advantage to supply citrus to Europe, North America and Asia during the northern hemisphere summer. Citrus cultivation in South Africa requires access to water and most farms operate with capital intensive irrigation equipment. At the same time, fruit farming is labour intensive, especially during the harvesting season and there are more than 100,000 permanent farm workers and a unknown number of seasonal workers employed by citrus farmers 2. Once harvested, the fruit is transported by rail or truck to one of ve ports in Southern Africa Durban, Port Elizabeth, East London, Cape Town and Maputo and shipped overseas in refrigerated ships. Outspan plays a direct role in marketing and distributing fruit in overseas

Organising farm workers has proved extremely dicult in South Africa. Nonetheless, many of the farms that have been unionised are labour intensive operations.

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markets by establishing oshore companies or by merging with existing companies based in the target market. Outspan has had single desk authority over citrus exports since the establishment of a citrus `scheme' in the late 1930s through the provisions of the 1937 Marketing Act 3. Since Outspan itself could not become a statutory body, a separate Citrus Board was formed with the mandate to regulate citrus markets and with the considerable power to nominate an `overseas market and distribution agent'. When the Citrus Board was established in 1940 it immediately elected the Outspan as its overseas distribution and marketing agent and until very recently, all citrus exports from South Africa were handled by this central cooperative in return for a levy on sales. The ties between Outspan and the Citrus Board have remained very close: most of the Citrus Boards twelve members have also been Outspan employees and the two entities have always occupied the same building. Soon after it was nominated as single desk seller of citrus exports, Outspan made the important decision to market all South African citrus under the Outspan label. Prior to 1940, the central cooperative had marketed fruit under a large number of dierent labels attached to estate farms, groups of growers' organised regionally, and even individual farmers. In the same way that wine estates emphasise the unique ecology under which their vines grow, many of these citrus brands highlighted the specic or regional advantages of their citrus growing region. After the early 1940s, growers were forced to abandon their local labels and export fruit under the Outspan brand. Local and regional cooperatives, large estates and individual farmers became, after the 1940s, integrated into a nationally organised citrus chain. For millions of consumers in Britain and continental Europe, South African citrus became synonymous with the Outspan label. The coordination of South African citrus under a single brand name had important implications for citrus production and marketing. First, it was emblematic of a process that has accelerated in the postwar period that has seen Outspan exercising greater control over the liere upstream and downstream of the farm. In the 1960s, for instance, the Chairman of Outspan noted that while previously ``...it was always our policy to control the distribution of fruit down to the rst point of sale...we are now adopting a policy which is designed to enable us to control the ow of our fruit right down to the ultimate consumer'' (cited in Cartwright, 1977, p. 84). The use of a single label was an important milestone in this process as it allowed Out-

span to develop a global marketing strategy based on a range of dierent cultivars grown in a variety of dierent ecologically distinct citrus producing regions in South Africa. As a global exporter, it could rely on a steady ow of dierent citrus cultivars through the local citrus harvesting season and the northern hemisphere summer. It could also market fruit of dierent qualities or varieties to dierent markets. The second implication of the single label was that it obscured the important regional dierences between citrus growing areas in South Africa. As noted earlier, prior to the 1940s, there were many dierent citrus lieres. After the 1940s, these chains were brought together, principally through cooperatives and pack houses, into a single commodity chain controlled by Outspan. This change had important ramications for the relationship between global markets/northern consumers and local farmers and farm workers; after the 1940s the power of northern consumers and the impact of global markets were experienced `nationally'. The impact of highly competitive markets, changing consumption patterns, and the politics of trading at a global scale in the post-war period was thus mediated through Outspan but experienced by the industry as a whole. Another way of interpreting the impact of the use of a single label is to explore its role in the discursive reconstruction of South African citrus farming. Goodman and Watts (1994, p. 39) have argued that agro-food systems `...may be subject to dierent sorts of territorialisation or deterritorialisation'. The conguration of the citrus liere, at one level, territorialised South African citrus in that it was presented to northern consumers as a `national product'. At another level, the conguration of the liere contributed to a process of deterritorialisation by `erasing' the ecologically distinct citrus growing areas within South Africa. In the 1990s, Outspan is far more than the Citrus Boards overseas agent. By its own account, it is directly involved in every stage of citrus production, transportation, distribution and marketing: Outspan International is unique in the citrus world in oering a completely integrated service to growers and exporters-from seed and budwood from which the citrus is grown, through every aspect of the production, packing, shipping, export and marketing chain to an all-round service to the fruit trade in the nal distribution and marketing of the products (South African Citrus Exchange, 1992). The company's research and extension division has developed from a few small research laboratories and a handful of extension ocers, into a large and coordinated programme aimed at improving the quality of South African citrus. This capacity in research and extension has, not surprisingly, allowed them to shape

3 The cooperative that was nominated as export agent in the 1940s was called the South African Cooperative Citrus Exchange. As we shall see, Outspan replaced the SACCE in the early 1990s. For the purposes of this paper, Outspan is used to refer to both organisations.

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production practices on the ground. Research and extension is divided into ve departments: Production Research, Extension Services, Citrus Improvement Programme, Outspan Laboratories and Operations Research. The Production Research department is concerned with on farm production practices including irrigation techniques and fertilizer application methods. One of this department's more important research areas has been the development of Integrated Pest Management (IPM) techniques for citrus. The development of new methods of combating pests like red scale has been a response to the increasing resistance of pests and diseases to traditional pesticides, particularly organophosphates. Research into IPM has also been stimulated by stricter European guidelines for pesticide residues on export fruit and local concerns over the environmental impact and sustainability of high-input production systems on citrus farms. The result has been an active eort in promoting IMP and bio-intensive methods of controlling pests that protect or increase the natural enemies of citrus pests while at the same time ensuring that the fruit meets the increasingly stringent phyto-sanitary regulations of exporting countries. The Extension Department's function is to transmit the research practices and techniques developed in Production Research to farmers producing for export. Their approach to citrus exporters is `proactive' so that these growers produce a crop of export quality. Extension ocers must also transfer knowledge about cultivation practices and cultivars that is in line with the ``...the long term strategic objectives of the industry as a whole'' (South African Citrus Exchange, 1994). In the early 1990s, for example, extension ocers were instructed to assist farmers by improving the quality and standard of navel oranges; this was a cultivar identied by Outspan as central to its `product range'. The Extension Department is also involved in guiding new citrus farmers and here too its assistance is in line with the strategic objectives of the industry. New farmers are encouraged to consider market demand for cultivars, the country's cultivar spread and the national tree replacement policy. Farmers are urged to plant varieties of citrus ``...which have been identied as required to meet market demands'' (Citrus Journal, 31 March 1994). While Outspans extension service persuades farmers to improve production practices for particular cultivars it encourages both existing and new growers to plant new trees in line with the company's `product range'. The Citrus Improvement Programme (CIP) is a scheme developed by Outspan to ensure that farmers plant high quality and disease-free trees. Some of the pathogens that aect citrus can be transferred in budwood, the material that is used to propagate new trees. To prevent diseases spreading through infected budwood the propagating material is grown on an Outspan owned farm in the Eastern Cape called the Outspan

Foundation Block (OFB). Trees produced from OFB budwood are certied to be disease free and are sold only to nurseries that participate in the Citrus Improvement Programme. The goal of the CIP is to produce trees `...derived from horticulturally superior, disease free propagation material (which) gives the growers the best chance of producing top quality, awless export fruit which can compete in any world market' (Citrus Journal, 31 July 1996, p. 7). Outspan considers it commercially suicidal to purchase trees developed from budwood outside the CIP. The last two departments in the extension and research division are Outspan's Laboratories and Operations Research. The laboratory facility's main function is to advise on the fertilizer needs of trees by examining soil and leaf samples. Operations Research focuses on the post-harvest transport and treatment of citrus and their research eort has concentrated on developing techniques that minimise damage and decay en route to an overseas market. Their responsibility begins at the pack-house where they monitor packing methods and attempt to nd solutions to ongoing problems associated with citrus packing including, for example, grapefruit which is not `round' when it arrives overseas. In the early 1990s they spent considerable eort on packaging design with a view to protecting the fruit en route while at the same time decreasing packaging costs. The operations research has also improved the company's precooling facilities at the various ports and monitors the eectiveness of refrigerated transport. Outspan's involvement in citrus does not end at research and extension. Since the 1920s, agriculture in general but citrus in particular has enjoyed preferential rail rates from the South African Railways and Harbours Department. In the late 1920s the Citrus Exchange negotiated an export rate for fruit transported from cooperative pack-houses by the Railways and Harbours. In the 1930s the state further subsidised rail transport in an eort to decrease transport costs for citrus growers. Although citrus is currently transported by truck and rail, Outspan's relationship with South Africa's railway parastatal company remains important and it continues to negotiate favourable freight rates for citrus. Indeed, the railways company has made some important changes to its transport infrastructure to satisfy the needs of growers who export through Outspan. One of these innovations has been the development of an `O' type wagon which is designed to transport palletised fruit with as little movement as possible. Transporting fruit in these wagons plays an important role in streamlining the transition from train to ship, as they can be loaded onto ships without repackaging. In Durban this innovation has meant that the dock facility can load 140 O trucks containing 240,000 cartons of citrus per day. The railway's computerised tracking and monitoring system allows Out-

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span to coordinate transport and pre-cooling at harbours to minimise the chances of fruit decay. The rail company is currently `laying the foundations for the citrus transport needs of the future' so that it can remain an `integral part of Outspans logistic chain' (Citrus Journal, 31 March 1993). As a company that transports over 900,000 tons of fruit, Outspan has an important inuence over this part of the liere. Preparing citrus for shipment, securing the necessary shipping space and nally shipping the fruit overseas has been restructured since the mid-1980s. Through investments and mergers Outspan is exercising greater control over shipping schedules and port facilities. In the mid1980s, the cooperative purchased pre-cooling and handling facilities at Durban and Port Elizabeth. Both of these facilities have been upgraded in the 1990s to ensure the rapid cooling of fruit to the required shipping temperature. Upgrading the Durban facility alone cost Outspan R25 million. Previously it had taken fruit at least three days to cool citrus to 5C; the new upgraded facilities can cool the fruit to the same temperature in 24 hours. They can also handle and dispatch much more fruit, more quickly than was possible before. Since the end of the conict in Mozambique, Outspan has also relied on the strategically placed port of Maputo. In the mid-1990s Outspan created a joint company with Manica Freight Services to pre-cool and ship some of the fruit produced in the citrus growing regions of Mpumalanga, the Northern Province, Swaziland, Mozambique and Zimbabwe. The new company purchased the entire cargo terminal and pre-cooling facilities from Matola Frigo (Business Report, 24 July 1996). Cape Town is the fourth port used by Outspan and it uses the International Harbour Services (IHS) company to export citrus produced mainly in the Western Cape and Northern Cape provinces. IHS is a subsidiary of the deciduous fruit agent Unifruco, an organisation with which Outspan has very close ties 4. The nal stage in marketing citrus involves distributing the product overseas. Outspans involvement in overseas markets depends largely on the organisation of retailing in the receiving country. Where the sale of fruit is concentrated in the hands of large and powerful retail chains, notably Britain and several other European countries, Outspan has attempted to market fruit directly to these retailers. The company has had some recent success in Britain. Outspan was recently given accreditation by the Sainsburys retail chain following a visit to South Africa by the retailers chief food technologist. The accreditation process is based on the quality of the fruit as well as the environmental condi-

tions under which it is grown. In other markets where Outspan has less experience, joint venture companies have been established with a host company to facilitate the sale of citrus overseas. For instance, Outspan recently entered into a joint venture with Metro International, a Hong Kong based company, and created Metspan to distribute fruit in a market where they previously had no presence (Financial Mail, 30 May 1997). Citrus exports to the Far East increased by 120% following the establishment of the company in 1996. Using the considerable resources at its disposal, Outspan is able to open new markets and consolidate others by inviting trade delegations, supermarket chains, and independent retailers to inspect local crops and production methods. These resources also allow it to take an altogether more aggressive strategy by creating new companies and alliances in strategically important oshore markets.

3. Re-regulating citrus The changes that have occurred in the marketing chain have been paralleled by an important institutional transformation in the 1990s. The relationship between Outspan and the Citrus Board has in broad terms remained the same since the 1940s: the Board has always nominated the central cooperative as the industrys export agent. In 1991, however, the central cooperative was downgraded from the Citrus Boards overseas marketing agent to the industrys policy setting forum. (South African Cooperative Citrus Exchange, 1992). Outspan International, a new cooperative company, was launched as the operational and marketing organisation for citrus exports and all sta were transferred to the new company. In 1994 Outspan International made an even bolder step by using an amendment to the Cooperatives Act (1993) to transform itself from a central cooperative into a private company called Outspan International Marketing. The companys shares were distributed to individual growers based on their aggregate export volumes over the previous three years. Until very recently this private company has retained its status as the Citrus Boards export agent and, by implication, control over all citrus exports from South Africa. This institutional transformation was driven in part by Outspans desire to play a more aggressive role in a global trading regime that was no longer closed however imperfectly to South African fruit. The success of fresh fruit export strategies in other countries, notably Chile, during the 1980s provided a powerful incentive for the citrus industry to make up ground that they had lost due to sanctions. A more aggressive marketing strategy required that Outspan shift its emphasis away from production and technological advancement

Outspan and Unifruco own a European based company called Capespan which is responsible for marketing deciduous fruit and citrus in Britain and other European countries.

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the traditional strengths of the cooperative towards overseas market development. The transformation of the industrys single desk seller from a central cooperative into a privately owned company did not go unchallenged. The business press was dismayed that the move to a free market in agricultural trade had been hi-jacked in a process where cooperatives moved ``...marketing functions out of the boards control to monopoly private marketing companies'' (Finance Week, 30 September 1993). Perhaps more important was the challenge to Outspans continued role as single desk exporting agent by a group of farmers who have organised themselves as the Independent Fruit Growers Association of South Africa (IFGASA). Beginning in the early 1990s the organisation mounted a vigorous campaign for the deregulation of citrus exports. There has always been a small number of citrus growers opposed to a single desk in exports, but this opposition was never consolidated into a formal organisation. The collapse of the South African currency in relation to other major currencies in the 1980s and the perceived failure of Outspan to translate this export advantage into higher grower returns, appears to have been the catalyst for the formation of a second organisation for citrus growers. Their opposition to Outspan was also based on a long-standing concern of some growers over the practice of pooling citrus exports. Pooling fruit for export means that the return on any individual pool is divided equally between growers based on their contribution to the pool. Since the beginning of cooperative marketing, independently minded farmers have balked at having to indirectly subsidise poor farming practices by marketing their superior quality fruit with the product of marginal farmers. According to IFGASA, pooling also fails to reward the countrys best growers: ``Outspans price pooling systems prevents individual farmers from beneting from product quality or excellence- or entering into independent marketing or packaging deals with overseas clients'' (Moolman, cited in Financial Mail, 8 December 1995). Scale does not appear to determine whether a farmer is likely to be a member of IFGASA. Instead, the organisation seems to be made up of growers producing higher value citrus cultivars. Farmers with experience in exporting sub-tropical fruit independently of a cooperative or marketing company are also more likely to join the ranks of IFGASA. While IFGASA represents a small proportion of citrus growers in southern Africa perhaps 160 out of a total of 1200 they have had a considerable inuence on Outspan International. The discourse of deregulation has provided an eective platform for IFGASA to highlight its struggle with the single desk exporter for citrus. The agribusiness has in turn reacted aggressively to what it calls a vociferous minority of maverick growers. Its specic responses to IFGASA and the de-

mand to deregulate exports must be seen in the context of the conditions under which a single desk may be authorised in the legislation that has replaced the 1937 Marketing Act. Under the new Marketing of Agricultural Products Act (1996) a single desk may be authorised if two conditions are satised: rst, the organisation must demonstrate that sucient growers are in favour of single channel marketing. Second, the nominated agent must show a commitment to the development of black smallholder farmers and improving the conditions of farm workers. Outspan has attempted to satisfy both requirements. In 1996 Outspan conducted a poll on exporters views of cooperative marketing. The results, which were publicised at a press conference, showed that almost 90% of growers were in favour of single-channel marketing for citrus exports. Only 8% of growers by number and 5.3% by fruit volume were opposed to Outspans monopoly of the export crop. Growers were also asked to rate Outspans services and they received a grade of 3,92 out of a possible 5 (Outspan International, Press Release, 21 May 1996). IFGASAs response to the poll was that the questions were formatted in a way that prevented growers from expressing their true feelings towards marketing; moreover, those growers who were genuinely opposed were intimidated by the vast, delegated statutory powers exercised by Outspan. In the mid-1990s, Outspan also commissioned two reports, both of which pointed out the benets of a coordinated marketing strategy for South African citrus exports. The rst report, produced by an international accounting rm, compared export earnings for growers in South Africa, Australia and the United States. Their ndings showed that South African growers earned 17% more than their counterparts in the other two citrus growing countries. Outspan was quick to point out that earnings for growers in Australia, where the market was too fragmented, were lower than in both the United States and South Africa where exports are co-ordinated by Sunkist and Outspan respectively (Business Day, 15 May 1996). The second report was commissioned by the World Bank and it too, surprisingly, came out strongly in favour of a single desk for citrus exports. The author of the report noted that while most cooperatives in South Africa were inecient and incompetent, Outspan International has proved to be an exception. The citrus industry in southern Africa provides a lesson on how to organise an integrated marketing chain for exporting fresh produce and on the advantages of regional cooperation in agro-business (Dixie, 1995, p. 66). The report compares Outspan to other multinational food companies; this is the South African version of Dole or United Fruit.

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Outspans last strategy in its campaign to retain a single desk has been to highlight what it calls its commitment to reconstruction and development. The industry employs 100,000 people (with 600,000 dependents) in eight of the countrys nine provinces. Outspan has supported the Rural Foundation, an NGO dedicated to rural development and upliftment programmes (Citrus Journal, 31 May 1995). Even though its support of the Rural Foundation came on the heels of a crippling strike on one of the countrys largest citrus farms, Outspan has granted the Foundation over R1.5 million. Outspan has also highlighted its direct role in bringing emerging farmers into the industry and in its own words has been a pioneer in a number of successful working models of black export citrus ventures (Outspan Brieng Document, 1995). All of these ventures are in the former bantustans of the Eastern Cape, the North West, the Northern Province and Mpumalanga and in the post-1994 period Outspan has been active in transforming these state owned farms into smallholder schemes. The organisation estimates that these farms produce as much as 20% of export volumes (Outspan Brieng Document, 1995), although the number of black citrus farmers remains very small. On white owned farms they have a programme that assists farmers in developing crches, primary schools and high schools on the e large estates. They have supported farmers in their eorts to provide medical facilities, acceptable housing, craft centres and recreational facilities. Farmers have also been assisted in coming to terms with new laws, most notably, the amendments to Labour Relations Act (1996) through seminars and conferences. For black farm workers they have courses that develop farming expertise in irrigation, fertilization, picking and packing as well as supervisory and management courses. Finally, Outspan is one of the founding members of the New Farmers Development Corporation, a private company backed by a variety of agribusiness, dedicated to broadening the ownership base of agriculture in South Africa. Their focus is on assisting emerging farmers with loan nance and in facilitating equity participation schemes with farmers and farm workers. The projects under investigation in April 1996 were all focused on citrus or subtropical fruit and Outspans contribution to the establishment of the company was R2.5 million (Business Day, 5 September, 1996). Despite Outspans eorts, it failed to convince South Africas post-apartheid Minister of Agriculture on its case for a single desk for citrus exports. In 1996 he stated publicly that while ``the act allows for a singlechannel marketing system, it was unlikely that this will happen...I am totally unconvinced by the argument for a single-channel marketing system despite being told that the greatest number of producers are in favour of

it'' (cited in Business Report, 14 October 1996). In 1997 Outspan was not appointed as the export agent for citrus exports and it seems certain that the Citrus Board will be dissolved. For the 1998 season Outspan has been without the regulatory protection that it has enjoyed for over half a century. In the short term, its monopoly over the infrastructure for exporting fruit should ensure that it retains the lions share of South Africas citrus exports. Attempts to map the way in which the liere is transformed in the longer term must be tentative; nonetheless, it is possible to identify several new developments in citrus marketing which are emerging in this new deregulated environment. First, individual growers will begin exporting under distinctive labels outside of Outspans impressive infrastructure. Many of these operations will have had some experience exporting unregulated high value fruits to Europe and will add citrus to their export range. An interesting example is Inala farms, an operation in the Mpumalanga lowveld, which currently markets exotic fruit (mangoes, paw paws, avocados) to Sainsburys in the United Kingdom. The organisation markets its fruit on the basis of quality and environmentally responsible farming practices but also on the basis that it represents the successful implementation of South Africas land reform programme. Inala is one of a handful of equity owned farms in South Africa that is part owned by farm workers. Second, groups of farmers in particular regions may attempt to market their fruit through local cooperatives and new brands that highlight the ecological distinctiveness of their growing region. The signicance of these rst two developments is that South African citrus will no longer be synonymous with the Outspan label and that northern consumers are likely to become more aware of the dierent ecological conditions under which citrus is grown in South Africa. Returning to the earlier discussion on the territorialisation of agro-food systems, the delinking of the brand from South African citrus exports is thus likely to lead to the regional reconguration of citrus lieres (Goodman and Watts, 1994). Finally, local and overseas marketing agents who were previously denied access to South African fruit are likely to play a greater role in citrus marketing. Several organisations have signaled their intention to export South African fruit. One local company oers a package not dissimilar to Outspans, but on a smaller scale: cold rooms, a quality control laboratory, pre-packing facilities, agents and clients around the world, and access to sea-and airfreight transportation (Deciduous Fruit Grower, January 1995, p. 21). The exclusive control that Outspan has exercised over the citrus export crop for almost 60 years will give way to a far more diverse playing eld with agents, Outspan and exporting companies competing for growers produce.

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4. Market power and local/global processes One way of interpreting Outspans attempts to retain the single desk is to suggest that the organisation has been unwilling to face the rigours of the free market. Yet this explanation fails to explain why an organisation that controls the infrastructure for citrus exports, and thus wields considerable extra-legal market power, remains so intent on maintaining a single desk for citrus exports. The companys struggle to retain statutory control of exports is not simply about its desire to maintain the regulatory environment that it has enjoyed for more than half a century. Instead, Outspans eorts to maintain a single desk must be understood as the struggle by an organisation to maintain the link between its global strategy and local market power. The remarkable feature of Outspan International is thye extent to which it owns or exercises control over the citrus liere. The company exercises a level of control similar to that described by Page (1997, p. 140) in his analysis of hog production in Iowa: ``these rms (Cargill, ConAgra) are involved in nearly every stage of pork production, including inputs to grain farming, grain transport and processing, livestock feed manufacturing, meat packing, and processed food production.'' Outspans eorts to control the commodity chain intensied in the late 1980s with its acquisition of port and precooling facilities, the restructuring of research and extension, and more recently with the establishment of oshore companies in Europe, North America and Asia. The companys justication for controlling the liere is based on the imperative of producing a high quality export crop that can compete on overseas markets. The Outspan Foundation Block, the extension and research service, innovations in packaging, improvements in rail transportation and the construction of advanced precooling facilities are all part of a strategy to ensure that South African citrus sold under the Outspan label meets the exacting standards of overseas consumers. At the same time, this infrastructure gives the organisation considerable power over growers production decisions on the land. By advising growers on integrated pest management techniques, fertilizer methods, irrigation technology and by providing farmers with short term loans, Outspan is able to exert control over production methods on the farm. In this sense, Outspan represents the vector through which northern consumers exert power over the culture of citrus farming in South Africa. Outspans power over citrus farming extends beyond the immediate priority of improving production methods. The company has a long-term strategy that involves shaping the mix of cultivars and citrus varieties produced in South Africa. For instance, the extension division ``...actively encourages the establishment and production of cultivars which have been identied as

required to meet market demands by providing information and advice to existing and potential producers in suitable production areas'' (Citrus Journal, 31 July 1993). Supplying overseas markets with a steady supply of citrus is a complicated process that involves exporting fruit that matures at dierent times during the season. This in turn depends on producing a variety of dierent citrus cultivars in a range of ecological zones. In South Africa navels are produced at the beginning of the harvesting season followed by easy peelers, midnights and delta seedless varieties. Valencias dominate during the mid-season and the season ends with navels. The mix and variety is central to the companys global strategy of marketing citrus for the northern hemisphere summer season. Outspan appears to have achieved the feat of coordinating ``...heterogenous climates, regional biodiversity, seasonal variations, and technological improvements to satisfy the taste and quality demanded by consumers in industrialised countries'' (Arce and Marsden, 1993, p. 304). Outspan has not, however, always successfully tamed nature in the way Arce and Marsden (1993) describe. The cultivation of minneolas in two of South Africas citrus growing regions is an example of Outspans failure in succeeding to match its market power within the limitations of nature (cf. Goodman and Redclift, 1991). The minneolas produced in the Western Cape during the mid-1980s proved to be very popular on overseas markets. The fruit produced in this region was a deep orange-red colour, was very sweet and did not have the high acid levels that are sometimes found in the cultivar. In an attempt to meet the overseas demand for the fruit, Outspan encouraged growers to plant minneolas in other parts of the country, notably Mpumalanga and the Northern Province. The results were, however, disappointing as the environmental conditions did not suit minneolas: the fruit lacked the brilliant colour and sweetness that was characteristic of the Western Cape crop. Moreover, the acid levels were unacceptably high for the highly competitive overseas markets. The example of minneolas is a tangible example of Outspans power to shape citrus production in South Africa, but also its failure to produce the Ford minneola. There are two observations that may be made about Outspans market power. The rst is that the way in which the organisation congures and sometimes determines 5 farm production practices and cultivar choices for independent producers is not unique to this particular context. Le Heron (1994, p. 51) notes how farmers in New Zealand have been placed in ``F F Fposition of asymmetrical dependency with agribusiness rms'' (also see Page, 1997). It is, nonetheless, interest-

5 Outspan has in the past asked farmers to sign a contract agreeing to use a particular method of pest control and pesticide product.

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ing to note that the kind of power that Outspan and other agribusinesses exercise over farmers is strikingly similar to the relationship between outgrowers and farmers involved in formal contract relationships. In a recent review of the literature on contract farming, Porter and Phillip-Howard dene the relationship as one where growers provide the means of production, but the outgrower provides inputs on credit. They note that extension is often part of the package as it ``...allows the company some inuence over growing practices'' (Porter and Phillip-Howard, 1997, p. 228). The Little and Watts (1994) denition also stresses the extent to which the agribusiness shapes production decisions and exercises some control at the point of production (Little and Watts, 1994, p. 9). Growers in contract farming relationships normally shoulder the risks of crop failure and environmental damage (Morvaridi, 1995). There are obvious similarities between these denitions and Outspans relationship with South African growers. Individual growers in South Africa provide the means of production and Outspan supplies inputs on credit in the form of an advance on the crop. At the same time, its monopoly over the research and extension infrastructure has allowed it to inuence the way growers cultivate citrus and which cultivars they plant. The result of this power is that despite the absence of formal contracts, Outspan sells the South African crop not the produce of some 1200 independent growers but the product of 1200 growers whose production regime on the farm is congured by Outspan itself. The second observation relates to the links between Outspans local market power and its global market strategies. Outspans ability to shape production decisions (for quality) and its role in conguring South African citrus exports (for cultivar range and variety) has provided the foundation for a coordinated global strategy that allows it to supply some markets with better quality and a wider variety of citrus while other, less lucrative, markets are supplied with poorer quality and standard varieties of fruit. Since it has access to fruit over the entire northern hemisphere summer, it has the advantage of being able to oer large retail chains the luxury of dealing with a single supplier of citrus for the entire season. For obvious reasons, individual growers are unable to supply overseas markets for extend periods. New markets that have been opened in the postsanctions era are also supplied with the best quality and variety of fruit in an eort to secure a previously untapped market. Outspan has responded to the growing demand for exotic citrus varieties and those which fall under the broad category of easy peelers by encouraging farmers to plant new cultivars that fetch higher prices on international markets. The demand in Japan and other parts of Asia for particular varieties of fruit under strict phyto-sanitary conditions is one of the more recent challenges that Outspan is facing. This lucrative

new market demands that growers produce new varieties of fruit under strict production and post-harvest guidelines. Outspans power over farmers has, in the past at least, allowed it to recongure South African citrus in line with these new demands. The links between Outspans global strategy and its local market power explains why the organisation has expended so much energy and resources to maintain a single desk when, through its control of the infrastructure, it will continue to attract the majority of South African growers. Outspans power to shape production practices and its inuence over the conguration of South African citrus exports has been the foundation for its global market strategies. This power has allowed the company to respond to specic markets with a specic citrus product or range of products, it has permitted the company to penetrate new markets with the best fruit South Africa can oer and it has permitted the company to respond to (or develop) new consumer tastes in citrus. Outspans global strategy has thus depended on its power over the culture of local citrus farming and its capacity to shape the conguration of citrus cultivars planted in South Africa. The companys loss of the single desk for exports has broken this important relationship between local control and global strategy. For Outspan the costs of losing the single desk are high: not only will it lose its inuence over citrus in South Africa, it is also likely to lose some key elements of its product range. Growers producing high quality fruit and exotics like the easy peelers are most likely to attempt to maximise their earnings by exporting in lucrative niche markets. The response by the Chairman of the Citrus Board to the possibility that oshore agents would be attempting to source South African fruit in a deregulated market exposes the extent to which Outspan has depended on controlling local citrus production. When this possibility was raised in the business press, the Chairman warned that the Citrus Board would not allow foreign agents to ``...mess around in our playing elds'' (cited in Business Report, 31 May 1996). As the single desk seller of citrus for over half a century, Outspan became so accustomed to controlling South African citrus that it considers any interference an invasion of its turf. 5. Conclusion Based on the South African citrus liere, this paper has explored the relationship between local forms of regulation and global market strategies. For Outspan International, its power to shape domestic production practices through legislation and its control over the infrastructure for citrus exports provided the foundation for a global market strategy. This strategy involved supplying markets with dierent citrus products and responding to the changing tastes of northern consum-

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C. Mather / Geoforum 30 (1999) 6170 Watts, M.J. (Eds.), Globalising Food: Agrarian Questions and Global Restructuring, Routledge, London. Cartwright, A.P., 1977. Outspan Golden Harvest: A History of the South African Citrus Industry, Purnell, Cape Town. Chase, J., 1997. Controlling labour commitment in Brazils global agriculture: the crisis of competing exibilities. Environment and Planning D: Society and Space 15, 587610. Dixie, G., 1995. Southern Africa Citrus Case Study, World Bank Southern Africa, Johannesburg. FitzSimmons, M., 1997. Commentary on part III: Regions in global context? Restructuring, industry and regional dynamics. In: Goodman, D., Watts, M.J. (Eds.), Globalising Food: Agrarian Questions and Global Restructuring, Routledge, London. FitzSimmons, M., 1997. Regions in global context? Restructuring, industry, and regional dynamics. In: Goodman, D., Watts, M.J. (Eds.), Globalising Food: Agrarian Questions and Global Restructuring, Routledge, London. Friedland, W.H., 1994. The new globalization: the case of fresh produce. In: Bonanno, A., Busch, L., Friedland, W., Gouveia, L., Mingione, E. (Eds.), From Columbus to ConAgra: the Globalization of Agriculture and Food, Kansas, University of Kansas. Goodman, D., Redclift, M., 1991. Refashioning Nature: Food, Ecology and Culture, Routledge, London. Goodman, D., Watts, M., 1994. Reconguring the rural or fording the divide? Capitalist restructuring and the global agro-food system. Journal of Peasant Studies 22 (1), 149. Gouviea, L., 1994. Global strategies and local linkages. In From Columbus to Conagra: the globalization of food and agriculture, University of Kansas, Lawrence KS. Jussaume, R.A., 1998. Globalization, agriculture, and rural socialchange in Japan. Environment and Planning A30, 401413. LeHeron R, , Globalized Agriculture: Political Choice, Pergamon, London, 1993. Little, P.D., Watts, M.J., 1994. Living Under Contract: Contract Farming and Agrarian Transformation in Sub-Saharan Africa, Wisconsin University, Madison. Marsden, T., Munton, R., Ward, N., Whatmore, S., 1996. Agricultural geography and the political economy approach: a review. Economic Geography 72, 361375. Morvaridi, B., 1995. Contract farming and environmental risk: the case of Cyprus. Journal of Peasant Studies 23 (1), 3045. Page, B., 1997. Restructuring pork production, remaking rural Iowa. In: Goodman, D., Watts, M.J. (Eds.), Globalising Food: Agrarian Questions and Global Restructuring, Routledge, London. Porter, G., Phillip-Howard, K., 1997. Comparing contracts: an evaluation of contract farming schemes in Africa. World Development 25, 227238. Raynolds, L., 1997. Restructuring national agriculture, agro-food trade, and agrarian livelihoods in the Caribbean. In: Goodman, D., Watts, M.J.(Eds.), Globalising Food: Agrarian Questions and Global Restructuring, Routledge, London. Watts, M., 1996. Development III: the global agrofood system and late twentieth-century development (or Kautsky redux). Progress in Human Geography 20, 230245. Watts, M., Goodman, D., 1997. Agrarian questions: global appetite, local metabolism: nature, culture, `and industry in n-de-siecle agro-food systems. In: Goodman, D., Watts M.J. (Eds.), Globalising Food: Agrarian Questions and Global Restructuring, Routledge, London. Whatmore, S., 1994. Global agro-food complexes and the restructuring of rural Europe. In: Amin, A., Thrift, N. (Eds.), Globalization, Institutions and Regional Development in Europe, Oxford University Press, Oxford.

ers with new citrus varieties. The relationship between northern consumers and local farmers and farm workers was mediated through an organisation that represents the South African citrus industry. In the 1990s, Outspans single desk has been challenged by a group of renegade farmers who have demanded the deregulation of citrus exports. Their campaign has been successful in that the new Agricultural Marketing of Products Act (1996) has stripped Outspan of its export monopoly and the organisation will be forced to compete with individuals, groups of growers and marketing agents who export outside of the companys web. Outspans struggle to maintain the single desk must be seen in the context of the links between its global strategy and its local market power. While it will maintain market power through its ownership of the infrastructure, without control of all South African citrus it will lose some key elements of its product range. This loss will force Outspan to recast the relationship between local production and global market strategy. The changes in the regulation of citrus exports are likely to change the territorial conguration of the citrus liere. The re(emergence) of the ecologically distinct citrus growing regions that are found in South Africa will in turn recongure the relations between northern consumers and local producers. Acknowledgements The research for this paper was funded by the Restructuring of Agriculture in South Africa (RAiSA) project coordinated by Nick Amin, Department of Economics, University of Natal. Thanks to Nick Amin, Phil Raikes and Timothy Mather for comments on an earlier draft of this paper. The paper was also presented at the Geography of Commodities conference held in Manchester in 1998. I would like to acknowledge the Centre for Science and Development for their contribution towards travel expenses. References
Amin, N., Watkinson, E., 1997. Economic regulation in the South African broiler industry: components, processes, eects and implications. Unpublished paper prepared for the Restructuring of Agriculture in South Africa conference (RaiSA), University of Natal, Durban. Arce, A., Marsden, T., 1993. The social construction of international food: a new research agenda. Economic Geography 69, 293311. Bernstein, H., 1996. The political economy of the maize liere. Journal of Peasant Studies 23 (2), 120133. Boyd, W., Watts, M., 1997. Agro-industrial just-in-time: the chicken industry and post-war American capitalism. In: Goodman, D.,