eBusiness Weekly
South African citrus farmers will voluntarily stop the export of Valencia oranges from some areas of South Africa, which is affected by citrus black spot, to the European Union (EU).
The decision was taken after some South African citrus were found to be non-compliant to standards.
Citrus black spot is a fungal disease that leaves marks on the rind of the fruit – but does not result in fruit decay or any illness.
“This poses a major threat to the sustainability and profitability of the sector and the 130 000 jobs it sustains as well as the R30 billion in export revenue it generates annually,” according to Justin Chadwick, CEO of the Citrus Growers’ Association (CGA).
But he added that while this closure will serve as another blow to growers who have faced one of the most challenging seasons to date, continued access to the EU market over the longer-term must be prioritised. “This decision also shows South Africa’s phytosanitary CBS Risk Mitigation System being implemented effectively,” says Chadwick.
To date, some 138 million 15kg cartons of fruit have been packed for export to key markets across the world. The latest prediction is that 167.2 million cartons of citrus will be shipped by the end of the 2022 season, which is 3.3 million fewer cartons than predicted at the start of the season.
“While these figures still show steady volume growth when compared to previous years, a number of serious operational and commercial challenges mean that the majority of local growers are faced with the very real prospect of significant earnings losses this year,” says Chadwick.
The CGA believes that only 20 percent of SA’s citrus growers are likely to achieve above break-even returns at the end of the 2022 season.
The biggest impact for growers is due to price hikes on a number of inputs due to the Covid-19 pandemic and the war in Ukraine.
For example, fertiliser prices increased just over 56 percent between 2020 and 2021 and fuel prices are up by 53percent . Freight rates have reached record high levels, with shipping lines hiking their prices by 128 percent between the first quarter of 2020 and the first quarter of 2022.
“This means growers are having to pay virtually twice as much to ship their fruit, than what it cost to produce it over the course of an entire year,” says Chadwick.
“At the same time, there has been a decline in real export prices across all varietals which is expected to continue for the next few years.”
The situation was further impacted by new False Coddling Moth (FCM) regulations suddenly passed by the EU requiring exporting African countries to implement a more intense mandatory cold treatment for oranges headed to the region.
In the view of the CGA these regulations were unjustified and unfair and the SA government is challenging it at the World Trade Organisation.
The new regulations saw up to 1 350 containers of citrus detained at EU ports for a number of weeks, which resulted in local growers incurring over R200 million in losses.
“All of these factors along with the current economic constraints in South Africa means that growers are under severe pressure.
“As a result, it is not unusual to hear of instances where growers have had no choice but to dump cattle-grade fruit that is not fit for human consumption, as was the case for one farmer in the Eastern Cape recently,” says Chadwick.
Eddy Kreukniet of growers’ organisation Exsa Europe estimates that, although in recent weeks only 50 percent of the volume of oranges normally exported from SA to the EU have been sent, volumes are now correcting and prices are as much as 30 higher than last year.
He too was surprised by the sudden new cold treatment requirements for FCM.
Some suppliers are managing to deal with the adjustment better than others.
The Western Cape, for example, was already accustomed to comply with strict North American regulations.
In practice the new EU regulations caused delays of two to three weeks, but Exsa had no rejections. He too mentions the increases in sea freight, energy and packaging costs.
“It is difficult to pass these on to customers,” he says. — Fin24.com
