SA’s citrus exports for 2022 came in below expectations amid a tough season in which input and transport costs surged, squeezing profit margins.
Citrus production is a key subsector of the agricultural industry and a major foreign currency earner, contributing at least R30bn each year. SA is the world’s second-largest exporter of fresh citrus fruit after Spain.
Citrus growers shipped 164.8-million cartons to global markets in 2022, an increase of 3.2-million from 2021.
But that was 5.7-million cartons less than predicted at the start of the season, Citrus Growers Association of Southern Africa CEO Justin Chadwick said on Monday.
“These figures highlight the extremely tough season growers have had to endure that has negatively impacted their returns and the volumes they were able to export and threatens the future sustainability of the industry, which sustains over 140,000 jobs and brings in R30bn in revenue to SA each year,” he said in a statement.
The industry was also weighed down by astronomical shipping price hikes, which made the cost of getting fruit to market commercially unviable for many growers. Freight costs increased by more than 150% over the past two years.
“At the same time, the unjustified and discriminatory new false codling moth regulations passed by the EU midseason placed further financial strain and risk on growers.
“These challenges were coupled with the ongoing decay of public infrastructure such as roads, rail and port operations; erratic electricity supply; and a decline in real export prices.”
Chadwick said that meant already tight margins for citrus producers were squeezed to the point where only one in five farms was likely to make a positive return this season.
Millions of cartons of citrus fruit worth nearly R654m were recently stuck for weeks in European ports after the EU introduced new phytosanitary requirements in July, when shipments were already en route, essentially blocking SA from accessing the market. The move threatened the viability of many citrus enterprises.
Brussels argued at the time that its new rules were aimed at combating the potential spread of the false codling moth, an African pest that has a soft spot for oranges and grapefruit.
This prompted the SA government to file its first complaint at the World Trade Organization, arguing that the EU’s requirements were “not based on science” and were “discriminatory” and excessive.
While Pretoria later entered into an agreement with the EU, paving the way for SA fruit already en route to enter Europe, the delays left many exporters reeling. The new regulations, which remain in place, will add pressure to exporters in the seasons ahead.
Chadwick said the new EU regulations, which require mandatory cold treatment of SA oranges entering the region, are a threat to the future of the industry. “These regulations are also completely unnecessary in light of the world-class and highly effective [false codling moth] risk management systems already in place.”
He continued: “The association therefore continues to support the department of trade, industry & competition and the department of agriculture ... in the current dispute lodged at the World Trade Organization and hopes that the process will result in a solution that is mutually acceptable to all parties.”
Chadwick said the decline in fruit shipments to some markets this season is a particular concern in light of the forecast that fruit produced and available for exports will continue to grow on average by 10-million cartons a year for the next decade, hitting 200-million cartons in the next five years and as many as 260-million in the next 10 years.
“This means the industry could potentially sustain a further 100,000 jobs and generate an additional R20bn in annual revenue, bringing its total contribution to 240,000 jobs and R50bn in revenue, as long as key markets and logistical infrastructure are secured and optimised in order to absorb this increased growth,” he said.
The association is committed to working with the government to optimise, secure and retain as many market access opportunities as possible.
Chadwick said key markets that offer potential for expanded access and require particular attention ahead of the 2023 season are the US, India, China, Japan, Vietnam and the Philippines.
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