No more than 20% of Mzansi’s citrus growers are likely to break even at the end of the season. This is according to the Citrus Growers’ Association of Southern Africa (CGA), who says that the latest setback to local citrus farmers is the industry’s voluntary early closure of Valencia exports to the EU.
The organisation made the announcement in a press release just this morning (Wednesday, 7 September 2022). It says that the CGA and Fresh Produce Exporters’ Forum Boards both deem it best to voluntarily close the export of Valencia oranges from areas affected by citrus black spot (CBS), a month before the end of the season.
“This decision was taken in response to the 10 CBS notifications of non-compliance on SA citrus detected so far this season and the traditional heightened risk that Valencia oranges pose for CBS non-compliance at the tail end of the EU export season.
“Continued access to the EU market over the longer term must be prioritised and this decision also shows that South Africa’s phytosanitary CBS risk mitigation system is being implemented effectively.”
Even though more citrus has been exported volume-wise this year, the CGA says that most local growers face the “very real prospect of significant earnings losses this year” because of a chain of setbacks so far.
The challenges
Challenges that the citrus sector has had to overcome, were:
- Fertiliser prices have increased just over 56% between 2020 and 2021
- Fuel prices are up by 53%.
- Shipping tariffs have increased by 128% between the first quarter of 2020 and the first quarter of 2022.
- A decline in real export prices across all varietals, which is expected to continue for the next few years.
- Drastic new cold-treatment regulations by the EU around false codling moth in oranges.
- The containment of up to 1 350 containers of citrus in European ports for several weeks, which resulted in local growers incurring over R200 million in losses.
Volume up, income down
So far, 138 million 15kg cartons of fruit have been packed for export from South Africa and the latest prediction puts the season total at 167.2 million cartons.
Although it means volume growth compared to previous years, it is 3.3 million cartons less than predicted at the start of the season and will not come with increased profits. “Experienced industry commentators are of the view that less than 20% of citrus growers are likely to achieve above break-even returns at the end of the 2022 season,” the CGA says.
‘No surprise that fruit is being dumped’
There are major threats to the sustainability and profitability of the citrus sector, the 130 000 jobs it sustains, and the R30 billion in export revenue it generates annually, the CGA says.
Economic constraints in South Africa, ongoing fiscal pressure, persistent load shedding, high unemployment rates and low levels of consumer and business confidence compound the industry-specific challenges and are putting growers 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.”
Where possible, the organisation adds, growers continue to donate fruit that is fit for human consumption to communities in need, specifically when such fruit will not generate a viable return when sold fresh or processed into juice. “The CGA has also helped facilitate donations to communities through its Orange Heart Fruit Drive initiative.”
Safeguarding of EU market
The organisation cautions that the long-term enforcement of the EU’s new FCM regulations is a serious threat to the industry, which is why it views the department of trade, industry and competition’s consultation with the World Trade Organisation – on the acceptability of the new regulations – as critically important.
“The CGA’s position remains that the cold treatment prescribed within the new regulations is contrary to scientific evidence, making it an arbitrary and unnecessarily trade-restrictive measure and accordingly contravenes international requirements for such phytosanitary trade regulations.
“The CGA will make all resources available as required by [the South African government] during the upcoming WTO consultation process.”
In an earlier interview with Food For Mzansi, Justin Chadwick, CEO of the CGA, said, “It is too soon to tell what the outcomes of the WTO dispute will be. Citrus growers are urged to do their best to comply with the new regulations at present.”
Mitigating shipping costs
The spikes in shipping costs means that growers must pay virtually twice as much to ship their fruit than it cost to produce it over the course of an entire year.
The CGA says that it is engaging with other fruit sectors in a bid to take control of their own shipping, but a feasibility study on this is only expected to be completed by the end of September.
Voluntary closure of Valencia exports
The closure of Valencia exports will be rolled out in stages. Last inspections will be done in the northern regions on 16 September, and in the Gamtoos Valley, East Cape Midlands, and Sundays River on 23 September. Mandarins, grapefruit, lemons, and navels from CBS-free areas will not be affected.
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