South Africa’s citrus industry is working hard to mitigate the impact that the Russian invasion of Ukraine has had on local citrus growers and exporters. On top of fruit destined for Russia being blocked and delays in fruit getting to the market, there have also been increases in input costs for growers and exporters because of the conflict.
As it stands no fresh produce is being shipped to the region. According to the Citrus Growers’ Association of Southern Africa (CGA) this has been the case for the past few weeks with most countries. Early shipments of lemons destined for the Russian market have also been impacted.
“Should this situation continue, when the export season officially kicks off in April, other varietals such as grapefruit and soft citrus will also be impacted,” explained Justin Chadwick, CEO of the CGA.
Chadwick said that although South African exports to Ukraine are still developing, the conflict would put a hold on exports to that country. “Exporters had started to build some momentum in direct exports to Ukraine,” he said.
When it comes to the Russian market, the country accounts for approximately 7 to 10% of total South African citrus exports annually, with 11.2 million (15kg) cartons of fruit having been exported to Russia in 2021.
Chadwick said that the CGA was working with exporters, government and other stakeholders across the citrus value chain to mitigate the impact on Mzansi’s citrus industry.
Exporting will be more expensive
Furthermore, from a global perspective, Morocco, Turkey and Egypt all export significant quantities of citrus to Russia. Chadwick pointed out that the conflict had impacted the ability of these countries to also supply the Russian market, resulting in the diversion of fruit to other markets.
“The concern is that these markets could suffer from an oversupply and a build-up of stock, which could impact early season South African supplies,” he said.
“In addition, the depreciation in the rouble will make imported fruit more expensive, while payments could be difficult due to restrictions on money flows. This increases the risk of exporting to Russia.”
Chadwick said he believes that what is currently happening highlights the importance of access to multiple markets in order to divert fruit when necessary. The CGA called on government to redouble their negotiations with trading partners in order to optimise present market access conditions, to retain access where this is threatened and to gain access to new markets.
Farmer profit margins are already severely squeezed and the current situation will make matters worse.
Over the past year there has been a major increase in a number of input costs, including fertiliser prices almost doubling and agrochemical prices increasing on average by 50%. Rising fuel prices and freight costs, which increased by approximately 30-40% in 2021, have also impacted farmers
With a sharp increase in the price of crude oil as a result of the war, shipping costs for the industry will increase further, Chadwick cautioned,
“The major European ports used by the South African fresh produce industry are heavily congested as all containers need to be scanned. This results in fresh fruit from South Africa, in some cases, remaining in transit for up to 90 days – when it usually takes around 24 days,” Chadwick pointed out.
With 14% of global fertiliser exports currently being stuck in Russia and the price of oil and gas continuing to climb as a result of the current conflict, the citrus industry is expecting further increases in fertiliser, fuel and agrochemical prices, placing further strain on growers.
The CGA remains committed to working with all stakeholders to help mitigate these threats and the impact of the Russia-Ukraine conflict on the upcoming citrus season.
“It will take our collective effort to help ensure the continued profitability and sustainability of our local citrus industry, which sustains over 120 000 jobs and generates R30 billion in export revenue for the country, particularly following a tough 2021 season,” Chadwick pointed out.
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