Many South African citrus growers who exported to pre-war Russia have already found alternative markets. But one leading export and distribution company has pushed through the chaos and maintained trade relations. As a result, Pomona Fruit has benefited from a lucrative gap in the Russian market.
Co-owner Francois Hugo tells Food For Mzansi that a window of opportunity was created when Mzansi’s citrus trade with Russia – South Africa’s fifth biggest export market – was blocked due to the invasion of Ukraine and subsequent sanctions.
Hugo and his co owners Anton Bruwer and Padre Koekemoer are determined to utilise the gap created by export companies that have abandoned their routes.
When trade resumed a few weeks later, a number of exporters had suspended dealings with Russia because of payments, shipping delays and spiralling shipping costs.
“Unlike other export companies, our company’s strategy was to push through the chaos instead of identifying alternative markets,” says Hugo. “The other exporters who diverted left a gap in the market, thus creating a much higher demand for fresh produce.”
The trio’s export company, located in the Breede River Valley in the Western Cape, exports grapes, stone fruit and citrus to many global countries, including Ukraine and Russia.
Spanner in the works
In a previous article, Hugo said that he was closely monitoring the war and the subsequent impact on trade. He decided to keep on sending produce to Russia as long as marine and credit insurance remained available.
He also said that there was a dire need for fresh produce in both Russia and Ukraine, which is why he deemed it important to find a way of doing business with the the two countries.
Now, many exporters have taken note of the increased demand and are vying to take advantage of it. Hugo is therefore expecting an oversupply soon.
“The downside of everything has been the logistics nightmare to get the fruit into the Russian market due to Maersk withdrawing.”
Maersk is a Danish shipping company, a mega global logistics player who has announced the closure of its operations in Russia and Belarus due to the ongoing war in Ukraine. The company has since said in a statement that it was constantly evaluating the situation in Ukraine and hoping to return services to normal as quickly as possible.
ALSO READ: Russia-Ukraine: SA exporter on high alert
New and increased markets
Citrus Growers Association of Southern Africa (CGA) chief executive Justin Chadwick told Reuters that the United Kingdom, Middle East and South East Asia were taking up more of South Africa’s soft citrus.
“Since then, the United Kingdom’s share of soft citrus has increased from 24% to 61%, at the expense of Russia decreasing from 32% to 5%,” Chadwick said.
South Africa’s total citrus exports to Russia have fallen by nearly 70% on a year-to-date basis compared with the same period last year, according to CGA data.
The industry group says South Africa shipped 11.2 million 15 kg cartons of citrus fruit to Russia last year.
Chadwick said however that the biggest impact of the conflict had been the surge in oil and gas prices.
“The conflict has also resulted in a major hike in fertiliser, fuel and agrochemical prices, which will continue to place strain on Southern African citrus growers and farmers across the world,” he said.
The conflict has also hit shipping with major European ports used by South African fruit exporters, extending transit times to 90 days from the usual 24 days.
According to Chadwick, the industry was already grappling with skyrocketing shipping costs before the conflict. Shipping costs, he explained, jumped by about 150% over the past year.
“At these levels, it now costs between 2 and 2.5 times as much to ship the fruit as it does to produce it over the course of an entire year.”
ALSO READ: 5 global export bans that shook SA agriculture
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