South Africa’s citrus industry has joined a long list of concerned exporters on what the Russia-Ukraine war could mean for its citrus producers. This as questions on how long the war Is likely to last, are yet to be answered.
Currently, South Africa’s citrus industry is not severely impacted by the conflict in Ukraine as the country’s export season has not yet started in big volumes.
“However, should it not be possible to export citrus to the region once the 2022 season kicks off in earnest, then fruit destined for Russia may end up in other markets,” explains Justin Chadwick, CEO of the Citrus Grower’s Association (CGA).
This could ultimately lead to an oversupply with resultant lower prices.
In 2021, the Russian Federation was number five in terms of export destinations for South African citrus, with 11.2 million (15kg) cartons. Overall, South Africa exports approximately 8% of its fresh fruit to Russia.
For the citrus industry, the major concern at this stage is the disruption to its logistics chain and payment schedule.
“The CGA has been engaging with exporters who are aware of the present risks and will manage these based on their commercial decisions, and will consider alternative options should the risk increase,” Chadwick points out.
The citrus body has been monitoring the situation and engaging with stakeholders across the value chain and say it would continue doing so. They are trying to mitigate the impact of the Ukraine conflict on the upcoming season.
Pressures already felt in fruit industry
Meanwhile, according to Wandile Sihlobo, chief economist at Agbiz., exporters such as the South African fruit industry stand to lose, considering that Russia is major export market. Both the limited shipping lines and the exclusion of Russia in the global payment systems are major challenges, he explains.
“The citrus industry export season starts within the next two months, and this will be a challenge in addition to the pressures the apples and pears industries are already feeling through this impact.”
Wandile Sihlobo, chief economist at Agbiz
“There will be a need to divert the roughly 7% of citrus exports to Russia elsewhere, which could add downward pressure on prices and, after that, profitability,” Sihlobo says.
Other agricultural products
Furthermore, with Russia and Ukraine accounting for nearly 30% of global wheat exports, about 14% of global maize exports, roughly 32% of global barley exports, almost 60% of global sunflower oil exports, and about 14% of global fertiliser exports, the current war has evoked many questions about global food supplies.
According to Sihlobo, what everyone wants to know is how long the war will continue and how severe will the infrastructure damage be at the shipping ports because of the bombings. Also how the farming communities of Ukraine and Russia will be distracted by the war.
These questions, he explains have implications for food supplies in the coming months or the following season.
“If the Ukrainian farming communities are disrupted and unable to fully produce in the next season, then global grains and vegetable oils supplies will be negatively affected.
“Similarly, a disruption in the fertiliser market impacts its usage and crop yields in various countries. Still, in South Africa, the near-term impact of this war is through price transmission and not the limitation on the commodities’ availability,” Sihlobo adds.
When it comes to wheat, South Africa could be in trouble. The country imports roughly half of its annual 3,4 million tonnes consumption. For the current season of 2021-2022, which ends in September, South Africa has imported 40% of the estimated imports of 1,5 million tonnes.
“Ultimately, South Africa is a major exporter of most agricultural products. The priority at the moment will be to ensure that the country doesn’t face its own ‘Great Grain Robbery’ within the near term,” Sihlobo says.
All of this could come down hard on the South African consumer in terms of prices. Sihlobo warns that the rise in agricultural commodity prices, domestically and globally, along with rising fuel costs, presents significant upside risks to food price inflation.
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