This year, the world’s biggest markets for citrus – Europe and the United States of America – are projected to be in short supply of citrus. The shortage offers South African citrus farmers a real opportunity to bounce back stronger from 2022 – a year dubbed one of the worst for Mzansi’s growers.
But while the global market will seemingly present the local citrus industry with a window of opportunity, in order for farmers to benefit, several external challenges must first be dealt with. These include logistical disruptions, the new EU cold-chain regulations, and load shedding.
In Tridge’s December webinar, “Major Global Events in Agricultural Trade in 2022 and Expectations for 2023″, global market analyst Juan Carlos pointed out that both the EU and the US will see lower citrus production.
This means that imports from non-EU origins into these markets are likely to increase throughout the year, Carlos explained. According to him, South Africa, Australia, Argentina, Chile, Peru, and Brazil, are most likely to benefit.
“They will face tough competition in markets in terms of volumes and price… because main markets such as the EU and the US will be short in citrus.
“They will face tough competition in terms of who will provide the larger volumes at a better price,” Carlos said.
Other global trends
According to Carlos, there will also be tough competition from Morrocco, Egypt, Turkey, and South Africa in terms of volume and price.
“Citrus demand is likely to soften somewhat in key markets such as the EU and UK due to substantial inflationary pressures.”
Other likely global citrus trends for 2023, he said, includes freight costs decreasing gradually throughout the year, favouring Southern Hemisphere suppliers. This includes South Africa, Australia, Argentina, Chile, Peru, and Brazil.
Moreover, the continuity or new EU regulations for citrus suppliers will be key for market access, he said.
ALSO READ: ICYMI: SA lodges dispute in citrus fiasco
Exports slightly increased despite challenges
Meanwhile, Elton Greeve, global fulfilment manager at Tridge, expected logistic challenges to remain. However, several structures are already in place to counteract these challenges, he pointed out.
“The citrus industry will focus on managing logistics, pricing, and quality, especially to Middle Eastern and Asian markets,” Greeve stated.
Disruptions in logistics complicated the citrus trade throughout 2022. Heavy flooding in many areas of South Africa led to road and port damage, while port congestion and vessel unavailability exacerbated the situation, Greeve added.
“The biggest price driver in South Africa was the cost of getting food to the destination market. Floods at the start of the citrus season resulted in shipping delays of up to a month.”
Another blow to the South African industry was the EU’s new cold treatment regulations to prevent the spread of false codling moth.
Furthermore, the regulations complicated citrus exports to Europe, and consequently the Middle-Eastern and Asian markets were flooded with South African citrus.
“Despite these challenges, South African citrus exports increased by an estimated 3.7% YoY in 2022. However, this increase is lower than the initial estimates.”
About 52% of global citrus exports originate from the Mediterranean region which is dominated by Spain, South Africa, Turkey and Egypt. Furthermore, about 20% of the citrus originates from sub-Saharan Africa, 12% from Asia and 11% from South America.
Swift response saves the day
According to Greeve, South African producers and suppliers reacted proactively in response to logistical problems.
“Citrus suppliers preempted logistic solutions, working with logistic companies and the government to overcome some of the challenges.”
Greeve said challenges faced in previous years forced Mzansi’s citrus industry to put a critical focus on logistics during the peak citrus export season.
While this is great, decreased profits for fruit producers in 2022 unfortunately mean that less capital can be reinvested in the industry.
ALSO READ: Citrus farmers hope for a better 2023
Sign up for Mzansi Today: Your daily take on the news and happenings from the agriculture value chain.
