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Strike battered EC’s thriving citrus sector in 2022

Home Agriculture Strike battered EC’s thriving citrus sector in 2022

SOUTHERN African citrus growers packed for export 164.8 million (15kg) cartons to be delivered to global markets in 2022. While this is an increase of 3.2 million cartons when compared to 2021, it is 5.7 million cartons less than what was predicted at the start of the season.

These figures highlight the extremely tough season growers have had to endure in an industry which sustains over 140 000 jobs and brings in R30 billion in revenue to South Africa each year.

The Eastern Cape is the second-largest citrus-producing province in the country, producing 48 million cartons of citrus in 2022, with the Sundays River Valley being the largest producing region.

According to the Citrus Growers’ Association (CGA), the violent protests on citrus-producing farms in the Sundays River Valley at the end of April saw growers suffering over R70 million in damages to their property, infrastructure and packhouses and losing R100 million worth of fruit that was due to be exported. This had a compounding effect on the sustainability of citrus farms in the region, which were already under immense financial pressure due to rising input costs (including electricity, fertilizer and soaring freight rates) which are aggravated further by the inefficiency of our ports, global supply chain crises and the war in the Ukraine. As a result, a number of growers were not profitable in 2022. This had a significant impact on local communities, given that our citrus growers are the largest employers in the region.

South African citrus, is top-quality and sold into European markets which remain the biggest recipients of local citrus, with Asia, the Middle East and North America also serving as counter-seasonal destinations for fruit.

The CGA is at the forefront of the government’s dispute lodged at the World Trade Organisation (WTO) regarding the new EU False Coddling Moth (FCM) regulations, which require mandatory cold treatment of SA oranges entering the region. “They are a major threat to the future sustainability of the industry. These regulations are also completely unnecessary in light of the world-class and highly effective FCM risk management systems already in place,” says the CGA.

The significant investment made by local growers into research (totalling R150 million a year), development, phytosanitary and other quality assurance programmes means that fruit reaching key markets is of the highest quality. Growers have also invested billions of Rands in the establishment of state-of-the-art packhouses and cold storage facilities to process, pack and export citrus. As a result, the South African citrus industry has become globally recognised for its innovation, quality and resilience. Unfortunately, global citrus prices have not risen in relation to the recent major increase in input costs and shipping price hikes, which have negatively impacted grower returns.

Looking back at the 2022 season

The challenges faced by the South African industry in the 2022 season include a surge in farming input prices and transport costs as well as astronomical shipping price hikes which made the cost of getting fruit to market commercially unviable for many growers. At the same time, the unjustified and discriminatory new False Coddling Moth (FCM) regulations passed by the European Union (EU) mid-season placed further financial strain and risk on growers. These challenges were coupled with ongoing decay of public infrastructure such as roads, rail and port operations; erratic electricity supply and a decline in real export prices. This means that already tight margins for citrus producers were squeezed to the point where only one in five farms is likely to make a positive return this season.

As a result, while there was modest growth in fruit packed and exported across some citrus varietals when compared to 2021, the final figures were far lower than what was predicted when the season started in March 2021. This can be seen when it comes to Mandarins, where 31.8 million cartons were packed for export, which is an increase of 900 000 cartons from 2021, but is 2.7 million less than the season forecast. Volume growth in lemons continued unabated, with 34.7 million cartons packed for export in 2022, an increase of 3.6 million cartons from the previous year, and 2.4 million cartons more than what was predicted.

There was also a drop in packed export volumes of some varietals when compared to 2021. For example, 16.7 million cartons of Grapefruit were packed for export in 2022, which is 800 000 less than the 17.5 million cartons the previous year. There was also a decrease in the number of cartons of Valencias packed for export, with 53.8 million cartons exported versus 55 million in 2021.

The only other category that saw positive growth was Navels, with 27.8 million cartons packed for export in 2022, which was an increase of 600 000 cartons when compared to 2021. However, it was 900 000 cartons less than the 28.7 million carton forecast at the start of the season.

The decline in fruit being shipped in the 2022 season is a particular concern in light of the forecast predicting that fruit produced and available for exports will continue to grow by 10 million cartons per year (on average) for the next decade, hitting 200 million cartons in the next 5 years and growing up to 260 million in the next ten years.

This means the industry could potentially sustain a further 100 000 jobs and generate an additional R20 billion in annual revenue, bringing its total contribution to 240 000 jobs and R50 billion in revenue, as long as key markets and logistical infrastructure are secured and optimised in order to absorb this increased growth.

The CGA is committed to working with government to optimise, secure and retain as many market access opportunities as possible in order to ensure growers are able to export their fruit at good returns. Key markets that offer major potential for expanded access and require particular attention ahead of the 2023 season are the United States, India, China, Japan, Vietnam and the Philippines.

Working with Transnet and other stakeholders during the 2023 season, the CGA is committed to identifying any issues at the ports and coming up with solutions to resolve these. The fact that the process to bring in public-private partnerships into Durban and Ngqura ports remains on track to be concluded early next year is extremely positive and it is critical that similar partnership opportunities be explored for Cape Town port.

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