South Africa’s citrus growing industry has, despite achieving a marginal increase in export volumes for the 2022 season, compared with that of 2021, faced a myriad of challenges during this period, which have negatively impacted on returns and threaten future sustainability and profitability.

Therefore, mitigating measures are being pursued by the growers and industry nonprofit organisation the Citrus Growers’ Association of Southern Africa (CGA) to safeguard the long-term sustainability and profitability of the industry, its export revenue of about R30-billion a year and the 130 000 jobs it sustains.

CGA CEO Justin Chadwick outlines the latest total citrus export figure for the 2022 season as 165.1-million 15 kg cartons, compared with the 157.7-million cartons exported in 2021.

The exports comprise 16.7-million cartons of grapefruit, 31.9-million cartons of mandarins and 34.8-million cartons of lemons, as well as 27.8-million cartons of navel and 53.9-million cartons of Valencia oranges.

These figures were set to be finalised once the last shipments for the season had been shipped out at the end of November, prior to the publication of this article.

Despite the minimal increase in export figures, Chadwick indicates that this was a season marred by challenges, both old and new.

These include increased production of citrus, but less market access for the fruit produced; a surge in farming input prices; decaying public infrastructure, such as roads and rail, as well as worsening port operations; erratic electricity supply; astronomical shipping costs and a devastating decline in real export prices.

Chadwick adds that these challenges mean that local growers face the very real prospect of considerable earnings losses in 2022.

He cites industry commentators’ views that less than 20% of citrus growers are likely to achieve above break-even returns at the end of the current season.

Coming to Fruition

Citrus growers at farm level are thus considering initiatives to make their business more resilient and remain profitable.

These include reducing the amount of citrus produced by removing older orchards, erecting netting over orchards to improve pack-out percentages, reducing production yields while increasing fruit sizes that are favoured for exports, and increasing yields to reduce the unit cost of production.

At industry level, more than R1-billion will be invested in research and innovation in the next five years to continuously improve the efficiency of production and ensure the long-term competitiveness of South African citrus in global markets, Chadwick informs.

To manage rising freight costs, the CGA is assisting by investigating the feasibility of collaborating with other fruit sectors to either bring in new competition, or take control of their shipping to guarantee some price stability and better service in the future. Chadwick says this could offer considerable relief to growers and their returns next season.

Meanwhile, Chadwick indicates that the CGA has engaged with State-owned rail operator Transnet on an ongoing basis on operations at the country’s ports.

“The CGA has also welcomed government’s announcement that funding would be prioritised to upgrade and repair port infrastructure at the ports, while . . . positive progress continues to include public–private partnerships at the Durban and Ngqura ports, with the hope that this will be concluded by early next year.”

Chadwick emphasises that the CGA remains committed to working in partnership with government to optimise, secure and retain as many market access opportunities as possible to avoid an oversupply of local citrus on overseas markets and a drop in fruit prices.

He also highlights the importance of collaborating with government to successfully expand and open new markets in 2023. Markets with considerable potential for expanded access that require prioritisation include the US, India, China, Japan, Vietnam and the Philippines.

“This is the only way the growers will be able to offset increasing input costs that are squeezing their profit margins and for the industry to remain competitive and resilient enough to withstand and respond to events out of its control,” Chadwick avers.

Regulatory Battle

Another challenge threatening the industry is the impasse between the European Union (EU) and South Africa on new False Coddling Moth (FCM) regulations, with this matter the subject of an ongoing World Trade Organisation (WTO) dispute process.

The new FCM regulations, which require Southern Africa countries to implement mandatory cold treatment from 0º to 1º for at least 16 days on all oranges exported to the region, were passed by the EU in June.

This, Chadwick contends, is “misplaced and unwarranted” for several reasons.

South Africa has a rigorous and highly effective FCM risk management system in place, which he says is evidenced by there having been only 15 FCM interceptions on citrus from the Southern Africa region in 2021, compared with 14 in 2020 and 19 in 2019.

This year, the FCM interceptions “stand at a mere two”.

This means that 99.9% of fruit exported from the country is free of FCM, compared with about 100 EU FCM interceptions originating from other countries in relation to other imported plant products last year, he adds.

“It is, therefore, perplexing why South Africa has been singled out for special attention,” Chadwick queries.

He says what is most concerning about this new legislation is that it appears to have relied on an opinion by the European Food Safety Authority on the FCM systems approach, which he says a team of independent scientists has reviewed and, consequently, raised several concerns regarding errors and misunderstandings of these processes.

For example, the team found that the mandatory cold treatment would actually detract from the effectiveness of current FCM measures being implemented by the local citrus industry.

Chadwick also highlights that the new legislation does not take into consideration the findings and outcomes of a detailed analysis conducted by the CGA of each of the 15 FCM notifications of noncompliance cases detected in 2021, which includes the intercepted larvae not being alive in seven of the 15 reported noncompliance cases, which means that these posed no threat.

Moreover, for the other eight reported noncompliance cases, the analysis concluded that there was a high probability that the required FCM risk management system cold chain protocol had not been fully observed.

To mitigate this, the local industry implemented a number of changes to the system before the upcoming export season began, with these proactive steps communicated to the EU.

Chadwick adds that the CGA considers the new regulations to be unfeasible, as only some cultivars can tolerate cold treatment without risking chilling injury susceptibility.

The local industry also does not have the logistical or infrastructure capability required to implement cold treatment for the volumes of citrus fruit exported from South Africa to the EU, and the proposed post-harvest treatment period of 16 days exceeds the typical shipping times between the two regions.

“With South Africa potentially exporting an additional 80 000 t of lemons and soft citrus to the EU by 2024, which will generate R1-billion in export revenue and create 4 000 new job opportunities, it is critical that these misguided regulations are amended,” he emphasises.

Therefore, the CGA has welcomed the South African Department of Trade, Industry and Competition’s (DTIC’s) move to launch a dispute at the WTO on this new legislation. This process is ongoing, with the CGA supporting the DTIC and the Department of Agriculture, Land Reform and Rural Development in terms of all requisite information.

Trade-Off

As the EU tightens regulations, the CGA and the Fresh Produce Exporters’ Forum Boards decided to voluntarily close the export of Valencia oranges from citrus black spot- (CBS-) affected areas in South Africa to the EU from September 16 – at which point there was just a month left of the 2022 season.

This decision was taken in response to the ten CBS noncompliance cases on South African citrus that had been detected up to that time in the season, and the traditional heightened risk that Valencia oranges pose for CBS noncompliance at the tail end of the EU export season, Chadwick explains.

“While this closure definitely dealt another blow to growers who have faced one of the most challenging seasons to date, continued access to the EU market over the longer term had to be prioritised. This decision also showed South Africa’s phytosanitary CBS Risk Mitigation System being implemented effectively.”

The CGA is reviewing the current CBS risk mitigation system to make any necessary improvements ahead of the 2023 season.

Chadwick says most of the challenges growers have faced this season are likely to continue in 2023, especially the considerably high shipping costs, which he warns pose a major threat to growers’ profitability, the future survival of the sector and the livelihoods it sustains.

He, therefore, emphasises that the challenges alluded to must be addressed to ensure that the positive growth that the local citrus industry has enjoyed is not negated, with many growers facing negative returns and possibly going out of business next year.

However, Chadwick points out that the current trajectory can be reversed by implementing the interventions outlined.

Moreover, he asserts that, with 100 000 ha of land currently under citrus cultivation, the industry has the potential to bolster its role as a key exporter and economic contributor.

Current forecasts indicate that exports will continue to grow by ten-million cartons yearly, on average, for the next decade, culminating in 200-million tonnes being shipped abroad in the next five years and up to 260-million tonnes in the next ten years.

If these export increases are realised, the industry could potentially sustain a further 100 000 jobs and generate an additional R20-billion in yearly revenue, bringing its total contribution to 240 000 jobs and R50-billion in revenue.