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Tridge analysis

Logistic Issues Might Kill South Africa’s Citrus Export Boom

Fresh Orange
Citrus
South Africa
COVID-19
Price Trend
Oct 13, 2021
Written by
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Ayushi Khurana
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Growing demand for citrus fruits worldwide motivated South African farmers to increase the area under citrus production by 4.6% over the previous year. Production of soft citrus, new orange varieties, and lemons increased due to increased area planted, improved yields, a high level of new plantings coming into total production, and the minimal impact of COVID-19 on labor and input supply. However, citrus exports are missing out on this boom due to logistic issues. Currently, a large number of oranges meant for export are being dumped into the domestic market of South Africa which has pushed down the prices by over 60% in the last 6 months.

South Africa is among the fastest-growing citrus-producing countries in the world, where 94,329 hectares are devoted to citrus production. The area under citrus production is projected to increase by 4.63% in 2021 to about 98,700 hectares as a consequence of aggressive new plantings of soft citrus, lemons, and new varieties of oranges. The Limpopo province is the largest citrus production area, accounting for 40% of the total area planted, followed by the Eastern Cape (27%), Western Cape (19%), and Mpumalanga (8%). Demand for citrus fruits has been booming throughout the world due to the COVID-19 pandemic, but South Africa’s exports are missing out on this boom due to logistic issues.

The country had a strong Marketing Year in terms of production for soft citrus, new orange varieties, lemons, due to an increase in area planted, improved yields, a high level of new plantings coming into full production, and the minimal impact of COVID-19 on labor and input supply. Despite the increased production, the producers and traders are not able to enjoy the profitable exports as million tons of fruit stands uncollected in cold storages at the Durban port. Local South African growers are particularly having trouble as the port backlogs are impacting their sales revenue during the period of high global demand.

The problems of logistics and limited containers have been there for a very long time now in South Africa and it has significantly impacted the volume of goods exported out of the country. Citrus exports alone have fallen down by roughly 5% during the first seven months of 2021 compared to the previous period in 2020. Given the super-fast-moving and perishable nature of citrus fruits, the producers and traders are not willing to store this for longer periods even in cold storage.

A large number of oranges meant for export are now being dumped into the domestic market of South Africa by the traders. Given the limited demand and excessive supply, domestic prices of Navel orange, the most popular citrus variety of South Africa, have fallen down by over 60% in the last six months. Local farmers are concerned about getting low returns on their investments and resulting in lower profits or even losses by the end of this marketing year. Crippled logistic facilities and container shortages are affecting exports and economies across the world, agro-economies like South Africa suffer the most as they rely heavily on the upcoming export season as a source of income.


Source: Tridge.

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