South African Citruses Expected to Overcome Difficulties in Exporting to the US Market

Published 2020년 4월 6일

Despite good citrus harvest for 2019/2020, COVID-19 has created logistical problems for South African suppliers. However, with the South African government giving high priority to citrus exports and the US lessening restrictions to allow citrus imports to all its ports, exporters are expected to overcome difficulties in exporting to the US.

With the 2019/2020 harvest approaching, South African citruses were expecting record-high production volumes, estimated to export 143.3 million cartons of citrus fruits to more than 100 countries, a 13% increase from last year. However, the persistence of the coronavirus COVID-19 outbreak has presented logistical challenges for South African citrus producers.

Optimal Production for South African Citruses in 2019/2020

South African citrus production has been increasing steadily over the last decade from the expansion of production areas. In 2018, 81.6K ha of citrus fruits were planted, which is an 8% increase from 2017. The rapid expansion in plantings is due to increases in demand and investments for cultivating soft citruses such as mandarins and tangerines, lemons, as well as new orange varieties.

Due to good weather conditions, including optimal rainfall as well as improved water management techniques, citrus fruit production is expected to increase for 2019/2020. Orange harvest is expected to increase by 4% to 1.56 million metric tons, grapefruit and soft citrus production by 8% to 420K metric tons, while lemon and lime production is expected to increase by 6% to 530K metric tons.

Exports Grow Steadily: Higher Demand for Soft Citruses

The export of oranges is also projected to increase by 11% to 1.25 million metric tons, grapefruits by 7% to 290K metric tons, and lemons and limes by 8% to 370K metric tons. South Africa also expects to further increase citrus production to 500K tons over the next five years, focusing on expanding exports to markets such as China, the United States, India, Philippines, Japan, Vietnam, and the European Union. The US market is especially promising as the African Growth and Opportunity Act (AGOA) has allowed South African fruits to be exported duty-free. As a result, total grapefruit exports to the US have increased by 65% in the past five years.

While Valencia and Navel oranges take up the largest percentage (54%) of total exports, soft citruses witnessed the biggest production increases compared to last year, with an estimated increase of 12% at 330K metric tons. This is attributed to growers shifting from cultivating oranges to soft citrus fruits which accommodate a growing demand for the fruits, especially in the US market.

COVID-19 Poses Logistical Difficulties for Citrus Producers

Due to the coronavirus outbreak, the South African Citrus Growers’ Association (CGA) has expressed concerns about exporting to the EU this season, which is South Africa’s biggest export market for citruses. The EU takes up 40% of the total orange exports. Producers are also apprehensive about exporting to Asia, the Middle East, and the US, which are all major export markets heavily affected by the coronavirus.

There have also been concerns about transportation as there are currently not enough trucks to move produce domestically due to the nation-wide lockdown. Additionally, container shortages could disrupt shipments when the export season peaks in late April to early May. While producers have seen an increase in demand for food products high in Vitamin C, they are expected to have to overcome logistical difficulties in order to fully take advantage of the demand increase. Suppliers have been encouraged to begin export preparations ahead of time in order to avoid shipment delays.

The South African Government Seeks to Encourage Trade

There had also been worries of the virus’s impact on traders as local markets had been temporarily shut during the 21-day national lockdown expected to continue until April 16. “Bakkie trades” are informal trades on the back of pickup trucks through which a significant amount of citrus purchases are made. This had raised concerns among sellers that the local citrus industry might be negatively impacted.

The South African government is aware of these difficulties and is working to encourage trade. The government has reversed the ban on local trades in order to boost the local agricultural industry as the informal trade sector is a vital aspect of the agricultural supply chain in South Africa.

The South African government has also given high priority to citrus exports, giving them preference at ports to be exported in a timely manner. As exports to the EU and China, another major buyer, are expected to be limited this season, producers are in search of a more stable market.

The US Decreases Restrictions on South African Imports

In light of recent events, US authorities have proposed lifting port restrictions for South African citruses. While South African citrus imports must be shipped only to ports in Philadelphia, Wilmington, Houston, and Newark, the proposal includes authorizing importation to all ports in the US.

In addition, citrus demand in the US has risen significantly since the outbreak. Orange juice sales in particular increased by nearly 10% in the four weeks leading up to mid-March compared to 2019, following decreases in February sales by 2%. According to the Florida Departement of Citrus, "the unforeseen increase in orange juice demand has exceeded the current supply" in the US, leading to potentially high prices. This makes the country a key market for South African producers to increase their exports to this season.