After a four year hiatus mainly due to the Covid-19 pandemic, the Citrus Growers’ Association of Southern Africa (CGA) recently hosted a Citrus Summit, bringing together over 500 citrus growers and key stakeholders from across the country.
This was a significant event for the industry, which is poised for major growth over the next decade. Citrus exports are set to increase by 10 million (15kg) cartons per year over the next ten years, with a target of 260 million cartons by 2032.
This increase could generate an additional R20 billion in annual revenue, and sustain a further 100 000 jobs over and above the current 130 000 jobs supported and R40 billion attracted annually.
However, critical to attaining this target is the industry working in partnership with government and role-players across the citrus value chain to overcome a number of challenges threatening the profitability and sustainability of the sector.
These include a surge in farming input prices and transport costs, as well as astronomical shipping price hikes which have made the cost of getting fruit to market commercially unviable for many growers; the introduction of the unjustified and discriminatory new False Coddling Moth (FCM) regulations passed by the European Union (EU) in 2022, which threaten orange exports to the region; as well as the ongoing decay of public infrastructure and an erratic electricity supply.
The impact of these challenges and solutions to overcome them in order for the industry to achieve the 260 million carton target by 2030, was the main focus of the Summit.
Critical to achieving this are optimising, expanding and retaining key markets across the globe. This was a focus of the Summit, with a presentation by Citrus Research Institute Managing Director Vaughn Hattingh, highlighting that positive growth was achieved in a number of markets in 2022 including Asia (particularly China), the US and the UK.
This could be attributed to growers having invested billions into increasing their production of top quality fruit as well as an increase in demand for citrus in these markets. A number of countries offered potential for major continued growth and expansion in 2023 and beyond, including the US, India, Japan, Vietnam, Thailand and Korea.
The new False Coddling Moth (FCM) regulations passed by the European Union pose a major threat for the upcoming 2023 export season and beyond. It is expected that the new regulations will result in a loss of income of more than R500 million for growers this year alone and will also require an investment of R1.5 billion in logistics and cold storage in order to ensure compliance.
With the consultations at the World Trade Organisation level between the South African government and the European Union having stalled, the CGA believes that the only option is for national government to request that a WTO panel be established to adjudicate on the matter.
Another critical area of focus over the next few years, is an increasingly transformed industry, which supports black growers who have been particularly hard hit by the many challenge that have arisen in recent years.
Agbiz Chief Economist Wandile Sihlobo, highlighted that growth in agriculture was “two to three times more effective” in reducing poverty than an equivalent amount of growth outside of the sector.
He said that rising agricultural productivity not only reduced poverty, but also pulled surplus labour from less productive home production into commercial agriculture.
His presentation was followed by a panel discussion that included black growers with North West grower, Mme Louisa Maloka-Mogotsi expressing her frustration at the lack of funding support from the government and financial institutions.
She said: “I belong in this country. I need this country to look after me. We want to farm, but we need financial assistance.”
A failing logistics system and operational issues at South Africa’s ports were also highlighted as significant challenges .
But South Africa is well positioned to become a global leader in transporting refrigerated containers to ports across the country via the railways. The citrus industry hopes to continue collaborating with Transnet to improve these operations over the long-term.
CEO of Transnet Portia Derby shared the state entity's vision to support industry growth. The citrus industry was encouraged to hear about Transnet’s planned investment to improve the rail system, including the recent issuing of tenders for the repairing of locomotives in the current fleet, and confirmation that the process to bring in public-private partnerships on key rail corridors and Gqeberha and Durban Ports were making good progress.
Finally, sustainability and energy resilience were also discussed at the Summit, with presentations on the European Green Deal well as the South African energy outlook.
The CGA’s Paul Hardman discussed the impact that the Green Deal (which aims to move to a low-carbon future) and Farm To Fork Strategy (which aims to promote food sustainability) will have on the South African citrus industry.
Immediate impacts of the Farm to Fork strategy will mean possible disruption in supply chains as well as exporters competing on the basis of sustainability themes – which would create new challenges in an already complex exporting climate. In the longer-term, the EU Green Deal could impact traditional crop protection options which could hinder market access. It will be imperative for growers to pro-actively introduce initiatives on their farms to comply with these new policies.
Ongoing load shedding also poses a significant threat to growers with investing in alternative power sources placing further financial strain on them.
While the CGA welcomed the fact that ports are exempt from load shedding to mitigate the impact of the current energy crisis, power outages still posed a significant risk to other parts of the value chain, including farms, pack houses and cold storage.
It is clear that the industry has the potential to become an even more significant contributor to the South African economy over the next ten years. However, this will only be achieved if growers, government and key role-players across the value chain come together to address current challenges and find solutions that will enable the sector to grow sustainably and inclusively over the long term.
Justin Chadwick, CEO of the Citrus Growers Association of Southern Africa.
BUSINESS REPORT