The citrus industry is voluntarily forgoing exports of its last harvest of Valencia oranges from Citrus Black Spot (CBS) affected areas in South Africa to the European Union (EU) starting from next week starting Friday, the latest blow to a sector looking at selling 3.3 million crates less having been dealt blows by Covid-19 price increases, higher freight rates, the Ukraine war fertiliser and fuel price hikes as well as stringent market conditions.
The Citrus Growers Association (CGA) and the Fresh Produce Exporters’ Forum Boards said this decision was taken in response to the 10 CBS notifications of non-compliance (NONCs) on SA citrus detected so far this season and the traditional heightened risk that Valencia oranges pose for CBS non-compliance at the tail end of the EU export season.
"While this closure will serve as 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 must be prioritised. This decision also shows South Africa’s phytosanitary CBS Risk Mitigation System being implemented effectively," CGA CEO Justin Chadwick said in a statement.
The market closure will be rolled out in a staggered approach, with the last day of inspections on Valencias in Northern regions being on the 16th of September while the Gamtoos Valley [Patensie], East Cape Midlands and Sundays River Valley will close inspections on the 23rd September 2022. .
Mandarins, grapefruit, lemons and navels from CBS-free areas will not be affected.
Chadwick said to date, 138 million of 15 kilogrammes cartons of fruit have been packed for export to key markets across the world.
"The latest prediction is that 167.2 million cartons of citrus will be shipped by the end of the 2022 season, which is 3.3 million cartons less than what was predicted at the start of the season,'"he said pointing out there had "been a decline in real export prices across all varietals which is expected to continue for the next few years."
The CGA said challenges in the industry meant that 20 percent of citrus growers are likely to achieve above break-even returns at the end of the 2022 season which posed a major threat to the sustainability and profitability of the sector and the 130 000 jobs it sustains as well as the R30 billion in export revenue it generates annually.
"The most serious challenge facing growers, which is having the biggest impact on their bottom line is price hikes across a number of inputs as a result of the Covid-19 pandemic and the Russian invasion of Ukraine. For example, fertilizer prices increased just over 56 percent between 2020 and 2021 and fuel prices are up by 53 percent. Of even greater concern is record high freight rates, with shipping lines hiking their prices by 128 percent between 2020 Q1 and 2022 Q1. This means growers are having to pay virtually twice as much to ship their fruit, than what it cost to produce it over the course of an entire year," Chadwick said
He said the the CGA, to guard against further price hikes and ensure price stability in the future had engaged other fruit sectors on potentially taking control of their shipping, with a feasibility study expected to be completed by the end of September.
"All of these factors along with the current economic constraints in South Africa including ongoing fiscal pressure, persistent load shedding, high unemployment rates and low levels of consumer and business confidence means that growers are under severe pressure. As a result, it is not unusual to hear of instances where growers have had no choice but to dump cattle-grade fruit that is not fit for human consumption, as was the case for one farmer in the Eastern Cape recently," Chadwick said.
The industry decried the " recent unjustified and discriminatory False Coddling Moth (FCM) regulations passed by the EU, which will require exporting African countries to implement a drastic mandatory cold treatment for oranges headed to the region. These new regulations recently saw up to 1350 containers of citrus detained at EU ports for a number of weeks, which resulted in local growers incurring over R200 million in losses."
It said the long-term enforcement of the new FCM regulations is a serious threat to the industry, which is why the WTO consultation process recently launched by the Department of Trade, Industry and Competition (DTIC) will be critically important.
"The CGA’s position remains that the cold treatment prescribed within the new regulations is contrary to scientific evidence, making it an arbitrary and unnecessarily trade restrictive measure and accordingly contravenes international requirements for such phytosanitary trade regulations,' Chadwick said
The CGA will make all resources available as required by the DTIC and DALRRD during the upcoming WTO consultation process.
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