China’s latest food safety scare appears to have dented consumer confidence in Asian Citrus Holdings, with the leading orange producer now predicting a decline in revenue and profits for the 2013-2014 financial year.
The group has revealed a 17 per cent drop in the selling price of winter oranges from its Xinfeng plantation in the Jiangxi province, following media reports suggesting growers in the region were dying fruit with red Sudan dyes, commonly used to colour plastics.
A number of Jiangxi growers were also accused of using the banned growth stimulator Ethrel on their orange crops, in an attempt to extract premium prices in their domestic market prior to October, when production traditionally begins.
While Asian Citrus has distanced itself from the scandal, insisting none of its production bases were involved, the group admitted it was now counting the costs.
“Several reports appeared in local media that dyed navel oranges were being sold in the Gannan areas,” Asian Citrus said in a release. “This incident has affected customer confidence in the domestic orange market as a whole and, in particular, the navel oranges from Jiangxi province, which has negatively impacted the selling prices of the winter orange crop from our Xinfeng plantation.”
Asian Citrus’ revenue was initially tipped to rise by 9.6 per cent in the 12 months to June 2014, while the group’s earnings were forecast to increase 14.1 per cent over the same time period, according to Agrimoney.
Asian Citrus said “inclement weather and persistent heavy rainfall” has also contributed to its revised outlook for the current financial year, with the group estimating production volumes out of Xinfeng to fall by 5,000 tonnes.
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