The South African citrus season has been characterised by supplies that have been squeezed tight by heavy rain at the start of the season and a two-week strike that brought with it longer-term disruption. At the same time, the exchange rate between the rand and both sterling and the euro has cut through hopes for the season by putting pressure on returns.
But the southern hemisphere, as a whole, has managed to steady supplies and get things back on track, albeit after missing two to three valuable weeks of trade.
Across the board, values have reached “record highs” as a result of shortfalls across the category so that oranges, for example, are making up to £15 for 15kg - which, according to an insider, is “fantastically high” compared to historical norms.
The citrus market in the UK showed value growth of 5.7 per cent to £596 million in the 52 weeks ending 13 June, driven mainly by easy peelers, which are growing at 7.7 per cent. Another sub-category spearheading growth is limes, which have grown by an impressive 35.4 per cent, but from a low base. At the other end of the scale, grapefruit has been the only sub-category to have declined in both volume and value.
UK sales have been tricky given the soaring temperatures and summer sun in recent weeks, which have not been conducive to consumers buying into a category that is traditionally associated with winter.
“The delay to the start of the southern hemisphere season has been a big factor in the last three months,” says one importer. “If you watched the football over the last four or five weeks, you would have seen that a lot of the matches were played out in the rain. And in the middle of that, the two-week strike, which actually caused four weeks of disruption, threw sendings off kilter.
“We would normally reach full supply by mid-June but this year, it took until the end of June to get there so we have lost two or three valuable weeks.
“But in the time that the southern hemisphere ran short, European stocks were hoovered up,” he continues. “However, South African growers and exporters are not jumping up and down because of the exchange rate. The rand is strong against both sterling and the euro so that means in dollar markets such as the Middle East and the Far East, they can get better terms.
“From a South African perspective, I don’t think volumes will build significantly in August. There will be a natural increase in volume when Valencia replaces Navel next month, but it doesn’t feel like a year that will get significant volumes.”
The sector is only just getting back on track and sendings have started to settle into steadier patterns.
Easy peelers got off to an early start, with Argentina making a good start on satsumas and enjoying a 20 per cent increase in volume. However, there were complaints that some of the product quality was “indifferent” and reports that some fruit was rejected on arrival.
South African satsumas enjoyed a “fairly good” season, but prices all round were lower and there was a lot of pressure on the market in May. The country’s Clementine supply is lighter than it was last year, when there was an overhang of fruit.
Lemons remain strong, but “not quite as hot” as they were two years ago, according to one supplier, as even though there was a shortfall of fruit from Argentina, there was some European volume left on the market.
So what’s next for the category, given that the major players are already on the look-out for what might happen when supplies cross back up to the northern hemisphere?
Growers in Valencia are already forecasting a decrease in the 2010-11 citrus crop, following high winds that caused problems over several days in the fruit setting period. The effect of winds at the end of May and the first few days in June in eastern Spain are already visible on easy-peeler and orange trees in the region.
Producers had been hopeful of a return to higher volumes in the new season following an off-season last year, but agronomists are forecasting a crop as low as in 2009-10, which reached 3.25 million tonnes.
CITRUS SECTOR PEERS ONTO THE FUTURE
If those staring into a crystal ball predicting variety shifts in the citrus industry are to be believed, mandarins will be the winners in the future.
Citrus growers around the world are always looking for that special variety that will move them ahead of the rest. They should do well to heed the advice of one the most respected international citrus experts, Prof Dr Etienne Rabe, a South African by birth now ploughing his trade with Paramount Citrus and Biogold USA in California.
“We need to get out of run of the mill products and we have to do so quickly,” he says. “In this respect, we should follow the example of the apple industry, where drastic changes were made over a relatively short period in the variety specification which, in turn, has brought new excitement in the offer to consumers.”
Rabe says that as the citrus industry searches for new products, mandarins in general and more specifically the Nadorcott variety look like one of the winners. “Current volumes of Nadorcott will double between 2014 and 2015 and triple by 2019,” he says.
The interesting thing about Nadorcott is that it is known under different names in different parts of the world. Nadorcott, WMurcott, Afourer, ClemenGold, even Tango and Nadorcott Seedless are all names that refer to the same variety and the only difference can be found in mostly country of origin or quality specifications. And there are also those who claim that their particular version is also the best tasting of them all.
Rabe maintains that there are general gaps in the citrus production season, which could provide areas for growth in future.
“The general requirements are that we need a good early Navel, a productive late Navel, a seedless, productive Valencia, a high quality, very early mandarin, but which is not related to satsuma, as well as good mid- and late-season mandarins with easy-peeling and seedless qualities. Each country, however, has its own requirements and will have to seek to address them.”
In this respect, he says that Spain has too many early- and mid-season mandarins and there is therefore a greater interest in Navels. In California, there is a major move to mandarins, while in China there is too much early fruit, namely satsumas, and the emphasis is on later fruit and more Navels.
The Israelis are concentrating on exclusivity in high-value easy peelers while in South Africa, clementines are losing favour due to shipping and shelf-life issues, while Valencia remains a large part of the portfolio.
“The new rave is definitely Nadorcott,” says Rabe. “As production increases internationally, there is a real need to manage Nadorcott in what will be an oversupplied market. In this respect, the introduction of ClemenGold as a branded variety is a good example of what could be done.
“It is amazing to see how fast one variety is changing the landscape.”
He says the citrus sector should emulate the Pink Lady model with the introduction of novel selections. The ClemenGold launch is based on a variety that promises a high internal quality, excellent colour and specific seed levels. In the US, Cutie has been launched as a mandarin range with ‘guaranteed’ internal quality, low or no seed content and peelability.
The new trend is to introduce new varieties in a very controlled way in order to ensure the long-term sustainability of these varieties. New exciting varieties are therefore not available to all growers and they also do not have the right to decide how many of these trees they will plant once they can get hold of them. Levies, royalties and grower clubs all play a role.
Rabe says the management of and royalty structure around a new variety need to be such that the grower and other players in the value-added chain are reasonably assured that the risk will pay off. “Growers ultimately pay the price, irrespective of where levy is assessed,” he explains.
“It has to make financial sense to the grower, since the grower is the risk taker.”
He says it is difficult to predict the stars of the future, but Nadorcott is one of them. “The M7 Early Navel developed in Australia may prove to be one too. Some new exciting Murcott types are also in the pipeline.”
Rabe insists that there are exciting times ahead, but growers will have to be proactive and know what is on offer. “Marketers will have to stay tuned and supermarkets need to know what may be coming,” he says.
“The early bird will get the reward or get stung. There will be regrets either way.”
