There have been optimistic reports from South African citrus producers this year. The season for easy peelers is expected to increase, and all indications point to excellent quality across the extensive citrus portfolio.
Ans the industry enters its sixth year of deregulation all indications suggest that the challenges of recent years are well on their way to being consigned to the past. United in a common aim, citrus producers are now seeing the benefits of a more stabilised environment and are able to concentrate their efforts on developing the thriving export market on which the country has based its success.
But this hasn't always been the case. Orchards of lemons and oranges may have been an integral part of the South African landscape for more than three centuries, but trading and production conditions have not necessarily been easy.
When the Journal reported on South African citrus at the beginning of last season, the outlook was less rosy. Then, producers were still reeling from an unhappy situation of oversupply, low prices and a lack of informed cooperation -ñ factors which added up to a very difficult season in 2001.
Fortunately these problems were ironed out by the end of 2002, and all reports suggest there is every reason for optimism.
“In the beginning, in the first two years or so there were just too many people ñ agents and middle men ñ all wanting to earn a quick buck,” says Jan Van der Lans of the Netherlands' Van der Lans International BV. “Now, fruit exporters speak together about what the market requires in order to limit supplies so we can even out the prices. The situation is a lot more settled,” he says.
Capespan's Martin Dunnett agrees: “The seasons that followed deregulation were very difficult. There was trading confusion and the market was a difficult place. The shake out that deregulation caused happened quite quickly, but people have built solid relationships now so that can only be beneficial.”
Certainly, as the 2003 season gets underway the optimism of growers and distributors alike is palpable. “2000 was desperate,” Dunnett admits. “In 2001 we recovered good ground and 2002 was really the building season.”
According to Derek Sutton, sales director at Lona Trading there are also better relationships between all those involved in the citrus industry. “There is more communication between producers and a greater desire to work together for the greater good,” Sutton accerts. “There is also a certain amount of stability between the various producers and exporters. Producers are selecting their preferred exporter and the relationship is maturing. This stability is good for the industry and is helping to produce more accurate statistics.”
But, he warns, there can be no room for complacency, and despite six years in a deregulated environment, there is still much to achieve. “The most obvious improvements have been with regard to internal communication and the awareness of the need to compete with quality and service against the other southern hemisphere citrus producing nations,” he says.
“These very same issues still have some way to go before we achieve the success which we are striving for. A deregulated environment is a dynamic one and will by its very nature keep pushing all of us to achieve more.”
Producers are now looking to reap the benefits of a more stable, if slightly late season. Dunnett confirms: “We're mid-season now on satsumas which had a good quality start but supplies were a little short to begin with and initial sendings were fairly tight. Overall the South African season was delayed because the fruit was later in terms of maturity, but everything is running smoothly now and we're expecting clementines to arrive in the next couple of weeks.”
A hot, dry summer has resulted in forecasts of exceptional quality fruit for Capespan, but when it comes to climate and soil conditions, South Africa is generally seen as country of extremes. With variations in temperature and rainfall producing wildly different results. Van der Lans says: “There has been a drought in the northern province so I expect our grapefruit will be a bit on the small side. This was due to overly dry weather during the summer period. Of course there is irrigation, but there were also water restrictions.”
For Lona, with a network of citrus growers in areas such as Letsithele, Komati, Malelaan, Eastern Cape and Sundays River valley, adverse conditions have affected some satsuma production. Sutton explains: “The weather has been against most of the satsuma producers which will mean a smaller crop of the correct quality fruit. This, coupled with bad port congestion will lead, I think, to a lower volume than predicted.”
Although Sutton forecasts a normal lemon crop with volumes in line with last year's as far as oranges are concerned, he reveals there may well be a shortage in grapefruit. “This should mean a very good season in grapefruit on the back of the clean market created by the shortage from Israel and the early finish of Florida,” he says.
Whatever the volume of sendings, South African fruit is widely known for its premium quality and there are many in the UK who eagerly anticipate arrivals. “The lemons that came in last week were sparkling ñ they're excellent quality,” says Danny Brooker, salesman at Gilgrove. “Normally the first arrivals are slightly on the green side because they've been picked too early. This year though, they're great.”
South African lemons are currently pulling in good money at 900p for 15kg, but Brooker warns that when the Argentinean season starts ñ anytime now ñ prices will begin to fall. He adds: “Generally speaking, Argentine sendings are not as good quality as South African citrus which are very well received.”
In global terms, citrus is a highly important fruit crop, and although South Africa's production is far from being the largest, exacting standards and industry initiatives have enabled the country to remain a leading force. And although the country's citrus industry was formed in the early 1880s it took a long time ñ until 1926 ñ when the South Africa Cooperative Citrus Exchange was created, for the industry to realise its full potential. Now the citrus export industry is one of the country's greatest strengths and it remains one of the largest agricultural industries in the country in terms of export earnings. But as global currencies remain in a constant state of flux, the issue of the ever-changing exchange rate is a source of constant concern. “This is one of the biggest problems exporters face,” says Van der Lans. “There is a 15 per cent difference on last year. Sutton agrees: “Prices will be under pressure in South Africa due to the strength of the Rand against the other major currencies,” he says.
Exports to the US and Hong Kong provide additional lucrative outlets for South African citrus. “These are much more attractive than the UK because prices are very high,” says Van der Lans. “We're in direct contact with our growers who are now more involved in what's happening overseas and know what it is that the market requires. For the main part we market our own brand for citrus, apples and grapes. We want our growers to maintain the highest possible quality for this purpose. Branding is an issue ñ it means that we have to maintain a high level of quality and most of our growers are getting Eurep Gap now, it is necessary now that the supermarkets demand it.”
Lona is also committed to providing ongoing improvements in quality and shelf life and the company has recently invested in a new cold store development in Durban, one of the few stores in South Africa approved for the handling of sterilised shipments to protocol markets such as Taiwan. Recognising the need for accreditation, Lona will achieve ISO by the end of 2003 and hope to be fully accredited in Eurep Gap for citrus by the end of next year. Sutton continues: “As a company Lona export to all the main markets and the markets of both Russia and the Middle East are both challenging and rewarding. Japan, Taiwan, Korea and the US are all protocol markets and the returns for the fruit which passes the various protocols will be on average the best prices of a season.”
The UK still remains a vital segment of trade. Sutton continues: “This season we are looking forward to building on our substantial volumes exported to the UK last year. Our broad spread across the major growing areas in South Africa allows us to produce a full basket of varieties throughout the year whilst maintaining excellent quality”.
Last year Lona was selected to supply Jaffa branded citrus into the UK market. Dov Warmen, UK md of Mehadrin Tnuport Marketing, reveals: “We started working with Lona Trading for the first time last year in order to achieve year round availability of Jaffa branded citrus in the UK. Lona is one of our three approved suppliers of the Jaffa brand from South Africa and we are very pleased with the results.”
Brand recognition remains as strong as ever and Capespan is currently at work putting together the last pieces for a publicity campaign to be run through June and July, once the citrus is in full stream. “Outspan is still coming out well when it comes to brand recognition,” Dunnett asserts. “And from what we've seen so far, Outspan will have outstanding fruit again. Lemon plantings are increasing slowly although not enough to cater for the huge demand. Japan loves them and they're very well known there. New plantings are an industry investment and this is starting to happen again, although slowly. Capespan now has an exclusive contract for marketing Mor, Or and Afourer that will be on the market from mid-August to mid-September. It's still early days but production has significantly increased,” says Dunnett who predicts there will be 250,000 cartons of clementines for the UK this year. This is the product of an initiative by Citrospan, which involves Capespan and leading breeders to breed indigenous varieties and also to gain late maturing fruit from alternative areas.
From a market point of view it appears that our thirst for South African citrus remains as strong as ever. But despite the positive forecasts for 2003, there are still some issues that need to be addressed. A joint statement issued earlier this year by the Citrus Growers' Association of Southern Africa (CGA) and Citrus Southern Africa (CSA) pinpointed the escalating costs throughout the supply chain including packaging, chemicals and ports. And although both organisations have stressed the point that they both seek to deal with the threats and opportunities to the industry, the question of why two bodies should exist at all, remains succinct. Dr Hoppie Nel, chairman of CGS said: “Many in the citrus industry ask why there are two grower bodies, and rightly so. However if one understands the focus of both bodies, it does make sense. The CGA was formed just after deregulation to perform two important functions for citrus growers ñ research and market access...As CGA we have managed to unite growers in our quest to retain and direct research capacity in order to maintain existing and gain new market access. Growers have become involved in research not only in the funding but also in determining how the funds are utilised. We cannot afford to lose grower support by embarking on activities that do not enjoy grower support.
“During 2003 more specific markets will be co-ordinated more progressively with pro-active participation of producer nominees. These markets include the Middle East, Russia, eastern Europe, Canada and our traditional high volume UK and continental markets. The Citrus Grower Association and Citrus SA are grower owned instruments and resources to augment their performance should be used as such. Both boards and Secretariats are committed to serving the industry. Use us.”
Undoubtedly there is now greater communication between growers and exporters, as Sutton concludes: “The various exporter forums are a very good start to building better relationships between the growers in South Africa and the various markets where the fruit is sold. The exporters and importers now have a platform to educate the growers on the resistance levels and the improved quality expectations of the various markets.
“The creation of an export grid, which in effect prohibits or limits the unpopular sizes and quality specifications, is a good example of the efforts made to protect the various markets and the industry in general.”
Undoubtedly the last few years have been tumultuous for South African citrus ñ characterised by difficult trading conditions as producers struggle to re-align themselves with a deregulated industry. But those difficulties are hopefully firmly in the past and South Africa's citrus industry looks sure to remain a dynamic force.
