Israel. Citrus Annual. Dec 2013 Jan. 2, 2014
Post forecasts Israel’s MY (October-September) 2013/2014 citrus production at about 551 thousand metric tons. The 7 percent increase compared to the previous MY is mainly attributable to an increase in orange production, the result of favorable weather conditions thus far in MY 2013/14 compared to the previous MY. Post expects an increase of 5 percent in citrus exports in MY 2013/2014. Deliveries to processing plants are expected to increase by 14 percent compared to the previous year. Due to sanitary and phyto-sanitary (SPS) challenges which led to a ban on Israeli citrus exports to China and a new South Korean tariff on sweetie, exports to these two countries are trending downwards. Tangerines/mandarins (47 percent) and grapefruit (47 percent) in MY 2012/2013 make up the bulk of Israel’s citrus exports, while oranges represent just under 5 percent of Israeli citrus exports. The Star Ruby (red grapefruit) and “Or/Orri” mandarin varieties accounts for 36 and 29 percent of total citrus exports, respectively.
Israel is a medium-sized producer and exporter of fresh citrus fruit. Post forecasts that Israel’s citrus production in MY 2013/2014 will reach 551 thousand metric tons (TMT).
About one-third of local citrus production is mandarin (easy peeler) varieties and the most produced mandarin is the Or/Orri variety, about 62 TMT in MY 2013/14.
Post estimates that in MY 2013/14 Israel will export roughly 175 TMT of its harvest. It is anticipated that Israel will likely process again some 200 TMT, or 36 percent of the crop. The balance of 176 TMT will be consumed as fresh citrus fruit in the local market.
Due to unfavorable weather conditions in MY 2012/2013, citrus production totaled 516 TMT, a 12 percent decrease compared to the previous MY. About 167 TMT (31 percent) was exported. In addition, 175 TMT was processed, and the balance of 175 TMT was consumed fresh, in the local market.
The “Star Ruby” (grapefruit) and “Or/Orri” mandarin varieties alone account for 36 and 29 percent of total citrus exports, respectively. Oranges (mainly the Shamouti variety) on the other hand, continue to see their export market share significantly drop.
Russia and Ukraine have increased their market share in terms of Israeli citrus exports in recent years, buying now about 25 percent of the total of Israeli citrus exports.
About two-thirds of citrus deliveries to domestic processors in recent years have been grapefruit. Orange deliveries for processing have continued the decline noted in recent years.
Citrus planted area totaled 19,200 hectares in 2013. Out of the total planted citrus area, 5,000 hectares are the Or/Orri mandarin variety.
Post forecasts that MY 2013/2014 total production should total about 551 TMT, a 7 percent increase compared to MY 2012/2013. Israeli citrus production in MY 2012/2013 reached 516 TMT. The 12 percent decrease in MY 2012/13 was mainly due to hot weather conditions in spring 2012 which affected the MY 2012/13 crop and especially affected orange production which fell by nearly 40 percent compared to the previous MY. In addition, storms in the second week of January 2013 further reduced citrus production and affected fruit quality.
Production yields in MY 2013/14 are now more in line with the multi-year average. In addition, an increased number of mandarin trees (mainly Or) have entered the fruit-bearing stage over the past two years.
Oranges – Post forecasts that orange production in MY 2013/2014 will reach 100 TMT, a significant jump of 37 percent from the previous year. The increase is mainly due to favorable weather conditions in MY 2013/14 compared to the previous MY. Shamuti and navel oranges remain Israel’s two main orange varieties with some reduction in the number of trees of the former, with an increase in the number of the latter variety.
Tangerines/ Mandarins (Easy Peelers) – Post forecasts total mandarin production in MY 2013/2014 at 180 TMT and it is expected to reach 195 TMT by MY 2015/16. The Or/Orri variety is the main mandarin variety and accounted for about 33 percent (60 TMT) of total mandarin local production in MY 2012/13. Out of the 60 TMT Or production in MY 2012/13, 82 percent was exported and the rest (11 TMT) was consumed fresh by the local market.
Or is seedless and yields at least 30 tons per hectare. In addition, its taste is considered superior to other varieties. Other main locally produced varieties are Suntina, Mineola, Topaz, Orra, Michal, Murcott and Hadas.
Grapefruit – The star ruby “sunrise” variety is the main citrus fruit variety exported by Israel. About two-thirds of citrus deliveries to the processing industry in the three past years were grapefruit, and this trend is expected to continue in coming years. Post forecasts that in MY 2013/2014, Israel will produce 210 TMT of grapefruit. We expect that out of this total production, red fruit will account for 130 TMT. White grapefruit and sweeties comprise the balance of the grapefruit production, with 55 and 25 TMT respectively.
Lemons and Limes – MY 2013/2014’s lemon and lime production is expected to total 55 TMT. The expected 8 percent production increase is driven by favorable weather conditions during the growing season. Almost all lemons and limes are locally consumed. As a result of a shortfall in Argentinian lemon production which affected their exports to Russia, Israel has already shipped about 300 tons of lemons, mainly to Russia, since the beginning of the current marketing year.
Other Citrus – Continued competition from China-origin pomelo in foreign markets is forcing Israeli citrus growers to scale back on white and red pomelo production for export. White and red production is mostly consumed domestically. Post forecasts Israeli pomelo (red and white) production to reach 5.0 TMT in MY 2013/2014. Kumquat and Limquat production should reach 1 TMT in MY 2013/2014. Total other citrus are expected to total 6 TMT in MY 2013/14, a 12 percent decrease compared to the previous MY.
The total of area planted to citrus was 19,200 hectares (ha) in 2013, unchanged from 2012. Fruit-bearing trees account for roughly 16,128 ha, or 84 percent of total planted area. The Or/Orri mandarin variety accounts for 5,000 ha (26 percent share), and taken as a whole mandarins varieties take up 45 percent of the total citrus planted area, while grapefruit and oranges have about 20 percent share each.
About 45 percent of the new plantings in 2013 were Or/Orri variety. In addition, about 15 percent of new plantings in 2013 were navel (orange) varieties. This is mainly due to stiffer competition from other global producers including a growing supply of grapefruit and oranges in recent years especially by South Africa and Spain. In 2013, about 420 ha of citrus were uprooted, of which 40 percent were red grapefruit and 23 percent were oranges (Shamuti).
The Volcani Institute is the research arm of the Israeli Ministry of Agriculture, and the staff there works on innovations that benefit the nation's growers. They developed the popular Or/Orri mandarin variety and other popular fruit and vegetables varieties.
The declining consumption of grapefruit among the elderly population which take statins to regulate their cholesterol levels is a topic Volcani is trying to solve with a new grapefruit variety. The Volcani task is to develop a grapefruit variety that doesn't have the compounds that interfere with cholesterol medication. It is understood that American researchers have developed such a fruit, but Volcani researchers believe that its own variety they're developing is better than the American variety.
Post estimates local consumption of fresh citrus fruit in MY 2013/2014 at about 176 TMT, unchanged from the previous marketing year. Out of total local consumption, about 26 TMT is sold to the Palestinian Authority (PA).
Most lemon production (90 percent) is consumed fresh by the local market, while only 40 percent of the easy peelers’ mandarin production is consumed domestically. Due to a higher profitability of the Or/Orri mandarin variety in export markets 82 percent of the Or production is being exported and the rest is consumed locally.
The Processing Industry
There are only three citrus processing plants in Israel, of which one group controls two processing plants.
Post estimates deliveries to processing plants in MY 2013/14 will total 200 TMT. The expected 14 percent increase is driven mainly by higher local orange production in MY 2013/14 compared to the previous MY.
Citrus producers’ deliveries to processing plants in MY 2012/2013 totaled nearly 175 TMT, a 25 percent drop compared to the previous marketing year. The decrease is attributed mainly to low production of oranges and grapefruit in MY 2012/13 combined with decreased prices of grapefruit by the processing plants. About two-thirds of citrus deliveries in the recent three years were grapefruit. Orange deliveries to the processing industry have continued the decline that was noticed in recent years and since MY 2004/5 a drop of about 67 percent in orange deliveries has occurred - from 77 TMT in MY 2004/05 to 25.5 TMT in MY 2012/13.
With the decline of orange production in Israel resulting in a lack of oranges for processing, local processing plants have been turning in recent years to overseas sources (mainly Brazil) for oranges products for processing (concentrated orange juice, both frozen and fresh).
Post forecasts Israel’s exports of citrus in MY 2013/2014 to reach about 175 TMT. The expected 5 percent export growth is being driven mainly by Or/Orri mandarins’ good receptivity in the European market and increased local production of oranges in MY 2013/14. Fruit size and quality are above average and will attribute to the expected increase in exports.
Total citrus exports in MY 2012/13 decreased by nearly 8 percent compared to the previous MY. Post finds that mandarins (47 percent) and grapefruit (44 percent) in MY 2012/13 make up the bulk of Israel’s citrus exports. In recent years mandarins and grapefruit accounted for about 90 percent of the Israeli fresh citrus exports and this trend is expected to continue in the coming years as well. The Star Ruby (grapefruit) and Or mandarin variety alone accounts for 36 and 29 percent of total citrus exports, respectively. Oranges on the other hand, continue to see their export market share erode further. Oranges dropped to 4.4 percent within the citrus export mix in MY 2012/2013, down from 15.5 percent in MY 2008/2009. The significant decrease in orange exports in MY 2012/13 compared to the previous MY is attributed mainly to the sharp decrease in production in the previous year which was caused by unfavorable weather conditions.
Average export prices in MY 2012/13 were generally higher compared to the previous MY for all the citrus varieties, excluding grapefruit.
The grapefruit sector suffered from low prices for most of the season. In some parts of MY 2012/13, grapefruit export prices were so low, that processing prices were competing with the fresh produce export prices. The sharp decrease in grapefruit export prices in the previous MY was due to a greater supply of grapefruit worldwide.
In the last two years “Mehadrin” is the country’s largest grower and exporter of quality citrus, as well as also a leading exporter of fruits and vegetables. There are about 50 authorized private citrus exporters in Israel.
Some of the fresh citrus exports are exported under the private labels of the European retail food chains (eg Tesco, Sainsbury, etc). Adoption of private labels is increasing as consumers demand lower retail prices with guarantees of product quality and in the European countries about 20-40 percent of the retail chains sales are private label.
European markets import about 88 percent of Israel’s citrus exports. Specifically, Western Europe absorbs 66 percent of Israeli citrus exports (mainly the UK, Scandinavian countries, France, Italy and Germany), while Russia and the Ukraine combined take in 23.5 percent. However, some quantities will be exported to long distance markets mainly to– South Korea, Japan. U.S. and Canada.
Ukraine and Russia – These two markets have significantly increased their market share in recent years and almost one-quarter of the total Israeli citrus exports are shipped to these two countries. About 7,500 tons of Or mandarin variety were exported to Russia and Ukraine in MY 2012/13, which is 15 percent of the total Or exports. Other easy peelers varieties, such as Nova, Minneola, Topaz, Michal, Morkot and Merav were also exported mainly to Russia and Ukraine.
Japan - Exports to Japan of grapefruit (sweetie) in MY 2012/2013 increased by 4 percent from the previous marketing year. Post finds that red pomelo exports increased by 130 percent in MY 2012/2013 compared to MY 2011/12, due to shipping earlier than normal. For the first time in the recent past, there were some exports of red grapefruit to Japan. Still, with the Yen’s weakening vis-à-vis the US Dollar, the profitability of Israeli citrus exports to Japan is declining.
It is expected that total Israeli citrus exports to Japan in MY 2013/14 will be off by about 10-15 percent compared to the previous MY. The decrease is mainly due to competition from other suppliers combined with the decreased profitability of the Israeli citrus exports to Japan because of the aforementioned currency weakening. About 2,500 tons of Sweetie and 500 tons of Or mandarin variety have already been shipped to Japan in MY 2013/14.
Other Far East markets are declining in terms of exports of Israeli citrus as follows:
China – Two years ago this market was closed to Israeli citrus due to a sanitary/phyto-sanitary (SPS) issue. A fungi was detected on one of the shipments from Israel and since that time no Israeli citrus has been approved for import by China. A few months ago the Israeli Plant Protection and Inspection Services (PPIS) visited China and discussed certain SPS issues between the two countries, including the citrus SPS issue. At present, the Chinese citrus market remains closed to Israeli citrus.
South Korea – About one year ago, the South Korean customs authorities decided that the Israeli Sweetie variety is neither a grapefruit nor a Pomelo. Therefore, Israeli sweetie is subject to a $100/ton import tariff, and this new import tariff reduces the profitability of Israeli exports to South Korea. The Israeli government is working to address this issue together with South Korean counterparts. An arrangement between the two sides is expected to be achieved in MY 2014/15.
Exports by Citrus Varieties:
Oranges – Post estimates exports of oranges to reach 12 TMT in MY 2013/2014, an increase of 63 percent compared to the previous marketing year. The expected increase in exports is mainly due to higher local orange production this season. Due to bad weather conditions in MY 2012/13, local orange production was significantly lower compared to the preceding year leading to a significant decrease in orange exports in MY 2012/13.
Tangerines/ Mandarins (Easy Peelers) – Post forecasts total mandarin exports in MY 2013/2014 to reach about 82 TMT. The 5 percent increase is mainly due to the continued increased demand for the Or mandarin variety. Local Or production was about 60 TMT in MY 2012/13, of which 82 percent was exported with the rest consumed fresh locally. We estimate that in MY 2013/2014 there will be growth in Or mandarin exports which could climb to 52 TMT, an annual rise of 6 percent. Or mandarins are exported mainly to France (20 TMT, 40% of total Or exports), Russia and Ukraine (15% share of total Or exports), Canada and the U.S. (12% export share), Norway, Sweden, UK, Finland, Italy, Holland and Japan.
Grapefruit - The large supply of South African grapefruit in European markets has limited Israeli grapefruit exports since the beginning of MY 2013/14 (the large South African grapefruit supplies were shipped to the EU between June to October, 2013, hence prior to the EU ban on South African citrus). However, post estimates that demand will rise during the current MY. Overall Israeli grapefruit exports will be unchanged from the previous MY and will total about 78 TMT in MY 2013/14. Israeli grapefruit exporters actively target consumers in Italy, France, Germany, Russia and Ukraine.
Despite the 2012/13 decrease in local production and lower prices for fresh grapefruit in Europe, exports of Israeli grapefruit did not decrease significantly compared to MY 2011/12.
Exports of red grapefruit in MY 2012/2013 have not changed compared to the previous marketing year and totaled nearly 60 TMT, while 5.6 TMT of white grapefruit were shipped.
The Star Ruby (red grapefruit) variety accounts for 36 percent of total citrus exports.
For MY 2012/13, most Israeli red grapefruit was exported in the first two weeks and the last three weeks of this marketing year.
Other Citrus – With a decline in lemons and lime from Argentina, Israeli exporters have stepped in to supply some of the Russian market, having exported about 300 tons of lemons and 400 tons of limes mainly to Russia.
In MY 2012/13 183 tons of limes were exported, while already in MY 2013/14 lime exports have more than doubled compared to MY 2012/13.
Lemon exports in MY 2013/14 are forecast to total about 1,000 tons and lime exports are expected to reach 600 tons.
Israel’s exports of red pomelos in MY 2013/2014 are projected to total about 1,300 tons, a 30 percent increase from the previous year. White pomelo exports in this new marketing year are expected to be unchanged from MY 2012/13.
Frozen Concentrated Orange Juice
Israeli processors produce concentrates, juice, bases, puree, and slices. About 70 percent of these products are exported to the European Union (EU), the rest is consumed domestically. Annual per capita consumption of juices and nectars is roughly 4-5 liters. This amount is increasing due to the decrease in consumption of carbonated soft drinks.
With local orange production contracting in recent years, FCOJ imports have increased significantly. In calendar year 2009, frozen orange juice imports were valued at $14.5 million, while in 2012 they reached $29 million. 2011 FCOJ imports set a record in terms of value of $48.5 million (CIF prices). The significant decrease in FCOJ imports in 2012 compared to 2011 is due to the good citrus harvest that Israel experienced in MY 2011/12. However, due to smaller citrus production in MY 2012/13, it is expected that FCOJ imports will show an increase vis-à-vis 2012 and will total about $40 million in 2013. These imports are mainly from Brazil and the U.S.
Better local growing conditions in MY 2013/2014 are leading to local orange production increases that will limit the need of imports for processing in MY 2013/14 compared to the previous MY. Post estimates that in MY 2013/14 imports of FCOJ will fall to about 24,000 metric tons, dropping by 2,400 metric tons compared to the previous MY.
If trade issues with the Far East markets (China and South Korea) are not solved in the next two years, over time, these market constraints could impact local citrus production.
Exports of U.S.-origin citrus to Israel are not currently permissible. A Pest Risk Assessment (PRA) has not been conducted for U.S. citrus. Until a PRA is performed, U.S. citrus is not allowed to enter Israel. Moreover, Israel does not import any fresh citrus, and this is not expected to change in the coming years.
The U.S.-Israel Agreement on Trade in Agricultural Products (ATAP) grants U.S.-origin frozen orange juice (FCOJ) exporters a duty free tariff-rate quota (TRQ) of 4,154 metric ton. In addition, U.S. exporters benefit from a 1,016 metric ton frozen grapefruit juice TRQ