China. Citrus Annual. Dec 2013 Dec. 26, 2013
Post estimates that China’s overall MY2013/14 citrus production will increase based on favorable growing conditions in major producing provinces; however, the presence of the deadly citrus greening disease may compromise China’s citrus production in the near future. Citrus exports are expected to grow on increased domestic supplies. Imports of US oranges are likely to decline following import suspension of Californian citrus to China due to plant disease concerns.
Post estimates that China’s marketing year 2013/14 (November-October) orange production will reach 7.6 million metric tons (MMT), an increase of nine percent from the previous year, largely due to higher yields. Major orange producing provinces, including Sichuan, Guangxi, and Chongqing, are expected to have bumper harvests due to favorable growing conditions and enhanced orchard management. In MY2012/13, excessive rainfalls in Jiangxi, China’s top orange producer, lowered production, however, this year’s orange production is expected to recover to previous levels.
Jiangxi currently produces around 1.5 MMT of oranges on 122,000 hectares. As new plantings, mostly planted between 2003 and 2006, mature to full production, Jiangxi government officials anticipate that production will reach 2.0 MMT by 2015 and 3.5 MMT by 2020 on planted area of 133,333 and 146,666 hectares, respectively. However, the presence of citrus greening disease (Huanglongbing) in many southern Jiangxi counties, like Xunwu and Anyuan, may interrupt this ambitious production goal, as groves are destroyed to prevent spread of the disease. In fact, Jiangxi’s citrus industry is concerned that, if the disease spreads to other areas, it could have devastating impacts on their production in the next three to five years. Post forecasts that China’s MY2013/14 orange acreage will decline by one percent to 790,000 hectares due to disease control and prevention eradication measures.
Frozen Concentrated Orange Juice (FCOJ)
Post estimates that China’s MY2013/14 (October-September) production of frozen concentrated orange juice (FCOJ) will increase by more than 30 percent to 60,000 MT, largely due to adequate domestic supplies and low prices for fresh oranges. China has juice processing capacity of around two MMT but domestic supply cannot fill this capacity as farmers typically do not plant juice variety oranges but rather target their production for fresh consumption. When prices are low enough, juice processing companies will buy low-quality or small-sized domestic oranges for juice processing.
Post forecasts China’s MY2013/14 (October-September) tangerine/mandarin production at 17.8 MMT, up five percent from the previous year. Guangdong, China’s largest tangerine/mandarin producing province is expected to produce fewer mandarins due to the damage inflicted by citrus greening, especially to groves in Huizhou, Yangchun and Sihui areas. As a result, MY2013/14 tangerine/mandarin acreage in Guangdong is expected to fall and result in a slight overall acreage reduction to 806,000 hectares over last year. However, above average production by other major producers will likely offset losses in Guangdong for an overall gain in tangerine/mandarin production.
Post estimates that China’s MY2013/14 (October-September) canned mandarin production will decline by 10 percent to 400,000 MT, due to large carry-over stocks held at the canning facilities from the previous year. China is the largest exporter of canned mandarins. Sources note that domestic consumption of canned mandarins is estimated to be between 100,000 to 150,000 MT.
China’s MY 2013/14 (October-September) grapefruit/pomelo production is forecast at 3.8 MMT, up 12 percent from the revised MY2012/13 estimate of 3.4 MMT. While major pomelo producer provinces such as Guangdong and Guangxi are expected to have stable production, gains in MY2013/14 will be attributed largely to recovered production in Fujian, the top pomelo producer in China. Poor weather conditions in MY2012/13 had dropped Fujian’s pomelo production by 30 percent. China has limited production of grapefruit as producers prefer to grow pomelo varieties for fresh consumption.
China’s lemon production is forecast at more than 400,000 MT in MY2013/14 (October-September), roughly unchanged from the previous year. Although lemon production in Anyue is expected to drop by 30 percent from MY2012/13 following a spring drought, new bearings will likely offset the production decline. Anyue (in Sichuan) is the dominant production area for lemons in China with production accounting for nearly 80 percent of the nation’s total. The goal of Anyue government is to produce 500,000 MT of lemons by 2016.
Fruit demand in first tier cities is quite stable but increasingly diversified. For second and third tier cities, including Zhengzhou, Wuhan, Changsha, and Chengdu, as distribution systems become more developed, fruit consumption is expected to rise. Growing number of fruit outlets in urban communities is boosting fruit consumption and rapid development of new marketing venues, including online stores, has the potential to further increase consumption. A recent incident involving Jiangxi oranges which were dyed to attract the market had negative consumer repercussions and damaged the reputation of Jiangxi oranges. However, consumption is expected to recover in time. An on-going government campaign against extravagance has limited the institutional buying activities by government agencies and state-run enterprises and this move will affect the fruit market, especially that of high-end fruit.
For MY2013/14 (November-October), Post forecasts that China’s fresh orange imports will be 75,000 MT, down 15 percent from the previous year, due largely to the suspension of California citrus imports to China on disease detections. China’s imports of fresh oranges from the United States dropped by 36 percent in MY2012/13. As a result, the United States is no longer China’s primary supplier of fresh oranges. A government campaign of anti-extravagance is also expected to have a negative impact on consumption of high-end fruit including imported oranges.
FCOJ imports are forecast at 58,000 MT in MY 2013/14 (October-September), down slightly from the previous year given increased production of domestic juices. Chinese juice processors are expected to produce 30 percent more FCOJ (NFC has been converted into FCOJ), compared with the previous season, due to cheaper fresh supplies.
China’s MY2013/14 (October-September) tangerine/mandarin imports are estimated at 14,000 MT, up 17 percent from the previous year. Although China’s imports of mandarins remain relatively low, rising consumer demand is expected to raise imports during the local off season. Due to the suspension of California citrus, Australia has become the largest supplier of fresh mandarins to China, followed by South Africa.
China’s MY2013/14 (October-September) grapefruit imports are forecast to increase by 47 percent from last year to 25,000 MT on strong demand from high-end consumers who appreciate grapefruit’s nutritional benefits. Hotels and restaurants continue to source grapefruit for juicing. In MY 2012/13, US exports of grapefruit to China fell following the import suspension of citrus products from California.
China’s tangerine/mandarin exports are forecast at 800,000 MT in MY2013/14 (October-September), up 14 percent from the revised number of 702,000 MT in the previous year, in anticipation of an import rebound from Indonesia, the largest buyer of China-origin mandarins. In June 2012, the Indonesian government tightened requirements for imported fruit that increased the cost of China-origin fruit. As a result, China’s mandarin exports to Indonesia dropped by 60 percent to 75,000 MT in MY2012/13 from 192,455 MT in the previous year. Industry sources indicate that Indonesia will relax the import requirements on January 1, 2014.
China is expected to export 100,000 MT of fresh oranges in MY2013/14 (November-October), up 20 percent from the previous year given a recovery in domestic supply, primarily to Southeast Asia markets. Excessive rains during the summer of 2012 had led to a sharp decline of fresh supplies in Jiangxi, the top exporter of fresh oranges. Post has revised the MY2012/13 export number of fresh oranges to 83,000 MT in line with the Customs data.
Increased production and favorable prices are expected to raise China’s pomelo exports to 180,000 MT in MY2013/14 (October-September), up nearly 40 percent from the previous year due to rising demand from European countries, the main buyers of Chinese pomelos.
Citrus production costs have been increasing in recent years, especially labor costs. Currently, costs of managing orange groves are estimated at RMB 1,600 ($262) per hectare, according to Jiangxi fruit farmers. Labor costs are not included as labor is only hired during harvest season but sources relay that in Jiangxi, labor costs increased by 20 percent, on average, from a year ago.
As a result of a bumper crop, farm gate price for oranges is quoted at RMB 2.2 ($0.36) per kilogram in Jiangxi, down more than 20 percent from the previous year. In addition, orange sales are relatively slow due to negative publicity in October (see Consumption). Orange prices are expected to recover as the impact of the incident fades.
Mandarin prices vary significantly by place and by variety. For example, in Ganzhou, Jiangxi province, farm-gate price for locally-produced mandarins is around RMB 1.6 ($0.26) per kilo, unchanged from the previous year. In Guangdong where citrus production is expected to drop due to the greening disease, farm-gate prices for honey mandarins (harvested around mid-December) are estimated at above RMB 6.0 ($0.98) per kilo.
Pomelo prices are reportedly around RMB 3.0 ($0.49) per kilo in Fujian, down 25 percent from the previous year, due to large domestic supplies. In recent years, farmers are planting red-flesh pomelos that receive nearly twice the price compared to the white-flesh ones.
Bagged lemons are sold at RMB 6.0-7.0 ($0.98-1.15) per kilo in Anyue, nearly double the price from the previous year. Unbagged lemons are priced at RMB 3.0-4.0 ($0.49-0.66) per kilo, up nearly 80 percent on year, according to local reports.
Jiangxi’s Ganzhou area is a major orange producing region and in 2012, local governments launched a pilot crop insurance project for oranges. According to the project terms, the local governments in three orange-producing counties cover 60 percent of the premium. Insurance companies compensate farmers for losses resulting from natural disasters or diseases. Crop area covered by the pilot program is quite limited, compared to grain crops, and the share of the premium subsidized by the government is relatively low. For example, governments may pay as much as 80 percent of the premium in major rice-producing provinces.
Provincial governments are making great efforts to prevent and control the spread of citrus greening disease which is moving quickly across groves in Guangdong and Jiangxi provinces. The Jiangxi government is offering to pay famers RMB 5.0 ($0.82) for each eradicated tree. In Guangdong province, the agricultural department has launched a major research project, which incorporates resources of the government and academia, to explore effective ways to address this devastating disease.
China’s General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) suspended imports of Californian citrus in May 2013 due to plant diseases. USDA is working with the Chinese quarantine agency to reestablish market access to China market for Californian citrus.
The Chinese market for US citrus products declined sharply following the government suspension of California citrus exports in May 2013. As a result, competitor citrus products from South Africa, Australia, and Spain have expanded sales. At the same time, the quality of domestic citrus, especially fresh oranges continues to improve. Thus, the quality of locally-produced oranges is becoming more competitive with imports. Prior to the suspension of California citrus, direct (versus transshipped) imports were on the rise at commercial ports in Shanghai and Dalian and Shanghai had become China's second largest distribution hub for imported fruit after Guangzhou.
The majority of imported citrus is sold to major retailers, convenience fruit shops, and high-end hotel restaurants visited by middle-upper income consumers. Most five-star hotels in China choose US citrus for fresh consumption purposes, include juice, given its flavor and higher brix content. Imported citrus sales tend to be seasonal and benefit from promotional activity during popular gift giving holidays, such as Chinese New Year. Recent instruction by the central government to reduce opulence and extravagance in government expenditures has dampened holiday market and fruit gift sales significantly in the past year.
Traditionally, the use of in-store promotions has been successful in introducing U.S. citrus products to Chinese consumers. The growing popularity of fruit convenience stores in China is expanding consumer access to imported fruit. The stores are mostly located in the working class communities in urban areas. New marketing and sales tools, including the use of e-commerce, are providing new options to promote and sell imported citrus products