South Africa. Citrus Semi-annual. Jun 2014 七月 8, 2014
The South African 2014 MY (Marketing Year) total citrus exports are forecasted to increase as a result of increases in production and a weak exchange rate. South Africa achieved record orange exports to the United States at 40,576 MT in the 2013 MY. The impact of the stricter EU regulations on South African citrus imports anticipated to start showing in the 2015 MY.
Post forecasts the 2014 MY South African production of lemons, and soft citrus to increase by eighteen percent and nine percent, to 270,000 MT and 160,000 MT, respectively, on the basis of good growing conditions and increases in area planted. 2014 MY production of oranges is forecasted to increase marginally by three percent to 1,600 million MT and orange juice by three percent to 29,970 MT. The 2014 MY grapefruit production is forecasted to decrease by ten percent to 391,000 MT due to the annual cyclical fluctuations of grapefruit production.
Post forecasts increases in the 2014 MY exports of oranges (two percent), soft citrus (six percent), lemons (15 percent) and orange juice (23 percent) based on the equivalent increases in production and the weak rand exchange rate. Grapefruit exports are forecasted to decrease by seven percent based on the annual cyclical decrease in grapefruit production. Europe remains the largest export market for South African fresh citrus, and accounted for the following in the 2013 MY; grapefruit (46 percent), oranges (40 percent) and soft citrus (66 percent). Other regions such as the Middle East, Asia and Africa are also becoming increasingly significant markets for South African citrus exports. The Middle East accounted for 41 percent of the South African lemon export market in the 2013 MY. The growth in other markets is expected to continue in the coming seasons following the decision by the European Union Commission on May 27, 2014 to impose stricter regulations on South African citrus imports.
South African exports of fresh oranges to the United States under the duty free AGOA reached a record high of 40,576 MT. This is a massive increase, given that exports to the United States were about 290 MT in the 1996 MY and 25,619 MT in the 2007 MY.
Post forecasts the 2014 MY imports of citrus to remain flat based on a static domestic consumption and sufficient domestic production to supply the local market. Imports are mainly to cover for out of season demand usually toward the end of the year.
Background of the South African Citrus Industry
In the 2013 MY, approximately 63,060 hectares (Ha) was planted to citrus in South Africa. The Limpopo, Western Cape, Mpumalanga, Eastern Cape, KwaZulu-Natal and Northern Cape provinces are the main citrus growing regions in South Africa. Limpopo has the largest area planted, followed by Eastern Cape, Mpumalanga and Western Cape. The Western Cape and Eastern have a cooler climate which is suited for the production of the navel oranges, lemons and easy peelers such as clementines and satsumas. The Mpumalanga, Limpopo and KwaZulu-Natal Provinces have a warmer climate which is better suited to the cultivation of grapefruit and Valencia oranges.
Oranges are the biggest citrus type produced in South Africa and accounted for 66 percent of the total citrus area planted in the 2013 MY.
There are approximately 210 commercial varieties being planted in South Africa. Star Ruby is the most planted grapefruit variety due to its high global demand. Producers prefer Valencia oranges over Navels as Valencia’s have a longer shelf life and produce more yields than Navels. Nardocott is one of the most popular soft citrus cultivars in South Africa, however, there is growing interest in the Tango cultivar, which is seedless and is still waiting to be granted its Plant Breeders Rights.
Post forecasts South Africa 2014 MY grapefruit production to decrease by ten percent to 390,000 MT as a result of the annual cyclical fluctuations of grapefruit production where a high production season is usually followed by a low production season and the 2013 MY production was a high production year. Grapefruit producers usually switch production to lemons or vice versa, depending on the expected prices.
Post revised upwards the South Africa 2013 MY grapefruit production at 434,070 MT based on industry data. The 2013 MY grapefruit production at 434,070 MT represents a 42 percent increase in production from the 2012 MY production at 304,595 MT as a result of good rainfalls in the eastern part of the country and an increase in planted area. The 2013 MY area planted of 8,796 hectares is the highest since the 2008 MY. A low grapefruit production season is always followed by a higher production season.
Post forecasts the 2014 MY grapefruit domestic consumption to remain flat at 5,000 MT. Domestic consumption of grapefruit is low due to the negative press and perceptions on the medical effects of grapefruits in South Africa, in addition, there is a lack of awareness of grapefruit and the local market especially the younger generation has not acquired the taste for grapefruit.
Grapefruit is also processed for juice, the majority of which is exported to the Europe. The left over pulp following commercial juice extraction is an important source of grapefruit oil which is used as a flavoring in many soft drinks. The inner peel is a source of pectin and citric acid, which are both used by the food industry to preserve fruits, jams, and marmalades. Naringin is also extracted from grapefruit peel, and gives tonic-water its distinctive bitter flavor. Finally, the grapefruit peel oil is used in scented fragrances.
Post forecasts the 2014 MY grapefruit exports to decrease by seven percent to 220,000 MT based on lower domestic production. While South African grapefruit exports enter the European Union (EU) duty free under the bilateral Trade Development Cooperation Agreement (TDCA), the EU introduced stricter rules for the import of South African citrus to protect the EU from citrus black spot. Industry sources have indicated that while the stricter rules have brought certainty to South Africa following the banning of South African exports in November 2013, the industry would be affected by the added costs of complying to these requirements and the capacity of South African regulatory bodies could be constrained. The exact impact of the new requirements are uncertain at this stage and post anticipates that they could start showing in the 2015 MY and beyond.
Post revised downwards the 2013 MY exports to 236,414 MT based on final GTA data. The 2013 MY exports at 236,414 increased by 36 percent from the 2012 MY export at 173,885 MT. This increase is based on the cyclical increase of grapefruit production.
South Africa grapefruit can enter the United States duty free under the African Growth and Opportunity Act (AGOA). South African 2014 MY exports to the United States are anticipated to be significantly higher than the 2013 MY exports, according to industry statistics, the first citrus exports to the United States in the 2014 MY are double the amount exported at the same period in the 2013 MY. Europe and Japan are South Africa’s major export markets. Japan imposes a ten percent Most Favored Nation (MFN) duty on SA grapefruit. Russia which is the third largest market for South Africa’s grapefruit export, imposes a five percent or US$27.96/ton (whichever is greater), while Canada, Hong Kong and the UAE apply a zero percent MFN tariff.
Post forecasts 2014 MY grapefruit imports to remain flat at 450 MT as a result of static domestic consumption. South Africa is not a major importer of grapefruit. Imports originate from Spain and Israel to fill the demand gap towards the end of the calendar year.
Grapefruit prices tend to follow the production cycles of grapefruit, in years with high production prices are low, vice versa. Domestic price have grown from R1,434 (US$134) in 2004 MY to R2,352 (US$220) in 2013 MY. As expected, grapefruit processed prices are lower than the domestic and export prices.
Post forecasts the South Africa 2014 MY oranges production to increase by three percent to 1,600 million MT as a result of good weather conditions and an increase in area planted. The biggest increases in orange production are forecasted to be from the Western Cape, Sundays River, Patensie, Letsitele and Hoedspruit areas, and these increases are expected to be partially offset by orange production decreases in Senwes due to late rains and hail.
Post revised upwards the 2013 MY and 2012 MY orange production to 1,560 million MT and 1,466 million MT, respectively, based on industry data. The area planted of oranges has grown steadily since 2007 MY. The area planted has grown by at least twelve percent from 36,921 hectares in 2007 MY to 41,426 hectares in 2013 MY.
Post forecasts 2014 MY domestic consumption to remain flat at 130,000 MT based on static consumer demand. Fresh oranges are the most popular citrus consumed in South Africa. Post revised downwards the 2013 MY domestic consumption to 127,674 MT and the 2012 MY domestic consumption to 128,636 MT based on industry data.
Post forecasts 2014 MY South Africa orange exports to increase by two percent to 1,170 million MT based on increased domestic production, favorable market conditions and a weak Rand exchange rate. The decision by the EU Commission to impose stricter rules on South African citrus imports is anticipated to bring certainty to the market and will not affect the 2014 MY exports. The impact of this decision is anticipated to result in increased compliance costs in the coming seasons and possible shifts to other export markets which are less stringent.
Post revised upwards the 2013 MY and 2012 MY exports to 1,149 million MT and 1,089 million MT, respectively, based on GTA data.
While Europe still remains South Africa’s traditional market for orange exports, accounting for forty percent of the export market in 2013 MY, there has been significant export growth to other regions. The Middle East has gained ground as one of the major South African orange export destinations, with a growth of 57 percent from 172,804 MT in 2007 MY to 272,380 in the 2013 MY. Exports to the United States have also significantly grown by 58 percent from 25,619 MT in 2007 MY to 40,576 MT in 2013 MY. The 2013 MY exports to the United States at 40,576 MT under the duty free AGOA, were the highest ever achieved by South Africa to the United States. A long term comparison of the United States export market shows that South African exports to the United States have grown astronomically given that in the 1997 MY, orange exports to the United States were only 290 MT.
Post forecasts the South African 2014 MY exports to remain flat at 400 MT. Oranges are imported to South Africa in the months of November and December to close supply gaps and satisfy year-long demand.
The export market provides the highest prices, followed by the domestic market and the processed prices last. Local market prices have increased by 91 percent from R1,090 (US$103) in 2004 MY to R2,077 (US$194) in 2013 MY.
Post forecasts the South African 2014 MY production to increase by nine percent to 160,000 MT based on good growing conditions and an increase in area planted in the following regions; Senwes, Patensie, Sundays River, Boland, Western Cape, and East Cape Midlands. Post revised downwards the 2013 MY and 2012 MY production to 146,270 MT and 145,837 MT, respectively, based on final industry data.
After following a flat growth in area planted from the 2007 MY to the 2011 MY, the area planted to soft citrus started to increase steadily from 5,044 hectares in 2011 MY to 5,863 hectares in 2012 MY and 6,273 hectares in 2013 MY due to new orchards being planted and growers responding to the increasing global demand for soft citrus.
Post forecasts the 2014 MY domestic consumption to remain flat at 10,400 MT as domestic demand remains flat. Post revised upwards the 2012 MY domestic consumption to 11,209 MT based on industry data.
Post forecasts the South African soft citrus 2014 MY exports to increase by six percent to 140,000 MT based on growing market opportunities in the Middle East and a favorable exchange rate. Post revised upwards the 2013 MY and 2012 MY exports to 132,568 MT and 121,846 MT, respectively based on GTA data.
South African naartjies enter the US duty free as a result of AGOA preferences. EU member states impose a 1.6 percent preferential tariff for South Africa for all naartjies originating from South Africa. Russia imposes a five percent or US$41.93/ton (whichever is the greater) general tariff. Most Favored Nation (MFN). Canada, Hong Kong, the UAE, and Saudi Arabia impose a zero percent MFN duty.
Post forecasts 2014 MY soft citrus imports to remain flat at 1,400 MT. South African imports are only marginal in order to satisfy out of season demand.
Post forecasts 2014 MY production to increase by 18 percent to 270,000MT based on good weather conditions and an increase area planted. The main regions forecasted to result in this increase in production are the Sunday River and Senwes due to increased plantings and good growing conditions. Post revised the 2013 MY and 2012 MY production to 229,059 MT and 253,084 MT, respectively, based on published industry data.
After following a flat growth in the area planted from the 2007 MY to 2011 MY, the area planted to lemons started to increase from 4,667 hectares in 2011 MY to 5,457 hectares in the 2012 MY and 5,828 hectares in 2013 MY, and is anticipated to break the 6,000 hectares in 2015 MY.
Post forecasts the 2014 MY domestic consumption to increase by three percent to 13,000 MT based on increased production and marginal increase in domestic demand. Post revised upwards the 2013 MY and 2012 MY domestic consumption to 12,621 MT and 11,292 MT, respectively, based on industry data.
Lemon juice is used as flavorings for grilled or fried poultry and fish dishes, and a flavor agent in cakes, tarts, biscuits, candies, ice creams and salad dressings. In the drink industry lemons/lime are used to make lemonade, smoothies and liquors. In the cleaning industry, lemon juice is used as a degreaser and disinfectant, due to its high concentration of citric acid which can inhibit the proliferation of some molds and bacteria.
Post forecasts the 2014 MY lemon exports to increase by 15 percent to 200,000 MT based on increased domestic production, a favorable exchange rate and growth in export markets such as Russia and Middle East. Post revised downwards the 2013 MY and 2012 MY exports to 174,473 MT and 165,500 MT, respectively, based on final GTA data. The Middle East continues to be the major market for South African exports and accounted for 41% of the South African 2013 MY lemon exports.
Post forecasts the 2014 MY imports to be flat at 320 MT as a result of sufficient domestic production and relatively low domestic demand.
Post forecasts the 2014 MY orange juice production to increase by six percent to 31,000 MT based on the equivalent increase of fresh orange domestic production delivered for processing to 300,000 MT in the 2014 MY.
Post revised upwards the 2013 MY and 2012 MY orange juice production to 29,152 MT and 25,590 MT respectively, based on the revision of the respective fresh orange domestic production delivered for processing as per industry data.
Producers in South Africa prefer to export their fresh orange production as export prices are much higher than domestic and processed market prices.
Industry statistics for orange juice (200911, 200912 and 200919) are largely unavailable in South Africa. The production, consumption and stock data are comprised of information extracted from various sources, and represent Post`s best effort of the South African orange juice supply and distribution statistics.
Post forecasts the 2014 MY domestic consumption of orange juice to remain flat at 7,400 MT based on static domestic demand. The increasing food costs and inflation pressures faced by consumers have restricted growth in the domestic consumption of fruit juices especially the 100% fruit juice. There appears to be a shift within the market with increasing demand of concentrates compared to the 100% fruit juices.
Post forecasts the 2014 MY orange juice exports to increase by 23 percent to 27,000 MT based on increased production and the weakening rand exchange rate.
Post revised upwards the 2013 MY orange juice exports to 21,989 MT based on final GTA data. Netherlands is the biggest market for South African orange juice exports, followed by Mozambique, Zambia and Zimbabwe. Middle East countries such as Israel and the United Arab Emirates have also shown modest growth.
Post forecasts the 2014 MY import of orange juice to remain flat at 1,400 MT. South Africa only imports a small quantity of orange juice, an implication of low demand and sufficient domestic production to supply the market. Although Zimbabwe was the largest exporter to South Africa in 2013 MY, it also imported an equivalent amount of orange juice from South Africa in 2013 MY.
United States cold-sterilization protocol
South African exports to the United States are duty free under the AGOA. The Western Cape Province is the major region which exports to the United States under the cold treatment schedule of 24 days to reduce False Codling Moth. Following discussions by the United State`s Animal Plant Health Inspection Service (APHIS), and the South Africa`s Department of Agriculture, Forestry and Fisheries (DAFF), APHIS granted a pilot program to reduce the cold treatment schedule to 22 days which will be hugely beneficial to South Africa in preventing losses estimated to be between six and fifteen percent due to cold damage. Exports under the pilot program will be destined to the ports of Newark and Philadelphia, and if the program is successful South Africa will also have access to Houston and New Orleans in 2015 and beyond.
Tightening of the European Market
South African citrus exports enter the European Union (EU) duty free under the bilateral Trade Development Cooperation Agreement (TDCA). However, on May 27, 2014, the EU Commission introduced stricter regulations for the import of South African citrus as a follow up to the restrictions applied to the South African citrus imports for the 2012/2013 season. The key changes to the regulations are that the new measures would include (i) recording pre and post-harvest chemical treatments, and (ii) mandatory registration of packing houses, as well as on-site official inspections at citrus orchards, (iii) South African authorities will also need to take a sample of at least 600 of each type of citrus fruit per 30 metric tons (MT), (iv) all fruit showing symptoms will be tested, and (v) no distinction between citrus fruits for fresh consumption and citrus fruits for processing will be made. The EU Commission also indicated that in the event that recurring interceptions of citrus fruit contaminated with citrus black spot are detected in the coming months, these measures will be further strengthened and additional restrictions may be imposed. Post will be closely monitoring the impact and developments of these new regulations