Business

Exports of Valencia oranges to the EU voluntarily closed

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The Citrus Growers’ Association of Southern Africa (CGA) and the Fresh Produce Exporters’ Forum boards have voluntarily closed the exports of Valencia oranges, from areas in South Africa affected by a fungal disease known as citrus black spot (CBS), to the European Union effective 16 September.

In a statement issued on Wednesday, the CGA’s CEO Justin Chadwick noted that the decision follows 10 CBS notifications of non-compliance on citrus detected and the heightened risk that Valencia oranges pose for CBS non-compliance at the tail end of the EU export season.

The association says the market closure will be rolled out in a staggered approach, with the last day of inspection on Valencias in Northern regions being 16 September while the Gamtoos Valley, East Cape Midlands and Sundays River Valley are due for final inspections on 23 September.

It notes that mandarins, grapefruit, lemons and navels from CBS-free areas will not be affected.

“While this closure will serve as another blow to growers who have faced one of the most challenging seasons to date, continued access to the EU market over the longer-term must be prioritised.

“This decision also shows South Africa’s phytosanitary CBS Risk Mitigation System being implemented effectively,” adds Chadwick.

He says that while 138 million cartons of fruit have been packed for export to markets across the world, recent predictions show that the sector will export 3.3 million cartons fewer than what was predicted at the start of the 2022 season.

CGA notes that significant operational and commercial challenges will affect the majority of local growers who are faced with the prospect of severe earnings losses this year.

“Experienced industry commentators are of the view that less than 20% of citrus growers are likely to achieve above break-even returns at the end of the 2022 season. This poses a major threat to the sustainability and profitability of the sector and the 130 000 jobs it sustains as well as the R30 billion in export revenue it generates annually.”

The association says the most significant challenge facing growers, with the biggest impact on their bottom line, is price hikes across several inputs due to the Covid-19 pandemic and the Russia/Ukraine conflict.

It says growers are having to pay virtually twice as much to ship their fruit than what it costs to produce it over the course of one year.

“At the same time, there has been a decline in real export prices across all varietals, which is expected to continue for the next few years.”

“This challenge has been further compounded by the recent, unjustified and discriminatory false codling moth (FCM) regulations passed by the EU, which will require exporting African countries to implement a drastic mandatory cold treatment for oranges headed to the region.”

CGA says the new regulation, which came into effect on 14 July, saw up to 1 350 containers of citrus detained at EU ports for several weeks, resulting in local growers incurring over R200 million in losses.

“The CGA’s position remains that the cold treatment prescribed within the new regulations is contrary to scientific evidence, making it an arbitrary and unnecessarily trade restrictive measure and accordingly contravenes international requirements for such phytosanitary trade regulations,” it adds, noting its recently launched consultation process with the World Trade Organisation and Department of Trade Industry and Competition.

Chadwick says all these factors together with current economic constraints in South Africa – including ongoing fiscal pressure, persistent load shedding, high unemployment rates and low levels of consumer and business confidence – means that growers are under severe pressure.

The association says it remains committed to working with government and other value chain partners to ensure local growers can survive over the short term and that the industry remains a key economic and job contributor in the country.

Nondumiso Lehutso is a Moneyweb intern.

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