With 14% of global fertiliser exports currently stuck in Russia and the price of oil and gas continuing to climb as a result of the current conflict, the Citrus Growers’ Association of Southern Africa (CGA) says South Africa can expect further increases in fertiliser, fuel and agrochemical prices.
To mitigate the impact of Russia’s invasion of Ukraine and subsequent sanctions imposed on Russia by the US and Europe, on South Africa’s citrus growers and exports, the CGA has joined hands with exporters, government and other stakeholders across the value chain.
Some challenges have included fruit exports destined for Russia being blocked and further increases in input costs for growers and exporters as a result of the conflict.
The CGA explains that the Russian market accounts for between 7% and 10% of South African citrus exports every year. About 11.2-million cartons of fruit were exported to Russia in 2021.
“With no fresh produce having been shipped to the region over the past few weeks by most countries, early shipments of lemons destined for the Russian market have been impacted.
“Should this situation continue, when the export season officially kicks off in April, other varietals such as grapefruit and soft citrus will also be impacted,” the association points out.
Further, Morocco, Turkey and Egypt all export significant quantities of citrus to Russia.
The conflict has impacted the ability of these countries to supply the Russian market, resulting in the diversion of fruit to other markets. The concern is that these markets could suffer from an oversupply and a build-up of stock, which could impact early-season South African supplies.
In addition, the depreciation in the rouble will make imported fruit more expensive, while payments could be difficult due to restrictions on money flows. This increases the risk of exporting goods to Russia.
Although South African exports to Ukraine are still developing, the conflict will also put a hold on exports to that country. Exporters had started to build some momentum in direct exports to Ukraine in recent years.
This turn of events highlights the importance of access to multiple markets in order to divert fruit when necessary, the association says.
The CGA has called on government to redouble their negotiations with trading partners to optimise present market access conditions, to retain access where this is threatened and to gain access to new markets.
Meanwhile, there has been a major increase in various input costs over the past year, including fertiliser prices almost doubling and agrochemical prices increasing on average by 50%.
Rising fuel prices and freight costs, which increased by between 30% and 40% in 2021, have also severely squeezed growers’ profit margins.
The current situation, with a sharp increase in the price of crude oil, will increase shipping costs further, the CGA laments.
Moreover, the major European ports used by the South African fresh produce industry are heavily congested as all containers need to be scanned. This results in fresh fruit from South Africa, in some cases, remaining in transit for up to 90 days, compared with the usual 24 days.
Despite the challenges fruit growers are facing, the CGA remains committed to working with government, exporters and other stakeholders across the value chain to help mitigate these threats and the impact of the Russia-Ukraine conflict on the upcoming citrus season.
“It will take our collective effort to help ensure the continued profitability and sustainability of our local citrus industry, which sustains more than 120 000 jobs and generates R30-billion in export revenue for the country.”
Source: Engineering News