"We have had to learn fast about the vagaries of mother nature," explained Stuart Symington, Managing Director of Capespan South Africa. "We have had drought, hail, strong winds and even flooding, all of which are effecting the citrus season. But despite that we are starting a bit earlier this season."
Lemons are seeing a good price at this early stage but according to Symington this may change as the season progresses, especially when the Argentinian lemons start arriving as they are expected to export more than last year.
"Good market conditions in the last few years led to increased plantings," according to Symington. "But we do have to be a bit cautious that we don't create a tsunami of fruit in five years time. Capespan are investing in lemons but it pays to be cautious."
"Lemon prices are good at the moment, and the Far East is particularly good if you enter the market with the right quality”, explains Symington. "The EU is also paying favourable prices at the moment as demand firms. It is an encouraging start to our citrus season. But we remain ever conscious about how quickly markets – and therefore prices - can change".
South Africa has smaller fruit this season but increased plantings will counter some of the volumes lost to the drought. Grapefruit production is lower than 2015, with the possibility of blemishes from hail and sunburn. But all in all it should not be wildly different from a normal year.
“Capespan has ventured into farming on the pome, citrus and grape fronts. With our own farms and our procurement of third party fruit, we are concentrating on ensuring that we have the right mix of products – the right varieties in the right quantities and in the right weeks is what counts”. "The European market experienced an early frost this summer, so there will be an opportunity for southern hemisphere products to take some of that shelf space off the European retailers. In many respects, this year will be about matching markets with the appropriate fruit specifications that you have in your export cartons. For example, the Middle East market takes smaller fruit generally. Russia will be interesting this year: the rouble is weaker now compared to this time last year, and volumes exported will need to be matched with risk appetites that the various role-players have for that market. This will be a year of viewing some of the markets with great caution."
Symington says that they are optimistic about the season though, due to the dry hot weather there should be hopefully a reduced risk of CBS as it tends to manifest in more humid conditions. But as always they will need to be vigilant when sending fruit – especially to the EU markets.
The EU remains the biggest market for Capespan but the company has diversified its market spread in recent years. "The general trend is eastwards," explains Symington. "20% of South Africa’s citrus exports goes to the Far Eastern markets now whereas 10 years ago it was closer to 10%. This can be attributed to to increased demand as a result of the growing affluence of the Asian consumers. South East Asia - Bangladesh, Pakistan, India, Sri Lanka - have been very exiting markets in recent years, and we are expanding there. The Capespan Group recently invested in an Indian company Yuppa, and we are looking forward to capitalizing on this at Capespan South Africa."
Iran may be an interesting opportunity now that sanctions have been lifted. But this market is import permit driven – so its not like other markets. Baltic countries as well as the Eastern European markets are growing, thus re-emphasizing the importance still of the greater EU market for South African citrus suppliers.
For more information:
Stuart Symington
Capespan South Africa
Tel: +27 21 917 2848
E-mail: stuart_symington@capespan.co.za
Skype: ssymingt
Tel: +27 21 917 2848