With better trade terms, South Africa could help lessen citrus shortage in Asia

The Vietnamese spend trillions on buying imported oranges, and an awakening to the benefits of healthy living in China has caused a spike in orange juice consumption.

The reasons for demand are many and varied, compared with supply, which should be quick and simple. But it’s not simple at all. Import tariffs, put in place to protect domestic fruit producers, mean that Asia is experiencing a shortage of supply from citrus-producing countries in the southern hemisphere.

One way around that problem is a trade agreement with South Africa (SA), but SA has the lowest number of trade agreements among competing southern hemisphere suppliers to Asia.

Exacerbating this are setbacks such as SA’s exclusion from the Vietnamese market due to a minor administrative error. When applying for continued market access during Vietnam’s revision of its plant health regulations, SA stipulated the generic "citrus" instead of specifying the types of citrus for export. This resulted in all citrus fruit being excluded from the permit list. 

The only potential meaningful trade agreement SA’s citrus industry has is the Southern African Customs Union Plurilateral Agreement with India, which has been discussed for many years now without much progress.

SA is required to negotiate trade agreements with third parties as a bloc because the country is in the Southern African Customs Union with a common external tariff.

Southern hemisphere countries such as Chile, Peru and Australia enjoy trade agreements with up to nine Asian countries — a grave illustration of SA’s problematic position. These countries enjoy partial and even free trade agreements, which are invaluable when it comes to maximising opportunities in a given market. They enjoy significant savings and are spared a lot of the bureaucracy that SA has to endure.

The absence of required trade agreements — compounded by restrictive import tariffs — makes seamless exports to countries like China, Indonesia, Japan, South Korea, Philippines, Thailand and Vietnam much more difficult.

Like any progressive organisation, the Citrus Growers’ Association of Southern Africa has a keen focus on the retention of markets and the continued quest for new ones.

Last October, Fruit SA (of which the association is a founder member) signed a memorandum of understanding with Wang Junbing, the secretary-general of the China Entry-Exit Inspection Authority and Quarantine Association.

The citrus industry hopes that this will make for more stress-free export to China, especially when it comes to the required paperwork.

China’s mainland and Hong Kong are the biggest importers of SA’s citrus fruit in Asia, with Hong Kong and mainland China importing 120,000 tonnes of citrus fruit annually.

So far in 2017, SA has exported 1.8-million tonnes of citrus, with 300,000 tonnes destined for the Asian market.

This makes the country the biggest southern hemisphere exporter of citrus to the Asian market by far, and one of the leading exporters of fresh fruit to this market.

On its own, the citrus industry is a small entity jostling for a piece of the fiercely competitive Asian market. But with more interventions and support from the government, this is an opportunity that can boost the industry and deliver sustainable jobs and opportunities.

Source: businesslive.co.za

Publication date: 11/1/2017


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