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"To be honest I don't think anybody wins from political protectionism or sanctions."- Justin Chadwick CEO, South Africa's Citrus Growers Association"
South Africa to halt citrus exports to EU
Justin Chadwick CEO of South Africa's Citrus Growers Association told FreshPlaza at Asia Fruit Logistica in Hong Kong that the European Plant Heath had indicated that they were looking at imposing yet stricter regulations on exports .
"We have always maintained that we would like to reduce number of interceptions, although we believe that five is neither technically justified or appropriate or has any relevance. But they insist on five and we have to go along with what they decide."
This decision will only be for oranges from infected regions not for late mandarins where there have been no cases of CBS found.
"This suspension of trade is not to anybody's advantage really, although we are not talking about huge volumes, 3-4 million cartons, as the season is almost over and most people try beat the duty deadline which comes into force on the 16th October," continues Chadwick. "To be honest I don't think anybody wins from political protectionism or sanctions, trade needs certainty and a balanced flow."
South Africa exports 110 million cartons of citrus 75% of which are oranges total citrus export are worth some 1 billion Euros ($1.3 billion).
"This might not not sound like a lot of fruit but people have programs worked out for EU, said Chadwick. "But exporters have ships and containers booked, so taking this decision is disruptive and will cause some harm and most irritating is that we all know that there is no risk. We are at the point now where if there are further measures a lot of growers will just not go to Europe in the future."
According to Chadwick there are no immediate alternatives, "You are talking about over 40 million cartons so you don't just turn around and say, 'Ok we will send it to Tesco instead of Sainsburys'. There are no other markets ready to take your product, so it will be a growth over time in the markets. We are trying to develop markets in the east, we are on a mission now Indonesia and we already have access to most of the markets only one which we don't have to is the Philippines but Philippines inspectors have just been in South Africa and will flew back home on Sunday to submit a report which hopefully be successful and we will go through a comment period and hopefully have access for next season. We also have a draught protocol in Vietnam which is under consideration."
Chadwick explains that just having access does not mean export is easy. In Indonesia for example, South Africa don't have mutual country recognition, meaning stricter regulations and that they can't enter the port of Jakarta and have to go through Sumatra making it very costly to then move containers to Jakarta where the main market is.
South Africa supplies around 60% of oranges in the Southern Hemisphere and Chadwick said there is alternative market demand which can be met and expanded, "For example we are now sending 3m boxes of oranges to China, if you consider we send 40m to Europe there must be huge opportunities to increase volumes into the Chinese market. The issue is tariffs, we don't have free trade agreements with a lot of the Asian counties which a lot of our competitors do which makes our oranges expensive. For India we have a 35-45% tariff to and at the moment the volumes we send there are insignificant, but this is a market which should be able to absorb a good 10 m cartons."
Eastern Europe is also a possibility South Africaalready sends 12% of its citrus exports to Russia and through here to other countries. Chadwick doesn't think the ban on EU products there will make to much difference, possibly a bit more at the end of the season to replace some of what would have come from the Northern Hemisphere.
"Another market to consider is Africa, we currently only send 1% of our product there and quite a bit of it goes across the border to Mozambique and Zambia. If you look at the apple industry and the expansion into West Africa there must be more potential for citrus to grow. The big obstacle is logistics, people say it costs the same to send a container to Ghana as to Rotterdam. Infrastructure is developing but needs to develop a bit more, but there is a lot of investment taking place already."
South Korea is an exiting market for South African citrus. This the second year of shipping to there and volumes increased on last year.
There is a lot of potential for South African citrus in other markets but the biggest problem is that it will not happen over night and by the time agreements are set up it might be too late for some of the growers.
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