The South African citrus season kicked off at the beginning of April. The first lemons have already arrived in Dutch ports, and grapefruits will soon follow. This year’s volumes are estimated to be larger than last season, especially for lemons. Although there seems to be sufficient volume - there is 13% more than last year - the market is characterized by uncertainty.
The coronavirus pandemic, which spread rapidly from China across the world in March, is the primary cause of this uncertainty. “The situation is currently changing every week, and it is almost impossible to predict the South African season clearly,” says Total Produce’s Tjeerd Hoekstra.
The COVID-19 outbreak has fuelled citrus demand since these fruits are rich sources of vitamin C. “The European market’s increasing demand for citrus has ensured there is room for South Africa earlier than usual. Supply is currently limited. This is also being caused by the current complex situation in Spain. That country is not only dealing with logistical and packaging station issues caused by the coronavirus; they have had heavy rains too.”
South Africa has not escaped the outbreak either. At the end of March, the country was placed under three weeks of lockdown, which was then extended by a further two weeks. There is great uncertainty about how this will affect citrus exports. “How will it work with field laborers?" wonders Tjeerd.
"And packers at packing plants, and the cold storage facility capacity? These are all factors we have to consider since the preventative measure and distances they must adhere to makes it impossible to pack the usual capacities.”
According to Tjeerd, logistics will cause the main bottleneck this season. “I think supplies will be sluggish this year. Then there is still the question of whether the product will be able to reach its destination. At the beginning of April, ships were still docking at the Port of Rotterdam, but we have to take a possible export stop, as is the case with Peru, in mind."
"Besides these decisions that have to be made, equipment is also scarce at the moment. Many reefer containers were still stuck in China and the countries around it at the beginning of April. These must first all become available before they can go to South Africa to export citrus."
"Later in the season, the Asian markets will also demand South African citrus," adds Hoekstra. "But by then, I will already be way ahead. It is difficult to say how the market will look over a few weeks. That is currently hard to predict. I expect them to increase due to the demand and slow supply, but the picture could look very different over a week.”
In the Netherlands and the rest of Europe, citrus sales on the market are sufficiently challenging. “The demand for citrus has climbed at supermarkets, in particular, but, on the other hand, the demand from the hospitality industry has stopped completely. Now, 90% of the demand comes from retailers.
"The fact that we now depend on a single sales channel brings several challenges like the demand for a certain size. So, it is not that the citrus demand has exploded; it is more that the supply side is currently small due to the difficult demand. There are, after all, no longer any alternative sales channels.”
In a nutshell, there is a lot of uncertainty regarding the start of the South African citrus season. “Uncertainty is certainly the keyword for this season. This uncertainty is reflected mainly in the logistics and limited sales channels,” concludes Tjeerd. Time will tell how this year’s season will develop.
Tjeerd Hoekstra
Total Produce BV
Tel: +31 10 244 84 14
thoekstra@totalproduce.nl
www.totalproduce.nl