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South Africa: Record citrus crop fails to deliver large profits due to soaring freight costs

South Africa has what is expected to be a record citrus crop on its hands, but growers will not become super rich overnight as increased freight and other costs have really affected their margins.

Justin Chadwick, the CEO of the Citrus Growers’ Association of Southern Africa: “It will be a record in terms of volumes, topping last year’s. But in terms of returns for the grower, they’re looking pretty dismal. The biggest factors in terms of influence on our export returns have been the freight rate and the cost of shipping. As a result, a lot of fruit was exported at a loss.”

The Baltic Dry Index — the benchmark for shipping costs — soared over 1,000% higher at one point last year compared with its pre-pandemic levels, according to data gathered by the International Monetary Fund, which warned in April that the trend would be a major fuel driving inflation in 2022.

Freightos, a digital booking platform for shipping, said in September that global freight prices were “45% lower than [their] level a year ago, though still nearly quadruple the pre-pandemic norm.”

On that score, it’s perhaps revealing to note that fresh produce is not included in any of the five broad categories that comprise the Food Price Index calculated by the UN’s Food and Agriculture Organization. In terms of numbers, Chadwick said the Citrus Growers’ Association of Southern Africa estimates that about 167 million 15kg crates will be packed for shipment this year compared with 161.6-million crates in 2021. That represents about 70% of the crop, and the rest will go to the domestic market.

There were concerns that the market in Russia — the fifth-biggest destination for South African citrus exports — would be a write-off this year because of Moscow’s invasion of Ukraine. But South African citrus exports to Russia have exceeded last year’s.

Source: dailymaverick.co.za


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