AS no fresh produce has been shipped to the Russian market over the past few weeks by most countries, early shipments of lemons destined for this market have been impacted, according to the Citrus Growers Association (CGA).
Justin Chadwick, CGA’s chief executive, said in a weekly newsletter on Friday that should this situation continue, when the export season officially kicks off next month, other varietals such as grapefruit and soft citrus would also be impacted.
“Morocco, Turkey and Egypt all export significant quantities of citrus to Russia. The conflict has impacted the ability of these countries to supply the Russian market, resulting in the diversion of fruit to other markets. The concern is that these markets could suffer from an oversupply and a build-up of stock, which could impact early season South African supplies,” Chadwick said.
CGA said when it comes to the Russian market, the country accounted for 7 percent to 10 percent of total South African citrus exports annually, with 11.2 million (15kg) cartons of fruit having been exported to Russia last year.
The CGA said in addition, the depreciation in the rouble would make imported fruit more expensive, while payments could be difficult due to restrictions on money flows. This increased the risk of exporting to Russia.
Although South African exports to Ukraine were still developing, the conflict will put a hold on exports to that country.
“Exporters had started to build some momentum in direct exports to Ukraine. This turn of events highlights the importance of access to multiple markets in order to divert fruit when necessary. The CGA calls on the government to redouble their negotiations with trading partners in order to optimise present market access conditions, to retain access where this is threatened and to gain access to new markets,” he said.
CGA said over the past year, there had been a major increase in a number of input costs, including fertiliser prices almost doubling and agrochemical prices increasing. Rising fuel prices and freight costs, which increased by 30-40 percent last year, had also severely squeezed growers’ profit margins.
The current situation, with a sharp increase in the price of crude oil, would increase shipping costs further.
Chadwick said the major European ports used by the South African fresh produce industry were heavily congested as all containers needed to be scanned.
This resulted in fresh fruit from South Africa, in some cases, remaining in transit for up to 90 days – when it usually took around 24 days.
“With 14 percent of global fertiliser exports currently being stuck in Russia and the price of oil and gas continuing to climb as a result of the current conflict, we can expect even further increases in fertiliser, fuel and agrochemical prices, which will place a further strain on growers,” he said.
In an article titled Russia-Ukraine conflict and its potential impact on trade and food prices for South Africa, the National Agricultural Marketing Council’s (NAMC) Christo Joubert, Thabile Nkunjana, Ndiadivha Tempia and Sifiso Ntombela said while South Africans were already experiencing increasing food prices for most staple foods such as maize, wheat and animal proteins, the current situation between Russia and Ukraine was most likely going to have an impact on the cost of the production and distribution of food and ultimately on the end-user (consumers).
This was imminent for wheat products such as bread and vegetable oils, which would affect products such as cooking and animal products, especially poultry and pork.
According to the latest NAMC Supply-Demand Estimate report, South Africa had a wheat reserve that can last 67 days and maize reserves that amount to 88 days. This was said to be sufficient time to ensure South Africa identifies alternative suppliers should the conflict in Russia/Ukraine persist much longer.
given.majola@inl.co.za
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