By Thabile Nkunjana and Dr Sifiso Ntombela
Despite the challenges brought by Covid-19, the citrus industry exported a record of 146 million cartons in 2020, and cemented its position as the second largest exporter of citrus fresh-fruit in the world. Encouragingly, black farmers are gaining momentum in the export market as their volumes saw an increase of 40% pushing their export to 1.6 million cartons during the 2020 marketing year.
This success can be attributed to Efforts by the Citrus Development Chamber that coach and train farmers on adopting commercial farming and complying with international market standards. Also, the global demand for oranges and lemons during the early to mid-months of Covid-19 might have played a part in the industry’s export success.
The industry’s primary production is well developed and continues to grow, however, an increased output requires diversification of markets. While market expansion is essential for further growth, especially for fresh citrus products, the citrus industry players must consider product differentiation to cater to both fresh-fruit exports and agro-processing. The development of citrus processing capacity could encourage more farmers to enter the citrus industry either as producers of fruit for the juice market or fruit for the fresh export market.
This will be in line with the aspirations for the agriculture and agro-processing master plan that advocates for product-value addition to capitalise on export opportunities emanating from the African Continental Free Trade era. With the industry’s transformation making some progress from the primary production point of view, the country’s processing industry needs more attention and the (AfCFTA) offers a market opportunity. Research has well demonstrated the deficit in processed products across the continent, and South Africa needs to channel more attention to fruit processing to fill some of this gap. In the early 2000s, only a mere 6% of fruit and vegetables were traded within Sub-Saharan Africa, while the rest was imported outside the region.
While opportunities exist, both domestically and in the continent for processed citrus products such as citrus juice, it must be recognized that different cultivars will be suited for the processing market. The majority of cultivars planted in the country are geared for fresh-fruit export. Secondly, the farm premiums are different when the farmer produces for fresh fruit export and juice processing.
While farm premiums are different, so are the costs of production and need to comply with stringent market standards for fresh fruit exports, which in some cases becomes a barrier for new entrants such as black farmers. In essence, the point we are making is that, it is in the best interest of the citrus industry and country to create opportunities and market strategies for both fresh-citrus export and processing streams to allow farmers to choose their preferred path.
Just a bit of context, while South Africa is the second-largest citrus producer in the world, large quantities of fruit juice are imported from the global market, largely from China, Argentina, and Spain. This indicates an already matured citrus processing market in the country, which farmers can service. The country has progressed in terms of technology adoption when compared to most other African countries, and that should give it some competitive edge in upscaling its fruit processing for the domestic, the AfCFTA, and the global market at large.
Presently, South Africa accounts for at least 75% of fruit and vegetable juice exported within Africa, though its market share has declined by 17% between 2013 and 2019. Of the top ten leading fruit juice exporters continentally, Senegal, Morocco, and Eswatini are three countries that have increased their market share by 573%, 99%, and 4%, respectively, between 2013 and 2019.
Despite South Africa’s decline in its market share continentally, the country remains competitive. The observed decline can be linked to South Africa increasing its export outside Africa, and by margins, it remains the largest supplier. For example, exports to Spain had increased by 137.8% while increasing by 21.3%, 20.6%, and 15.2% to Israel, Chile, and the Netherlands, respectively.