SA citrus to weather global recession

US imports have dropped sharply, even more so than US exports, which suffered the largest decline in 40 years, and all this on the eve of South Africa’s citrus season.
But Justin Chadwick, CEO of the Citrus Growers’ Association, said it’s too early to tell if our exports to the US would be affected. “It’s still early in the season and we’ve only packed a few million cartons of citrus,” he explained. “But the message from the US is all lemon exports, not only those from South Africa, will be affected by the recession.”
First quarter GDP figures in the US recorded a 6,1% decline in January through March, much worse than expected and not much better than the 6,3% drop in the fourth quarter of 2008.
With less disposable income many Americans can no longer afford to dine out or buy takeaways as regularly. “This has led to a drop-off in demand for lemons, which are used extensively in the hospitality trade,” said Chadwick. “However, the opposite is expected for other fruit types. When people eat in, they tend to eat more fruit and vegetables than if they dine out.”
Chadwick said domestic demand for lemons had been quite good and exports to the Middle and Far East seem to be preferred markets for South African lemons, compared to previous years. “However, we’ve seen a big drop in the Russian market,” he continued. “The Russian economy is driven by oil and that market will take a lot less fruit, which is concerning.”
More soft citrus has been exported – 800 000 cartons of lemons, compared to 600 000 carton as of 16 April – with 70% going to the UK and 22% to northern Europe. The UK has benefited at the expense of Russia, which has reduced lemon imports from 14% in 2008 to just 3%. Lemons have predominantly gone to Middle Eastern markets (45% in 2008; 52% in 2009) and the Far East (14% in 2008; 2009, 22% in 2009).
South Africa has exported just over 110 000 cartons of grapefruit, with 82% going to northern Europe. Russia has decreased grapefruit imports from 26% in 2008 to zero in 2009.
Chadwick said price would be a significant factor in exports in 2009. “Most UK retailers are advertising based on price, even those which in the past differentiated themselves based on quality or service,” said Chadwick. “This will probably mean receivers will be looking for better deals from suppliers and for consignment deals.”
Chadwick advised growers to ensure they sold goods at a price covering costs and giving some return on capital and management.
He also noted supermarkets were changing pack sizes. “Consumers are buying smaller packs because of price, regardless of the fact they’re actually paying more per piece,” he said. “This could also mean a demand for smaller sizing in some markets.” – Robyn Joubert