2 September 2020
While COVID-19 has disrupted many industries, the citrus industry in South Africa has emerged resilient, with strong demand in export markets and strong potential beyond the crisis.
To tap this growth potential requires complementary public investment in ports and irrigation infrastructure, and technical capacity to negotiate access to wider export markets on favourable conditions.
Demand for citrus in international markets has boomed under COVID-19 and prices have increased.
For example, European prices for South African oranges in May 2020 were 7%-15% higher than a year earlier in euro terms, or around 40% higher in rand terms.
The volume of citrus exports from South Africa also grew amid the crisis. They more than doubled in the first four months of 2020 compared to the previous year, accelerating on the long term growth trend.
As reflected in the Citrus Growers’ Association membership, the industry is made up of established white commercial farmers who grow for the export market and a smaller number of small and medium-sized black growers. The association established a subsidiary body, the Citrus Growers Development Company, in 2003 to support the small and medium-sized black growers and drive transformation in the industry. These smaller growers accounted for 9% of the total 88,569 hectares planted by citrus growers in 2019. Similarly, of the 1,022,948 tonnes of citrus exported in 2019, small and medium-sized growers contributed 8% to the total.
Increases in the production and exports of small and medium growers could boost foreign exchange earnings and create jobs in an industry which already directly employs about 125,000 workers, around 14% of total employment in agriculture.
Greater inclusion of these growers in the higher value export markets is key to sustained growth. Measures to support their inclusion include investments in on-farm infrastructure and to ensure compliance with standards for quality and health (plant and human). The requirements needed to reassure importing countries that they are not at risk of any pests and diseases are the biggest barrier for fresh fruit exports.
The benefits of digitalisation can be harnessed to lower growers’ costs in adopting the necessary standards. For example, the use of blockchain technology through end-to-end data transparency allows all players in the supply chain to access historical and real-time data linked to the product, such as growing conditions, harvest details and transport history. A similar data sharing platform, Phytclean, was developed in South Africa in 2016. The platform captures, stores and reports data on registration and verification of orchards, and phytosanitary records for export certification.
Collective action by the industry and government is key to unlocking these opportunities to ensure that sustained growth stands on the two legs of inclusion and innovation.
Compliance and innovation
Citrus exports amounted to approximately R20 billion in 2019, up from R6.7 billion in 2010 (around 45% growth in US dollar terms). The growth in exports has been coupled with a corresponding increase in direct jobs in citrus farming from 56,902 jobs in 2009 to 125,000 in 2017, with many more in related activities.
Globally, South Africa is the second-largest exporter of citrus fruit after Spain, accounting for 10% of global exports in 2019. As such, the citrus industry represents a success story of labour-intensive and high-value agriculture-led growth. This success requires research and innovation in what can be termed the ‘industrialisation of freshness’.
If South Africa pursues wider export markets and supports the growing participation in exporting by small and medium growers then the fruit industry could create an additional 100,000 jobs by 2023. Changes in demand as the world comes out of COVID-19, with an increased emphasis on health, imply sustained stronger demand for citrus products.
Large farming groups currently dominate
The main exporters are large farming groups. This partly reflects the investments required to meet the demands and standards of export markets, with the costs of compliance being the responsibility of the exporter. Export requirements include registration and inspection of orchards and packhouses. This is to ensure traceability, good agricultural practices, conformity with product quality and labelling, and compliance with phytosanitary requirements to reduce the risk of quarantine pests and diseases.
Also, being competitive in export markets requires innovation through growing new and improved varieties.
To comply with the many export requirements, larger growers appoint administrators to keep records for compliance with standards and traceability of products.
They also pay for audits by certification bodies to show they comply with quality standards.
The industry has developed the technical and science expertise to comply with the requirements for exporting. The challenge is how to include smaller farmers in the systems of exporting to high value markets through collective actions. There have been steps to do this. Seventy-six of the 123 small and medium-sized growers registered with the Citrus Growers Development Company are exporting (although this is largely to regional markets).
The majority sell to hawkers and municipal markets or alongside main transport routes. These markets are important and will continue to be supplied. But the opportunity for growth in value is in the export market.
How to support growers
Efforts to grow the citrus industry need to focus on widening participation of small and medium-sized growers in export markets. The state and collective action through industry associations are critical to achieve this, not least in the current COVID-19 period.
Small and medium growers face challenges that exclude them from export markets. These include:
- production of poor quality fruit;
- non-compliance with sanitary and phytosanitary standards;
- a lack of irrigation water; and
- a lack of on-farm infrastructure such as irrigation equipment, fencing and packing facilities.
Government and industry have put in place several initiatives and interventions to address the challenges. These include access to land and input grants. But support tends to be piecemeal. It is also not up to the level that is required by growers to be sustainable.