SA citrus insights in the Middle East
An early South African lemon crop means exporters are competing with local produce in the Middle East, while a strong grapefruit harvest has caused dumping concerns. G.F. Marketing director David Pearce tells www.freshfruitportal.com how South Africa's citrus exports to the Middle East are shaping up this season and what consumers are looking for in the region.
Why is it that South African lemons have been able to dominate in the Middle East despite strong local competition from Turkey and Egypt?
South African lemons are well known for long shelf-life and good juice content. When South Africa arrives it is a new season whereas for Egypt and Turkey it is an old season - the customers all know this. South Africa's packing is much better, the carton is stronger, the fruit is alternate layer wrapped so the customers know that they can keep the fruit much longer than they can with the fruit from Egypt and Turkey.
What has this meant for lemon sales compared to last year?
Sales are as per normal at this time. Our season is earlier so we are in the market earlier. In fact, our pricing is lower because of us arriving earlier in a market that is full of Egyptian and Turkish supply.
You've spoken before about South Africa's increased grapefruit crop. Will the Middle East be able to absorb a large part of this?
This is what we are concerned about. Unfortunately, not all the exporters in South Africa are responsible marketers and we are concerned that some will ‘dump’ the Middle East with the smaller fruit that they can’t move in other markets. The Middle East can only absorb so much before the market is full. There are more smaller fruit (50/55/60) this year and we are expecting a flood of these sizes into the Middle East.
What pressure would this 'flood' put on prices and will it still be profitable?
Good question. The responsible marketer will liaise with growers and see what the 'cut-off-break even' price is and not go below that mark. However, others who, for example sell into Europe and the U.K which are consignment markets, have nothing to lose by sending to the Middle East. So, that is what we are afraid of.
Moving away from grapefruit, how are the first shipments of oranges expected to fare and how big is the threat from U.S. and Spanish competition?
Again, the responsible guys are not sending green fruit or early varieties, and as such the first shipments are only leaving week in weeks 16 or 17 and have not arrived in the market. According to our customers the volume of Spanish and U.S. oranges will be almost finished by end of May, so we should not have too much competition when our fruit arrives. Oranges sell well if they have full color - a full orange color - and if we arrive with greenish fruit we will not sell our fruit.
How picky are Middle Eastern consumers compared to other markets? How would you describe their expectations generally?
Traditionally, the Middle East has taken a minimum class 1 standard of fruit whereas the Far East, the U.S. and the U.K. would take a premium or super standard, which is perfectly shaped, no blemishes, etc. The problem is that there is a wide range when you pack a minimum standard class 1 and some growers pack right down to the borderline to get maximum pack-outs, which in effect means that you get various qualities floating around the market.
Middle Eastern customers are not fussy or picky but want a good solid fruit to work with. Also, in regard to pricing the Middle East will never pay the highest price but will also never crash as happens in Europe.
Fruit South Africa recently raised serious concerns over the value of the Rand. How has the high currency value affected citrus exports to the Middle East?
Yes, it is tough that’s for sure. We would ideally like to see our Rand at ZAR8 to one US dollar, but we are now at ZAR6.71 to the dollar, so this is making it difficult for us. However, at the same time the Rand against the Euro, the Pound and the Yen have also been affected, so it affects everyone.Unfortunately, it is the poor grower that suffers in the end, as always. A strong Rand means that we basically export less and more fruit goes to the local market. We pay about 70% of our growers in Dollars, so they play with the currency and exchange at best.
Where are the most significant citrus sales in the region and how do tastes differ from country to country?
Citrus is a commodity in the Middle East so it sells well in all countries - some countries want smaller sized fruit, others larger sized fruit. Saudi Arabia is the biggest receiver of fruit given that they have the biggest population in the Gulf. Iran could take more but they have high duties and stringent protocols, so it takes less than Saudi Arabia.