South Africa plays citrus 'volume game' in Asia
As the Southern Hemisphere's largest citrus producer, South Africa is looking to move more fruit to Asian markets, from Indonesia through to the Middle East. With a wholesale focus China is still very much the 'new frontier' and has been flooded this year by citrus supplies, with South Africa now set to bolster its presence with lemons, late Navel oranges and easy peelers in the coming years. At www.freshfruitportal.com, we speak with Capespan, Lona Citrus and Core Fruit about the changes taking place in new export markets.
Capespan citrus manager Johan Wege calls citrus a 'volume game', which is exactly what South African fruit exporters have been playing in Asia this season.
"For us it’s the most important new market that’s developing and access is easier now – we’re seeing growth from Indonesia right through to Pakistan and onto the Middle East," he says.
"It’s still a relatively young market from a maturity point of view and it's still very much wholesale-based, apart from the few supermarkets you have in places like Hong Kong.
"Development happens in the wholesale markets and they’re going to supply where they’re the most strong, so they prefer the stronger varieties like Navels and Valencias."
But for Core Fruit CEO Nico van Staden the focus has been on easy peelers - namely Nova clementines - with growing interest in China.
"Obviously, you don’t talk a lot about pricing these days, it can be dangerous, and as an industry we don’t have the best information system – normally you don’t know who’s shipping to where and it’s all a surprise when there’s an overload in a market," he says.
"The market is under pressure at the moment price-wise - A lot has been shipped to China and it’s a question of too much fruit. But I think that will ease up and we’re already seeing improvement. Some fruit in the market was too yellow and wasn’t firm enough, and the Chinese like good color.
"We’re a small player but in percentage terms we have 55% of our volumes in easy peelers, whereas most of the market is in your Valencias, your Navels. Easy peelers are difficult stuff and that’s why we focus on them, to differentiate ourselves from the mass."
Lona Citrus is also going down the easy peeler path according to Far East marketer Mari Yanagawa, but like Core Fruit the company has also faced difficult conditions.
"We’re trying to increase volumes of easy peelers as well, and I think a lot of South African companies are trying to get easy peelers out as much as possible, especially for the eastern markets.
"It’s getting more and more difficult. South Africa's getting more exposure than before and that’s good as a lot more people know about us, but there’s a lot of competition on the export side; not so much within South Africa but with South America, Australia, and there are more importers trying to get into the market too.
"The Japanese market has been depressed and a lot of people are cutting back, not just on certain fruits but fruits in general. It’s not going so well at the moment.
"We also need to focus on existing customers who have had a long relationship with us, and give the market exactly what it needs."
Taking on the Argentineans and Australians
Argentina has developed a strong lemon market in Asia while Australia has done the same with late Navel oranges, but both these countries' exporters could soon come slight pressure from their Southern Hemisphere African counterparts.
"Asian customers like the fruit sweet, so high sugar levels and relatively low acidity, and obviously they're keen on our lemons too from a quality and shelf life point of view, From a South African point of view, we can do a lot more," says Wege.
"Obviously Argentina and Chile play there but lemon production in South Africa will increase in the next couple of years. Our volumes aren’t enough to compete with Argentina yet but we’re definitely going to give them a go - our production will pick up 50% or 40% over the next couple of years.
"We know the market has got an interest in the late Navel varieties and most of that fruit comes from Australia; they’re definitely preferred as they’ve got good color, they’re hard and they’ve got good internal qualities. We see growth there."
He says Australia's strength in the variety and proximity to Asia are concerns for South African exporters.
"But my guess is, I would expect at this stage that Australia’s production costs are higher than South Africa’s, so we should be able to deliver more competitive value.
"Customers will pay good money for good fruit and you can get a good margin on that."
Yanagawa also sees an increase for the two fruit varieties.
"Late navels are becoming more and more popular, and a lot of customers have asked for it who never did before. It’s a good variety, with a good taste, juice content, the color's nice," she says.
When asked how she would envisage South Africa's citrus presence in Asia in five years time, Yanagawa was upbeat despite the challenges.
"I would like to think South African fruits could increase their share and South African volumes will go up, but then again it’s not something easy. Everyone else is trying to as well, but in South Africa we haven’t had as many natural disasters or freak weather this season.
"We do have potential and the reason being is that we’ve got some growers who are second generation, they’re very young and innovative, and they do understand the market – they’re more outgoing."
Van Staden emphasizes that while growth and volumes are important, focus needs to continually be on quality as the Asian market can be sensitive to that.
"We have a lot of experience in those markets and it’s not worthwhile to take a chance, as there’s a lot of money to be lost.
In terms of the next big thing, van Standen thinks the ClemenGold variety has a lot to offer.
"At the moment that's the hot topic on the citrus side of things and we’re a key player in that variety. New varieties are always welcome but it’ll only work if it’s working for the grower production-wise.