The South African import and export logistics environment is constrained by the lack of use of rail transportation linking to road transportation, coupled to underperforming Transnet state-run container terminals. Equipment failure at the terminals has been widespread and it is very likely to persist for the time being. This dilemma is a major constraint for the exporting of citrus since 95% of exports are by way of containerization. Although significant investment has been made in cold storage capacity along the Eastern, Central and Western corridors set out to provide much needed capacity, the biggest constraint in the logistics chain lies in the challenge of delivering containers to the terminals in an acceptable timeframe. This report seeks to take a ‘snapshot look’ at the past season’s logistics and shipping and highlight some of the interesting events and also aims to hone in on some of the prevalent challenges …
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The dry and warm weather in São Paulo concerned citrus growers in early May. They say that fruits were falling from the trees, a scenario that is reinforced in areas with high incidence of HLB (Huanglongbing, or greening).
Growers collected fruits that fell, allocating them to crushing activities, although this process is more expensive than the regular harvest. Still, as prices at factories are high, this fact ends up being advantageous for both citrus growers and the industry, which needs to absorb as more fruits as possible. It is worth noting that higher temperatures and below-average rains since the middle of the second semester last year may result in a lower volume to harvest in 2024/25.
The heat wave and the lack of rains also affect the quality of oranges, reducing its attractiveness in the market.
As for the tahiti lime, the dry weather started to affect the development and the quality of the peel. Some producers were concerned and started harvesting, aiming to collect fruits that are prematurely falling to send them immediately to the industry.
In 2024, orange prices paid to citrus growers in São Paulo/Triângulo Mineiro may remain at high levels. The supply may continue to be lower than the industrial demand, keeping the availability limited in the in natura market.
So far, there are no solid aspects that allow to project the volume that will be harvested in the 2024/25 season; however, the orange juice supply may not be enough to meet the demand, especially because of the expectation of low juice stocks in June 2024.
CitrusBR says that the volume in stocks by the end of the 2022/23 season (in June/23) was only 84.745 thousand tons equivalent to concentrate juice. Cepea calculations based on the orange production forecast by Fundecitrus indicate that the volume in stocks by the end of the current season (2023/24, in June/24) may not be higher. This scenario may be reinforced in case exports continue intense and the productivity remains below-average.
Therefore, it would be important if the orange volume harvested in São Paulo and in Triângulo Mineiro is above the average over the last years in order for the processed volume to meet exports and allow a recovery in stocks by June 2025. However, challenges faced in the second semester of 2023 (greening and heat waves) may bring difficulties for a good harvest in 2024/25.
It is worth noting that Brazil does not have major competitors regarding the global orange juice supply. Mexico, an important supplier for the US market, has been facing difficulties in the production, especially because of the dry weather, while Florida has been facing the impacts of greening. In this scenario, a decrease in the Brazilian availability might affect the world orange juice supply.
Investments
Although the profitability scenario had been positive in 2023, major investments in São Paulo are not expected for 2024, due to the high incidence of greening. The planting can continue firm in Triângulo Mineiro, but the availability of soil and water for irrigation are limited.
The new heat wave in São Paulo state has been concerning citrus growers. Temperatures are higher than those registered in the last wave, in September, and lasting longer. Thus, many producers say that the weather may affect the 2024/25 production, but it is still early to estimate possible impacts.
Up until mid-November, high temperatures have been affecting areas with fruitlets. It is worth noting that, in the heat wave observed in September, areas with fruitlets (which had registered flowers in August) were the most affected, since weather conditions have caused fruitlets to fall.
Areas with late flowers (verified in less than 30 days) may also be damaged by the hot weather – these flowers blossomed earlier and the development stage is more advanced. Moreover, citrus growers indicate possible impacts on bigger fruits, especially in trees with high incidence of greening, with less leaves and/or in bad nutrition.
In irrigated areas, in turn, damages tend to be mitigated, since flowers are in a more advanced stage. However, these areas are located in the north of São Paulo state, where temperatures are usually higher.
As for 2023/24 oranges, players surveyed by Cepea report impacts on the quality. Many fruits are withered and sunburned, and consumers usually do not want to buy fruits with these conditions – in many cases, it is necessary to accelerate the harvest in order to avoid the premature fruit fall.
TAHITI LIME – The heat wave has also been affecting the tahiti lime. As rains have not been frequent in major producing regions, the supply has not increased in a significant way, and most fruits are small.
Despite the smaller size, producers have been harvesting fruits in order to take advantage of high prices and to avoid that the hot weather affects the quality even more.
The second fortnight of September was marked by extremely high temperatures in São Paulo State. This scenario warned citrus growers, since intense heat may damage the oranges from both the current (2023/24) and the coming seasons (2024/25).
In the 2023/24 crop – which is currently being harvested –, the biggest problem has been wilted fruits, according to Cepea collaborators. This feature reduces both quality and remuneration, since the oranges become lighter because of the loss of water. On the other hand, for the industry, fruits quality rises slightly, due to higher yield and ºbrix.
On the other hand, for the coming season (24/25), although the effects of the hot weather from September are still uncertain, growers are concerned about fruitlet fall, which may be higher than the usual. This context could lead to a lower number of fruits per tree.
Also, the fact that many orchards have been affected by greening makes the situation worse. A survey from Fundecitrus (Citrus Defense Fund) shows that 38.06 % of the trees in the citrus belt (São Paulo + Triângulo Mineiro) have had symptoms of the disease this year, 56 % above that from 2022 and the sixth consecutive year of increase in the incidence of greening.
Until May, only one of the large-sized processors was crushing oranges from the 2020/21 crop in São Paulo State (in Araraquara) and in June, three more plants started activities, one in Colina and the other two in Matão.
Although there were more plants crushing oranges in June and processors had started crushing the fruits purchased through contracts, the crushing pace was still slow compared to that in previous crops, due to the crop delay in most citrus-producing regions in Brazil, except for northern São Paulo, where fruits development was more advanced.
Most processors were crushing their own fruits or those previous purchased, however, one large-sized processors was purchasing oranges in the spot market. Bidding prices for pear or early oranges were ranging from 21.60 BRL and 24.00 BRL per 40.8-kilo box, harvested and delivered to processors, depending on fruits yield – when less than 290 boxes are needed to produce a ton of concentrate orange juice, remuneration is higher.
The volume of fruits available in the spot market this season is expected to be low, since the attractive prices paid to growers (up to 26.00 BRL/box) tend to increase the preference for purchases through contracts. It is worth to mention that, according to agents from processors, only a few growers have not traded their fruits from the 2020/21season yet.
BRAZILIAN MARKET IN JUNE – Sales were low in the in natura market in June, due to the colder weather in São Paulo. As restaurants are not working and schools are closed, the demand for larger-sized fruits was higher, resulting in a surplus of smaller-sized oranges. Although these fruits may be allocated to processors, pear oranges quotes did not rise last month. Between June 1 and 30, pear orange prices averaged 25.26 BRL per 40.8-kilo box, on tree, stable (-0.1%) compared to that in May.
As regards tahiti lime, agents reported a slight reaction in the demand in late June – both domestic and international. Besides, the harvesting pace was controlled, in order to avoid price drops. Thus, amid lower supply, prices increased in June. The average price for tahiti lime last month closed at 29.49 BRL per 27-kilo box, harvested, 9.9% higher than that in May.
MY 2018/19 EU citrus production is projected to reach 11.6 MMT, an eight percent rise compared to previous year and consistent with previous estimates. The regional increase is due to an expected rebound in Spanish production, the EU’s main citrus producer. Favorable weather conditions facilitated good flowering and fruit setting. Spain expects a 14.6 percent increase in citrus production from the previous year at 7.3 MMT and 0.4 percent higher than previous estimates. In February 2019, Spanish growers protested against the European Commission as the rise in EU imports of South African citrus lowered EU prices. However, the rebound of EU citrus production may result in a reduction in EU citrus imports. Strategic markets destinations for EU citrus exports continue to be Canada, the Middle East and China. In addition, in MY 2017/18 EU imports of U.S. grapefruit and orange juice declined due to a decrease in U.S. production.
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New Zealand Kiwifruit Growers Incorporated (NZKGI) supports the Ministry of Social Development’s (MSD) declaration of a labour shortage for the kiwifruit industry in the Bay of Plenty and the extension of the labour shortage in the Hawkes Bay. The BOP declaration announced is for the period 15 April until 27 May 2019.
There is a current shortfall of over 1,400 vacancies in the Bay of Plenty’s kiwifruit industry which is expected to increase to 3,800 at harvest’s peak around mid-April. There was a shortfall of 1,200 vacancies at the peak of harvest in 2018.
NZKGI CEO Nikki Johnson says, “The industry has been working hard to attract labour for this year’s harvest. NZKGI has been running a media campaign to promote work in our sector and early signals indicate that this has gone some way in reducing the number of vacancies.
“However, it is vital to our industry that there is enough seasonal labour for harvest, and we currently don’t have enough people to pick and pack the intended crop. So it is entirely prudent and good risk management for MSD to take this step in support of our campaign.
“We would encourage people – kiwis and visitors – to come and enjoy working in an industry that exports an iconic piece of kiwiana overseas.”
Kiwifruit industry employers have been working closely with the Ministry of Social Development (MSD) to place New Zealanders in vacant roles. Between January and April 2019, MSD has placed nearly 500 job seekers into the kiwifruit industry. Despite this more workers are still needed. The declaration of a seasonal labour shortage allows overseas visitors who already hold visitor visas to apply to vary the conditions of their visas for working in kiwifruit in the Bay of Plenty.
Overseas visitors are encouraged to visit the New Zealand Immigration website where detailed information about varying the conditions of a visa can be found.
To date over 90 % of this season’s total kiwifruit crop is yet to be harvested. It is forecast that a similar amount of fruit is required to be packed this year in comparison to last year. This includes an increase of 12 % of SunGold kiwifruit which requires packing in a short period of time.
Johnson says NZKGI seeks to employ New Zealanders as a first priority, especially kiwis who live in regions with orchards and packhouses. Work and Income has given help to people that need transport from other parts of BOP and other Work and Income clients who would like to access this should contact their local office for support. “However, because of the low unemployment rate this is not always possible, and other sources of workers, such as those from the Recognised Seasonal Employer (RSE) scheme and backpackers, are also required.”
She says the industry continues to have robust discussions with Government around increasing the number of workers available under the RSE scheme, as well as other avenues to meet demand during harvest.
NZKGI has recently secured co-funding and employed a labour coordinator to connect employers with workers over harvest and analyse current and future labour demands of the kiwifruit industry, and will use this information to deal with industry growth projections. A University of Waikato report forecasts that the kiwifruit industry contribution to the Bay of Plenty’s GDP will increase 135 % by 2030 to $2.04 billion and require 14,329 new kiwifruit jobs.
The kiwifruit industry is an important contributor to the local Bay of Plenty economy, currently contributing $867 million to the regions GDP and employing 10,762 FTE in the year 2015/2016. The last declaration of a labour shortage for the kiwifruit industry was made in 2018 when the unemployment rate in the Bay of Plenty was 5.9 %[1]. The current unemployment rate is 4.8 %[2].
- [1] As of December 2017. Source: Infometrics
- [2] As of December 2018. Source: Infometrics
The first oranges from the 2019/20 season started to arrive at the market of São Paulo State in the first fortnight of March. Despite the small volumes harvested, trades started in the same month as production did last year. Thus, Brazilian citrus growers believe the output of early oranges will be able to supply the Brazilian in natura market.
Considering the favorable weather during the development of the flowers of these varieties (second semester of 2018), the citrus growers consulted by Cepea have reported a satisfactory flower settlement –, resulting in a positive volume harvested in all producing regions this new season. For now, supply has been controlled, due to the delay in fruits growth, which, in turn, reflects the lack of rains in January. In this scenario, most early oranges have not reached the ideal maturation stage for the in natura segment yet.
According to growers, among the fruits supplied in the first fortnight of March, the main varieties were rubi, hamlin and lima sorocaba – traded at 30 BRL per 40.8-kilo box, on average, on tree. The remaining varieties, such as westin and baía, may arrive at the market starting the second half of the month, as they reach the ideal stage.
However, supply should not be large enough to lead too many processors to start activities. Thus, until mid-April, the main destination of these fruits should be the in natura market – mainly to offset the low supply of pear oranges in the offseason period.
BRAZILIAN MARKET – The Carnival period in Brazil (March 2 to 6) weakened the demand for oranges in early March. Supply, in turn, was limited by the rains in São Paulo, which lowered fruits quality, mainly for late oranges. The growers consulted by Cepea reported the harvesting end for pear and late oranges.
Thus, between March 1 and 15, pear orange quotes averaged 43.32 BRL per 40.8-kilo box, on tree, 15.1% up compared to that in the first fortnight of February.
The average prices of all orange varieties (in natura) surveyed by Cepea in São Paulo State were considered satisfactory in January/19 compared to January and December of 2018. This scenario was linked to the lower orange supply in the citrus belt (São Paulo and Triângulo Mineiro) in 2018/19. Thus, it seems the prices paid to the citrus farmers from SP will continue at high levels in February, mainly for the higher quality fruits, since the availability of early oranges should only grow from April onwards, when the first fruits of the 2019/20 can be harvested.
In the first quarter of 2019, harvesting should be limited to both the fruits that are out of the ideal period and the remaining of the late oranges. Some farmers have even ended activities related to the current crop (2018/19). Besides, the high temperatures usually observed in February may boost the consumption of citrus fruits in SP, reducing supply even more.
According to the citrus growers consulted by Cepea, although perspectives regarding the volume to be produced are positive, the weather is still crucial for a good crop development – it needs to rain significantly in the citrus-producing regions this month so that fruits growth and new blossoming are favored.
PRICES – In January/19 the average price of the pera rio orange closed at 30.42 BRL per 40.8-kilo box, on tree, 52 % higher than in Jan/18 and 12 % higher than in Dec/18, respectively, in nominal terms. For natal oranges, the price average was at 26.34 BRL per 40.8-kilo box, 45.6 % and 8.6 % higher in the same comparison.
TAHITI LIME – For tahiti lime, on the other hand, the crop peak in São Paulo continued to press down quotes in January. However, farmers have reported problems caused by the high temperatures: some fruits were becoming yellowish and dropping down from trees, which may lower supply and push up the quotes of the higher quality fruits.
In January, the average price for tahiti lime was at 16.76 BRL per 27-kilo box, harvested, 18.2 % down compared to that in the same period last year and stable (-0.5 %) compared to the average price in December/18.
