CBS controls remain threat to South Africa citrus exports to EU despite recent expansion

Contrary to EU delegation claims, South African citrus exports to the EU have not tripled since 2007.  Export volumes since 2012 have in fact been 6.2% below the recent peak level attained in 2008. This is in part attributable to stricter EU CBS controls which have fallen particularly heavily on emergent and previously disadvantaged farmers, who find themselves commercially excluded from EU market supply chains. On-going campaigning by Spanish citrus growers for stricter CBS controls remains a threat to South African citrus exports, particularly given the burden the existing control measures place on government plant disease control capacities.

The issue of the differential impact which EU SPS controls have on small emergent commercial farmers and large commercial farmers raises the need to improve the design and application of EU SPS controls so as to support smallholder participation in high value export supply chains whilst still ensuring underlying EU SPS controls objectives are attained.

In April 2017 the Spanish association of horticultural companies, Asociafruit, committed itself to launching a campaign of action ‘to control the phytosanitary safety of fruits imported from South Africa’. Asociafruit claims ‘the European Commission “is ignoring” Spanish citrus growers and prioritising the interests of certain European lobbies’. Asociafruit is concerned at the price competitiveness of South African citrus which it claims are arriving in the EU at ‘at an increasingly cheaper price’.  This is attributed to ‘the lower production costs, given its increasingly larger and modernised farms, and the progressive reduction of tariffs by EU authorities’ (1).

This Spanish citrus grower’s campaign has included questioning in the European Parliament as to the validity of Dutch inspection controls on citrus imports; which it is maintained are carried out by private sector associations in violation of EU rules for the conduct of official inspections. Spanish citrus producers maintain Dutch CBS inspections are ‘less accurate…because the phytosanitary and quality review wasn’t carried out by officials assigned to the Ministry of Agriculture in the Netherlands but by employees of a private concessionaire (KCB), whose administrative board is entirely made up of the importers of Dutch fruit and vegetables’.

In response to these lobbying efforts the EC has reportedly announced it plans to carry out a new audit of the control systems in the Netherlands and seven other EU Member States in the 2017/2018 campaign ‘to improve the uniformity of these inspections in the Union and to promote the use of good practices’ (7).

In terms of the tariff treatment of citrus imports from South Africa, currently South Africa faces seasonal tariffs which from 16th October increase to 16%. However under the terms of the EU-SADC EPA, these duties are to be gradually phased out at a rate of 1.8% per annum over the coming 9 years.

According to Justin Chadwick, CEO of South Africa’s Citrus Growers’ Association, these tariff reductions ‘will make our citrus more competitive in Europe’.  This however will not necessarily lead to increased export volumes since ‘exporters have been shipping slightly higher volumes just before the tariff deadline’. The move is therefore likely to ‘mean more evenly spaced exports’ (2).

Meanwhile an EC information note on South Africa’s citrus exports to the EU has provided a somewhat misleading picture of the impact of the citrus black spot dispute on South African exports.  The note claims ‘South African citrus exports to the EU have grown steadily over the past 10 years… despite the presence of citrus black spot (CBS) in parts of South Africa’. It claims ‘South African citrus exports more than tripled to almost R7 billion in 2016 from under R2 billion in 2007’ (3).

This portrayal of trends in South African citrus exports to the EU is however highly misleading. A  review of statistics on the EC own market access data base reveals the volume of South Africa citrus exports has only exceeding 2007 levels (644,017 tonnes), in 4 of last 9 years since 2007, while even the high volume of exports attained in 2016 was below the export volume attained in 2008 (4). Overall up to 2016 average annual export volumes of South African citrus to the EU have been 5% lower than the level attained in 2007.

South African Citrus exports (0805) to the EU/UK 2008-2016 (tonnes and Euro)

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
tonnes 644,017 679,875 529,684 607,424 539,216 583,406 645,223 579,028 655,157 671,657
€ ‘000 420,108 426,420 333,825 427,604 346,536 405,829 473,265 432,932 549,565 600,972
€/t 652.32 627.20 629.67 703.96 642.67 695.62 733.49 747.69 838.93 894.76

Source: EC, Market Access Data Base

The EU Delegate’s analysis went on to claim ‘exports to the EU contribute to the transformation of the citrus sector in South Africa by creating new opportunities for emerging and previously disadvantaged growers’.

Press reports suggest that while South Africa has been able to greatly reduce the incidence of citrus black spot infections on fruit exported to the EU (see companion article: ‘Ongoing debate on citrus SPS controls highlights need for science based dialogues’, 16 March 2017), this has put considerable strain on the SPS regulatory services in the South African governments Department of Agriculture Forestry and Fisheries (DAFF) (the National Plant protection Organisation of South Africa – NPPOZA). Two EU FVO inspections reports from 2015 and 2016 have raised concerns ‘over the NPPOZA’s capacity to fully comply with the EU measures due to limited human resources’ (6).

In response from 2017 responsibility for phytosanitary certification activities (orchard inspections, pack house inspection and the issuance of phytosanitary certificates) has been delegated to the Perishable Products Export Control Board (PPECB) (6).

However the CGA has expressed concern that the acquired expertise of DAFF in managing CBS controls should not be lost.  It has further called for an agreement to be reached which ensures an acceptable level of service is maintained. In addition the structuring of the fees charged for CBS controls have been criticized by the CGA (6).

Comment and Analysis
The EU Delegates’ assertion that ‘South African citrus exports more than tripled’ since 2007 ‘despite the presence of citrus black spot’ is not supported by an analysis of the underlying statistics. Indeed, since 2012 annual average export volumes of citrus fruit from South Africa to the EU have been some 6.2% below the recent peak level attained in 2008, the year of the financial crisis.In terms of value, since the imposition of stricter CBS controls in 2012 the unit value of South African citrus exports have risen dramatically, as only higher value fruit has been exported to the EU in an effort to defray the additional costs of complying with stricter EU CBS controls. Average prices in the five years from 2012-2016, were 20.1% higher than in the five years from 2007 to 2011.  This has helped defray the costs of additional CBS controls measures, which were estimated at around 11% of the value of exports to the EU. This is in distinct contrast to the Spanish citrus sector allegations of South African fruit arriving in the EU at ‘at an increasingly cheaper price’.Main South African Agricultural exports to the EU 2010-2016 (€ ‘000)

2010 2011 2012 2013 2014 2015 2016
Citrus (0805) 427,604 346,536 405,829 473,265 432,932 549,565 600,972
Grapes (0806) 370,960 350,879 352,440 399,937 445,654 488,368 473,692
Wine (2204) 428,712 390,563 389,070 427,920 385,726 394,604 370,237
Deciduous Fruit (0808) 206,783 192,145 212,253 287,402 192,447 229,258 201,133

Source: EC, Market Access Data Base

This increase in the unit value of South African citrus exports since 2012 has seen the citrus sector emerge as the leading agricultural export sector in South Africa’s trade with the EU, overtaking the wine sector and maintaining its position ahead of the grape sector.

However the focus on supplying only higher quality higher value citrus to the EU market, alongside the September 2013 voluntary decision by the Citrus Growers Association of South Africa to ban exports to the EU of citrus fruit from areas with cases of CBS infections (5), has made it more difficult for emerging and previously disadvantaged citrus farmers to enter high value EU export supply chains. The hard reality is only larger more established South African citrus producers with sophisticated disease management strategies have been in a position to maintain access to the EU market. Emerging and previously disadvantaged growers are poorly placed to make the investments required to ensure a low risk of citrus black spot infection and hence access to EU orientated supply chains.

Contrary to the impression created by the EC delegation information note, the costs of meeting stricter EU CBS controls and the burden this places on the regulatory authorities responsible for plant disease controls in South Africa, poses an ongoing threat to South Africa’s citrus trade with the EU.  This threat falls particularly heavily on emerging and previously disadvantaged growers, despite EU delegation claims that the EU trade regime assists such farmers.  In this context resolving the CBS dispute remains an issue of considerable significance to the South African citrus sector.

The impact of stricter EU SPS controls on small emergent commercial farmers is an issue which resonates beyond South Africa. Indeed, it carries serious implications for efforts in all ACP countries aimed at promoting smallholder based export supply chains. There is a need to better design and apply EU SPS control measures in ways which take into account of the constraints which face smallholder producers, while at the same time respecting underlying EU disease control objectives.

Such an approach needs to be founded on a more honest assessment of the effects of these EU SPS controls on trade flows.

(1), ‘Andalusia and Valencia demand stricter phytosanitary controls’, 5 April 2017
(2), ‘Citrus exports to EU get extended zero tariff period’, 30 August 2016
(3) EU Delegation to South Africa, ‘SA citrus trade with the EU: A Snapshot’ February 2017
(4) EC, Market Access Data Base
(5), ‘South Africa imposes restrictions in citrus shipments to EU’, 25 September 2013
(6), ‘More challenges ahead for South African citrus exporters?’, 6 February 2017
(7) CGC Communiqué, ‘The EC rejects pest control by importers but allows the Netherlands to do it’, 3 May 2017

Key words:          Horticulture, SPS, citrus fruit, South Africa, Citrus black spot
Area for Posting: Horticulture, CAP, SPS