Summary
While Spanish citrus producers continue to press for safeguard measures against imports of citrus fruit from South Africa, EU data suggests the growth of imports from morocco and Egypt has been more significant than the growth in imports from South Africa. Furthermore EU data suggests declines in both EU citrus consumption and EU exports have had a far greater market effect than any increase in import volumes. EU data also suggests the current citrus market difficulties are specific to Spain, the only EU country where citrus prices are below the 5 year average. This strongly suggests that rather than restrictions on imports from South Africa, national action is required to strengthen the functioning of the citrus supply chains and eliminate unfair trading practices along citrus supply chains.
In late April it was reported the European Commission was to undertake ‘an analysis into whether imported third country citrus requires the activation of a trade safeguard measure in the form of increased import tariffs’ (1). This followed growing pressure from Spanish Citrus producers were on the EC to activate the safeguard provisions in the trade agreement with South Africa to limit exports of citrus fruit to the EU (for background to this campaign see the earlier epamonitoring.net articles ‘South Africa to Take EU to WTO Dispute Settlement over Citrus Black Spot Controls’, 8 April 2019 and ‘Will 2018 Be The Last Time South Africa Calls An Early Halt to Citrus Exports to Europe?’, 1 October 2018).
According to Inmaculada Rodríguez-Piñero,the MEP who represents the region of Valencia where most Spanish citrus production is concentrated, the EC is ‘fully aware that there is a problem’ in the citrus sector. Valencian citrus producers have faced ‘unsustainably low’ citrus prices for some time, with this being attributed to imports. A particular focus of concern has been the progressive reduction of tariffs on South Africa citrus imports during the 15th October to 30th November period (2) under the 2016 EU-SADC EPA (3).
While in December 2018 the Spanish government supported the withdrawal of some 50,000 tonnes of citrus fruit from the market, at the beginning of April it announced a more comprehensive programme of 16 measures to revitalise the citrus market. These measures covered the following areas:
- a programme of increased free distribution of small citrus fruit and processing oranges through charities;
- a €40 million programmes for subsidised credit;
- various tax relief measures;
- a strengthening of citrus market information systems linked to measures to strengthen the functioning of supply chains;
- export promotion measures;
- monitoring the application of SPS controls;
- closer monitoring of trade agreement negotiations to ensure reciprocity in access and closer monitoring if the implementation of trade agreements (4).
These initiatives have been welcomed by Spanish citrus producers organisations. This needs to be seen against the background of claims by the Valencian producer organisation that its members still face losses in excess of €100 million for the current season (2). It also needs to be seen against the background of the uncertainties facing Spanish citrus exporter as a result of the ongoing failure to conclude the Brexit negotiations (5).
With electoral losses in regional elections for both of Spain’s mainstream political parties in the face of the rise of the ultra-nationalist Vox party and national and European Parliament elections pending, the issue of safeguarding the interests of Spanish citrus producers is receiving growing political attention.
However press reports indicate the EC’s Director of Trade Defense Rubinacci’s determination to ensure decisions are based on ‘hard data’, with priority being accorded to establishing just ‘what the exact problem is”. This needs to be seen in a context where overall across the EU, citrus prices in March 2019 were 7% above of the five year average, with considerable variation between EU member states. It was only in Spain that prices were below the five year average (-4%), while in Italy, Portugal and Greece prices were respectively 11%, 27% and 31% above the five year average (3).
The South African citrus industry is reportedly relaxed about any EU review of trade flows, since it believes ‘the data will show that South African citrus doesn’t pose a risk of unfair competition to European citrus, and that a safeguard clause is not warranted’ (1)
This relaxed attitude also needs to be seen in a context where between 2015 and 2017 while imports rose by some 233,599 tonnes (+14.8%) EU consumption fell by 221,593 tonnes and EU exports by 107,317. The market effects of reduced EU citrus consumption and export levels was thus 41% higher than the impact of increased imports (6/3).
It was against this background that the EC Director of Trade Defense Rubinacci advised the Spanish citrus industry to join forces with citrus producers in other EU member states and to appoint a ‘spokesperson in Brussels who can convey industry’s concerns’, including ‘verifiable figures’ (1).
‘Citrus prices €/100kg and % changes’
| March 2019 price €/100 kg | March price compared to 5 year average (base = 100) | |
| EU | 62 | 107% |
| Greece | 56 | 131% |
| Spain | 50 | 96% |
| Italy | 87 | 111% |
| Portugal | 48 | 127% |
Source: EC, DG Agri Dashboard: Citrus Fruit, ‘Citrus prices €/100kg and % changes’ 12 April 2019,
https://ec.europa.eu/agriculture/sites/agriculture/files/dashboards/citrus-dashboard_en.pdf
Trends in EU citrus consumption reflect wider trends in fresh fruit and vegetable consumption across the EU. According to the European fruit and vegetable association Freshfel per capita fruit and vegetable consumption in the EU is not only falling but is substantially below the minimum daily intake levels recommended by the WHO of ‘400g of fresh fruit and vegetables per day’ (4).
Key Market Balance Indicators for Citrus Fruit (tonnes)
| 2015 | 2016 | 2017 | Change tonnes | % change 2015-17 | |
| EU production (tonnes) | 11.358.000 | 11.297.000 | 11.328.000 | -30,000 | -0.3% |
| EU Imports | 1,583,720 | 1,782,261 | 1,817,319 | +233,599 | +14.8% |
| EU Exports | 655,677 | 628,621 | 548,360 | -107,317 | -16.4% |
| EU Consumption (total | 11,775,496 | 11,526,855 | 11,553,903 | -221,593 | -1.9% |
| EU Consumption per capita (kg) | 23.2 | 22.7 | 22.8 | -1.7% |
Source: EC, DG Agri Dashboard: Citrus Fruit,ey Market Balance indicators for Citrus Fruit (oranges, small citrus, lemons) – tonnes’ 12 April 2019,
https://ec.europa.eu/agriculture/sites/agriculture/files/dashboards/citrus-dashboard_en.pdf
Freshfel has called for urgent measures to boost fruit and vegetable consumption in the EU. This includes the launch in 2019 of a ‘three year European Commission funded agricultural promotion programme entitled ‘FV for a Healthy EU’ to boost fruit and vegetable consumption by 18-30-year-old Europeans – the consumer segment with one of the lowest levels of consumption’ (7).
Freshfel has also highlighted how the Russian trade embargo (which for citrus fruit saw EU export volumes fall over 90%) has exacerbated the market effects of declining EU citrus consumption, while the potential trade effects of Brexit continue to overhang the EU27 fruit and vegetable sector.
In the citrus sector the impact of Brexit needs to be seen in a context where the UK is the 6th largest market in the world for citrus imports, with an annual growth rate in imports of 4% in recent years (6).
| Comment and Analysis
The latest data on the citrus sector posted as part of the new EC fruit and vegetable market observatory strongly suggests the current market difficulties are specific to Spain and require national action to strengthen the functioning of citrus supply chains and eliminate unfair trading practices, rather than pan EU safeguard measures against citrus imports from 3rd countries (see companion epamonitoring.net article ‘New EU Market Observatory for Certain Fruit and Vegetables Launched’, 2 May 2019). It further suggests that declining per capita consumption of citrus and export difficulties following the Russian import embargo have had a far greater market effect than the increase in imports. Indeed, with specific reference to South Africa the recent increase in exports to the EU in the 2017/18 season needs to be seen in the context of South African exports of oranges to the EU which in 2014, 2015 and 2016 were down 12.4%, 1.3% and 7.3% respectively compared to 2013. The recovery in South African orange export volumes only occurred in 2017, with volumes 3.9% above 2013 levels. Specifically in regard to oranges, 2018 saw a ‘3% fall in plantings of Valencia oranges’ in South Africa (8). In addition the impact of the earlier drought are still being felt in some regions with in April 2019 it being estimated that South African citrus export volumes ‘could end up lighter than forecast’, with it being maintained ‘it is unclear how production volumes would likely compare to 2018’ (9). This contrasts sharply with trends in EU imports from Morocco which were up almost 149% between 2013 and 2017 and imports from Egypt and Turkey which were up 57% and 35% respectively. Over the 2013-17 period while imports from South Africa increased nearly 17,000 tonnes imports from Morocco, Egypt and Turkey together increased over 180,000 tonnes, some 10 times larger increase. The large increase in Morocco citrus exports to the EU is closely connected to investments made by Spanish citrus companies in production in Morocco in an attempt to extend the season and strengthen their position in commercial negotiations with EU supermarkets. The focus on imports from South Africa under the expanded market access provisions negotiated as part of the 2016 EU-SADC EPA would thus scarcely appear justified. Exports to the EU of oranges (080510)
Source: EC Market Access Data Base, More broadly analysis from the USDA has pointed out that while ‘the EU remains South Africa’s largest export market for oranges, accounting for approximately 40 percent of the total export market…exports to Asia and the Middle East have grown steadily over the years due to the focus being placed by industry in growing these markets’ (10). This needs to be seen in a context where the EU is seen as an increasingly unreliable trade partner, given the perceived tendency of the EU to use SPS measures in a trade restrictive fashion. |
Sources
(1) freshplaza.com, ‘Counter seasonal South African citrus not unfair competition for European production’, 26 April 2019
https://www.freshplaza.com/article/9097950/counter-seasonal-south-african-citrus-not-unfair-competition-for-european-production/
(2) freshfruitportal.com, ‘EU to consider activating South African citrus safeguard clause amid Spanish crisis’, 16 April 2019
https://www.freshfruitportal.com/news/2019/04/16/eu-to-consider-activating-south-african-citrus-safeguard-clause-amid-spanish-crisis
(3) EU-SADC TDCA, 16 September 2016
http://trade.ec.europa.eu/doclib/docs/2015/october/tradoc_153915.pdf
(4) freshplaza.com, ‘Spain presents 16 measures to revitalize the citrus sector’, 4 April 2019
https://www.freshplaza.com/article/9090099/spain-presents-16-measures-to-revitalize-the-citrus-sector/
(5) freshpalza.com, ‘Agreements with third countries: a threat to the Spanish agricultural sector?’ 24 April 2019
https://www.freshplaza.com/article/9096731/agreements-with-third-countries-a-threat-to-the-spanish-agricultural-sector/
(6) EC, DG Agri Dashboard: Citrus Fruit’, 12 April 2019
https://ec.europa.eu/agriculture/sites/agriculture/files/dashboards/citrus-dashboard_en.pdf
(7) freshfruitportal.com, ‘European fresh fruit and veg sector facing “tumultuous period”, says freshfel’, 6 February 2019
https://www.freshfruitportal.com/news/2019/02/06/european-fresh-fruit-sector-facing-tumultuous-period-says-freshfel/
(8) Business Insider, ‘South Africa will export a record 137 million boxes of citrus this year – and other countries are getting upset’, 19 March 2019
https://www.businessinsider.co.za/south-africa-will-export-a-record-137-million-boxes-of-citrus-this-year-and-other-countries-are-getting-upset-2019-3
(9) freshfruitportal.com, ‘South Africa: Citrus volumes could end up lighter than forecast, exporter warns’, 17 April 2019
https://www.freshfruitportal.com/news/2019/04/17/south-africa-citrus-exports-could-end-up-lighter-than-record-forecast-exporter-warns/
(10) USDA, ‘South Africa, ‘Citrus Annual: Strong Growth of South African Citrus Production Continues’, 5 February 2019
https://agfstorage.blob.core.windows.net/misc/FP_com/2019/02/18/Southa.pdf