Summary
Spanish citrus producers continue to push for stricter phytosanitary controls on imports from Southern Africa. It is unclear whether this is driven by genuine phytosanitary concerns or commercial concerns. The increased commercial threat facing Spanish producers comes from Egyptian exporters, rather than Southern African suppliers, while the principal phytosanitary threat comes from Turkey. Despite this situation, Spanish citrus industry concerns may be taken up forcefully under the EU-SADC EPA review, given the other agri-food sector dispute the EU has with the SADC EPA region (e.g., in regard to safeguard restrictions on poultry meat imports from the EU). While Southern African citrus exporters see Brexit as an opportunity, given more relaxed UK phytosanitary import requirements, this will be at the cost of increased rules of origin and phytosanitary control complications along triangular supply chains (both EU to UK and UK to Ireland). These complications may require a restructuring of some routes to market used by Southern African citrus exporters serving UK and Irish markets.
Spanish citrus producers have received assurances from the European Commission, that account will be taken of the ‘citrus sector’s input when they evaluate the trade agreement with South Africa’. This evaluation of the EU-SADC EPA is scheduled to be completed by October 2021. Spanish producers are focussed on ensuring an in-depth analysis of ‘the trade agreement’s commercial impact, and the phytosanitary consequences that a possible entry of quarantine pests would have on the European citrus sector.’ Central to the Spanish citrus sector’s demands is the call for 3rd country imports to ‘comply with the same rigorous, sustainable, and health guarantee standards that European citrus fruits do’ (1).
While this needs to be seen in a context where ‘interceptions of harmful organisms in citrus fruits from third countries in 2020 increased by 42% over the previous year’ (1), this is largely attributable to the increase in interception of citrus products from Turkey. In 2021, the EU’s rapid alert network for food, reported ‘54 rejections of Turkish citrus at the border…. five times higher than in 2019’ (2). This followed the EU decision to add mandarins and oranges from Turvey to the ‘special surveillance’ list in May 2020. It is against the background of this EC decision that the increase in interceptions from Turkey experienced in 2020 continued into 2021.
It is difficult to differentiate between Spanish commercial concerns and Spanish phytosanitary concerns. In the past 2 years total Southern African citrus export have grown 22%, with this including an expansion of citrus exports from Eswatini and Zimbabwe (collectively up 13%). This growth trend is expected to continue for the coming 3 years, with a further 300,000 tonne increase in Southern Africa citrus exports projected (3).
At the same time EU citrus production is also increasing, with a projected 7.5% year on year growth, following favourable climate conditions and surging global demand. This is linked to heightened health consciousness amongst consumers in the midst of the Covid-19 pandemic. This resulted in a ‘dynamic citrus market and peak prices’ in 2020. Analysts have suggested the strength of EU citrus production growth was such as to ‘encourage EU exports to strategic markets while discouraging imports’ (4).
However, in the first quarter of 2021 Dutch traders (who account for half of European citrus imports from Southern Africa) reported the Covid-19 driven surge in demand for citrus in 2020 was receding, with the reduction in catering industry demand now beginning to make itself felt in the market for citrus fruit. This is reportedly putting pressure on prices given the higher volumes on the market (5).
EC average price data for oranges (which dominate both EU citrus production and imports) from March 2021 reflect this trend. Average EU monthly orange prices peaked in May 2020 (at €100/100 kg) (some 64% above the EU five-year average monthly price for oranges in May). Subsequently, prices fell to levels which by February 2021 were 26% below the May 2020 peak (€74/100 kg). Nevertheless, the February 2021 price level was still 7.2% above the level in February 2020 and fully 39.6% above the maximum monthly five-year average February price for oranges (6).
Nevertheless, current price trends are causing concern amongst Spanish citrus producers, with Dutch traders reporting ‘Spanish growers want a lot more money than the market is willing to pay’. Dutch traders sought to situate this in the context of the high volumes of Egyptian oranges on the market, which were reportedly up 30% in the first quarter of 2021 (5). This comes on the back of an almost 119% increase in EU imports of Egyptian oranges between 2010 and 2019 (7).
Trends in EU Citrus imports 2010-2019: A snapshot
| Country | 2010 | 2019 | |||
| Tonnes | % share EU total | Tonnes | % share EU total | % Change 2010-2019 | |
| Total EU Import | 2,197,783 | 2,288,213 | |||
| South Africa | 607,424 | 27.6% | 778,480 | 34.0% | +28.2% |
| Egypt | 135,268 | 6.2% | 295,918 | 12.9% | +118.8% |
| Morocco | 201,545 | 9.2% | 241,771 | 10.6% | +20.0% |
| Turkey | 276,601 | 12.6% | 215,850 | 9.4% | -22.0% |
| Argentina | 317,416 | 14.4% | 166,848 | 7.3% | -47.4% |
| Uruguay | 119,244 | 5.4% | 42,030 | 1.8% | -64.8% |
| Zimbabwe | 25,912, | 1.2% | 36,353 | 1.6% | +40.3% |
| Eswatini | 19,988 | 0.9% | 4,750 | 0.2% | -77.3% |
| Belize | 1,196 | 0.05% | 817 | 0.04% | -31.7% |
Source: EC Market Access Data Base
https://trade.ec.europa.eu/access-to-markets/en/statistics?includeUK=true
It is against this background that Spanish citrus traders are reporting intense pressure on their profit margins, with Egyptian suppliers not only exporting more to the EU but also extending the season and delivering better quality fruit (5). The Spanish citrus sector is increasingly of the view that ‘competition from third countries is becoming dangerously stronger every year’, with ‘challenging times’ ahead for Spanish oranges (5).
This needs to be seen against the backdrop of the declines in area under oranges and small citrus in Spain. Between 2010 and 2019 the area under oranges and small citrus in Spain fell 9% and 12.2% respectively (while the area under lemons grew 14.8%, but from a much smaller base). Since the 2014/15 season this has seen a 14% decline in Spanish production (6).
This provides the commercial background to the intensification of efforts by Spanish citrus producers to use the review of the EU-SADC EPA to strengthen import controls.
South Africa Citrus Exports to the EU in the context of Brexit (tonnes) (2020)
| Product | Total | EU | Netherlands | Belgium | UK | Ireland | |
| Oranges | 1,177,367 | 531,706 | 272,624 | 3,895 | 69,304 | 6,209 | |
| Grapefruit | 242,600 | 99,978 | 71,853 | – | 10,498 | 516 | |
| Lemon/Limes | 445,207 | 185,823 | 91,933 | – | 36,526 | 1,770 | |
| Mandarin/Tangerines | 380,768 | 187,789 | 80,977 | 1,497 | 86,263 | 1,497 | |
| 2,245,942 | 1,005,296 | 517,487 | 5,392 | 202,591 | 9,992 |
Source: USDA, ‘Citrus Annual, South Africa’ 9 December 2020
https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Citrus%20Annual_Pretoria_South%20Africa%20-%20Republic%20of_12-15-2020
In the face of Spanish producer pressure on the EC to implement stricter phytosanitary import controls on citrus fruit, the completion of the UK’s withdrawal from the EU and the decision of the UK to remove phytosanitary certificate requirements for imports of citrus fruit comes as good news for the Southern African citrus sector. This change to UK phytosanitary import requirements means citrus fruit can now be imported into the UK without phytosanitary certificates being needed and without the increasingly strict EU phytosanitary controls which have been applied to citrus imports over the past ten years (8).
| Comment and Analysis While the UK is the second largest direct destination for Southern African citrus exports to the EU (after the Netherlands), the Netherlands has traditionally played a major role in the distribution of citrus fruit across the EU28, including to the UK (9). With the UK having left both the EU customs union and single market the shipment of citrus produce via the Netherlands to the UK has become a lot more complicated. While EU/UK trade in citrus products is nominally-duty free under the EU/UK Trade and Cooperation Agreement, this duty-free arrangement does not apply to deliveries of Southern African citrus produce to the UK via the Netherlands unless shippers adhere fully to ‘Common Transit Convention’ procedures, with 3rd country citrus cargoes remaining at all time under customs supervision until final delivery in the UK.Currently it is extremely difficult for ACP exporters to utilise Common Transit Convention procedures give the acute infrastructure, IT, and staffing constraints on its efficient utilisation. This means very few 3rd country cargoes can be onward traded across EU/UK borders if the CTC process has not been initiated at the port of departure and the consignment does remains remain within its original mode of shipment (e.g., remains in the original container in which was initially loaded)If onward traded 3rd country citrus products are not shipped under customs supervision, then standard MFN tariff will be applied to these products when crossing over from the EU to the UK (see table for the applicable UK MFN tariffs).Applicable GB and Northern Ireland MFN Tariffs for Citrus Fruit Where ‘Originating Status’ Lost
Source: UK Global Online Tariff: Similar complications will be faced in the onward trade from the UK to the Republic of Ireland, where duty free access under EU trade agreements would be lost for citrus fruit is shipped via the UK outside of ‘Common Transit Convention’ procedures. These complications will extend to mainland UK to Northern Ireland trade once the current ‘grace period’ on the application of mainland UK-Northern Ireland border controls, mutually agreed with the EU, lapses. These rules of origin complications pose particular problems for the onward trade in citrus products between the UK and Ireland, given the high level of integration of the Irish wholesale and retail sectors in UK based supply chains. This may require adjustments to the routes used in delivering citrus products to Irish markets, so as to ensure this onward trade remains within the EU customs and regulatory territory at all times. This would require the unloading of shipments at mainland EU ports and their onward shipment via the expanded direct ferry services between mainland EU ports and Irish ports. The ferry links between French and Irish ports have tripled in frequency since the 1 January 2021, with further expansions of services from other EU ports to Ireland also underway (including direct container ferry services from Rotterdam and Zeebrugge). Further complications also arise in regard to phytosanitary requirements. While the UK has removed the need for phytosanitary certificates and other citrus specific import control requirements, EU phytosanitary certificate and related import control requirements continue to apply to citrus fruit onward shipped form the UK to Ireland. This will create additional complications along both UK to the Republic of Ireland supply chains and mainland UK to Northern Ireland supply chains, given Northern Ireland remains part of the EU customs union and single market phytosanitary regime. ACP exporters using triangular supply chains via the UK to serve Irish markets will need to bear in mind phytosanitary certificates will still be required for ACP citrus exports destined for markets in the Republic of Ireland and Northern Ireland. In terms of the EU-SADC EPA review, the EC may choose to take up Spanish citrus sector concerns, as a means of ‘leveraging’ the South African position on the application of safeguard controls on EU poultry meat exports, given the other agri-food sector dispute the EU has with the SADC EPA region. Developments in this regard will need to be closely monitored (see companion epamonitoring.net articles, ‘EU Formally Challenges Application of SACU Safeguard Duties in the Poultry Sector’, 27 June 2019 and South Africa Poultry Producers Seek Further Anti-Dumping Duties 9 March 2021). |
Sources:
(1) LA UNIÓ,’ The EC will take the citrus sector into account in the next evaluation of the trade agreement with South Africa’, 22 January 2021
https://www.freshplaza.com/article/9286681/the-ec-will-take-the-citrus-sector-into-account-in-the-next-evaluation-of-the-trade-agreement-with-south-africa/?edition=3
(2) freshfruitportal.com, ‘Spain’s CGC calls for EU to stop citrus imports from Turkey’, 2 February 2021
https://www.freshfruitportal.com/news/2021/02/02/cgc-calls-for-eu-to-stop-citrus-imports-from-turkey/
(3) freshfruitporttal.com, ‘South Africa forecasts another record citrus export year, driven by explosive late mandarin growth’, 19 March 2021
https://www.freshfruitportal.com/news/2021/03/19/south-africa-forecasts-another-record-citrus-export-year-driven-by-explosive-late-mandarin-growth/
(4) freshfruitportal.com, ‘EU citrus production poised to grow in 2020-21 campaign’, 4 January 2021
https://www.freshfruitportal.com/n citrus producers ews/2021/01/04/eu-citrus-production-poised-to-grow-in-2020-21-campaign/
(5) freshplaza.com, ‘Overview global orange market’, 12 March 2021
https://www.freshplaza.com/article/9301884/overview-global-orange-market/
(6) EU citrus dashboard, 3 March 2021
https://agfstorage.blob.core.windows.net/misc/FP_com/2021/03/05/Cap.pdf
(7) EC Market Access Data Base
https://trade.ec.europa.eu/access-to-markets/en/statistics?includeUK=true
(8) freshplaza.com, ‘UK has deregulated citrus imports, including those from South Africa’, 20 January 2021
https://www.freshplaza.com/article/9286090/uk-has-deregulated-citrus-imports-including-those-from-south-africa/
(9) USDA, ‘Citrus Annual, South Africa’ 9 December 2020
https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Citrus%20Annual_Pretoria_South%20Africa%20-%20Republic%20of_12-15-2020