Tight squeeze for SA citrus industry
BELGIUM - International Relations Minister Maite Nkoana-Mashabane has kicked off her European tour with high-level talks in Brussels.
It comes amid reports the EU is planning to ban South African citrus fruit imports over contamination concerns.
South Africa is the second largest exporter of citrus in the world.
It currently exports between 40 % and 45% of its total citrus export volume of some 1.5 million tons to the EU. The industry contributes about R6-billion in export revenue earnings and employs around 100,000 people.
Citrus harvesting and production in most of Europe tends to decline, particularly at this time of the year due to climate conditions.
The continental body has recently tightened the belt on citrus exports from South Africa, with a stricter interception levels of citrus infected by the Citrus Black Spot (CBS) disease.
Citrus imports from SA were halted after some shipments were found to have CBS.
The Citrus Growers' Association of Southern Africa is concerned.
It says the interception levels are threatening market closure of the multi-billion rand industry.
“The EU has indicated that in their opinion interceptions of fruit infected by CBS is at an unacceptable level. In October 2012 EU Plant Health informed DAFF (Department of Agriculture, Forestry and Fisheries) that interceptions should be kept below 5 [infected fruit]. If interceptions exceeded 5, then they would look at imposing additional measures,” said the association's CEO Justin Chadwick.
“South Africa exports in excess of 600,000 tons of citrus to the EU; what this means is that if 5 fruit have 1 black spot on each, the EU would take additional measures."
"The most extreme measure the EU could take is to ban the import of RSA citrus. In the past the best (lowest) we have ever achieved is 12 interceptions; in most years the number of interceptions exceeds 30. The level set by the EU has no technical or scientific basis, and is tantamount to threatening market closure,” he added.
CBS is a disease caused by fungus Guignardia Citricarpa and affects the appearance of fruit.
“Growers speak of the CBS issue as an industry ending event. Should the EU move to limiting or banning RSA citrus, the consequences of the fruit moving to other markets will destabilise these delicately balanced markets, returns will plummet and growers will be out of business.”
“Many small rural economies will suffer, jobs will be lost, downstream business’ such as transport, packaging and ports will suffer,” said Chadwick.
Some economists say the EU is increasing trade protectionism in a desperate move to save its own industries, protect jobs and boost growth.
According to Investment Solutions’ Chief Economist, Chris Hart, “China, India Brazil are big enough for them to say ‘Well you do that and we can retaliate,’ and that actually makes quite a big difference."
"South Africa is quite small so if we retaliate they’ll say ‘Well so what?’ So that is a hassle but I do think that we can use our multilateral platforms and the BRICS platform and see if there can be a more balanced approach to this so that you can’t just have the Europeans acting unilaterally,” he said.
“The threat against Citrus wouldn’t be surprising. It’s mainly to protect the Spanish citrus industry and it’s across agricultural products whether it’s in grains or in meat “ said economist, Hart.
“The European Union tends to have quite protectionist behavior. They do want free access to other markets but they do tend to restrict access to their own economy,” he added.
Although the South African citrus industry and the DAFF have implemented measures to try and reduce the likelihood of interceptions, the Citrus Growers' Association says this has become costly.
“This is costing millions in terms of orchard treatments, Packhouse practices and inspection. Orchard treatments are probably in the region of R200 million, while DAFF estimated inspection costs at over R15 million."
"In addition, many exporters have chosen to send fruit to alternative markets, impacting on returns from these markets. DAFF have increased their own requirements to a level where trade is seriously disrupted,” said Chadwick.
The first case of CBS was recorded in 1929, and until recently the EU has not been too concerned about excluding spotty fruit.
The EU introduced its CBS requirements in the early 1990s but South Africa had objections.
“When the EU harmonised requirements for CBS were introduced in 1992 South Africa objected as no scientific work was done by the EU to justify the measure."
"In 2000, after many years of negotiations with the EU, South Africa was asked to collate all material on CBS into a Pest Risk Assessment (PRA). This was done, and the PRA was submitted to the EU. The PRA concluded that CBS was not a risk to citrus growing countries in the EU and that the measures are inappropriate,” said Chadwick.
“After many years of technical exchange South Africa asked the EU to make a finding; they got the European Food Safety Authority (EFSA) to do an opinion on the RSA PRA.”
“The EFSA opinion was that although the likelihood of CBS establishing in the EU was highly unlikely – the measures were appropriate and in fact should be strengthened – a very unusual conclusion.”
“The USA also did a Pest Risk Assessment and concluded the same as RSA. The reason CBS will not establish in the EU based on trading of fruit is that the fruit is not a pathway, and that the EU climate is unsuitable for the establishment of CBS,” Chadwick added.
The Citrus Growers' Association of Southern Africa is now seeking an independent review of the citrus black spot risk.
“What we are asking for is that under the International Plant Protection Convention (IPPC), the dispute settlement procedure be continued and that an expert technical panel be established to consider all the information and come to a conclusion with regard to CBS risk,” said Chadwick.
“The IPPC process has begun with facilitated bilateral discussions – but this yielded nothing. The next step is the expert panel but both parties have to agree; the EU will not agree. They have stated that EFSA is busy with another PRA and we must await the outcome of that."
"We are now at a point that we have to consider a WTO Dispute process – we do not have the luxury of time while the EU concludes its internal processes,” he said.
SA Ambassador to Belgium Mxolisi Nkosi said the EU remained one of South Africa's biggest trading partners, accounting for 24% of global exports.
He said the Eurozone financial crisis had significantly reduced demand for South African exports.
Despite its problems, Nkosi said the EU remained the second-largest economy in the world, accounting for 17% of the world's GDP.
"Our relations with the EU go a long way," he said.
"South Africa is the only African country with a partnership with the EU."
However, Nkosi was concerned that EU development aid to South Africa would be significantly cut in the coming years.
"We need to be alive [to this], and the reality is the EU can no longer help us the way they used to," he said.
Despite this, he said the EU would remain a strategic partner.