New opportunity for citrus exporters

After several years of negotiations, Thailand has agreed on a protocol with the Department of Agriculture Fisheries and Forestry. Citrus growers who register to ship to Thailand will have their operations inspected by Thai officials this year. However, a strong rand and rising electricity and fuel prices are worrisome for the industry. A production and logistics cost trend analysis by Fruit South Africa found that a hike in electricity had already impacted on production and storage costs. Further negative effects are anticipated when the diesel price is expected to rise at the start of the export season mid-year. Transport costs during the past two seasons have risen dramatically. The report notes, “The average rand freight all-in rate was R1250 per pallet in 2006 and 2007. Post the 2008 oil price hike the freight all in rate is now averaging R1750 per pallet. That is a R500 per pallet increase and R7 per carton (70 cartons per pallet).” Like fuel and electricity costs, the currency exchange rate that will also affect the industry bottom line is beyond shippers’ control. “The strengthening of the rand against major fruit trading currencies continues to negatively impact the rand-valued return to growers,” said the Fruit South Africa report.