By Jacques du Preez
A second black swan event in two years and the impact thereof was completely unforeseen, dramatic, and severe. The industry was faced with fruit in transit prior to the war starting as well as further shipments in the period before sanctions were imposed. During the previous season 21% of our pear exports (4,4 mill cartons), 6 % of apples (2,1 mill cartons), and 9% (610,000 cartons) of plums were marketed in Russia. Volumes to Ukraine were very limited. This is certainly a lot of fruit that needs new homes…
The EU pear stocks are down by -15% on last year which will likely offer some opportunities for SA pear exporters. On the other hand, the EU apple stocks are up by +9%. The impact of the Russia-Ukraine conflict will largely impact negatively on the advantage that was initially anticipated, namely low EU pear stocks with EU domestic production and volumes from other fruit-producing countries having to be re-directed. This includes challenges on the domestic market and processing volumes already at high levels given the large crop. The specification of the product to Russia also doesn’t leave many options for other export markets.
Re-routing of fruit and finding alternative markets is a major problem with huge cost implications – from a logistical point as well as price. In addition to the shipping delays being experienced in the SA ports, there are now also port entry delays in the EU (Rotterdam) due to all essential cargo destined for Russia having to be unloaded, scanned/inspected before transshipments to Russia. Finding shipping lines still operating in Russia is difficult and very expensive; equally difficult is acquiring insurance.
Due to the specific fruit profile, especially pears, it is very difficult to find alternative markets for fruit en route and originally destined for Russia. This results in an abundance of all fruit types in Europe now, as well as on the local market. The juice market in SA is also saturated, so options are few and far between.
Financial: Swift payments, and clearing of payments
In addition to the logistical and market challenges, even if you can get your fruit to Russia, the risk of not getting paid is extremely high.
Re-issuing of phytosanitary certificates
DALRRD has gracefully allowed the re-issuance of phytosanitary certificates for fruit to be re-routed as best as possible.