Required Report - public distribution

**Date:** 2/28/2006

**GAIN Report Number:** SF6019

SF0000

**South Africa, Republic of**

**Citrus**

**Semi-Annual**

**2006**

**Approved by:**

![](media/image1.wmf)Rachel Bickford

U.S. Embassy

**Prepared by:**

Patricia Mabiletsa

**Report Highlights:**

South Africa's 2006 citrus production is expected to increase by 4.8%
from last year because of enough rain and normal temperatures in most
citrus fruit growing areas. Lemon and lime production is expected to
amount to 0.2 million MT, oranges to 1.2 million MT, while the
grapefruit harvest is expected to amount to 0.3 million MT, which are
increases of 2%, 4.9%, and 6.2% respectively.

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Semi-Annual Report

Pretoria \[SF1\]

\[SF\]

Table of Contents

[Executive Summary 3](#executive-summary)

[Production 3](#production)

[DEVELOPMENT OF THE INDUSTRY 3](#development-of-the-industry)

[Production Subcategory 4](#production-subcategory)

[Consumption 7](#consumption)

[PROCESSING 7](#processing)

[Trade 8](#trade)

[Trade Subcategory 8](#trade-subcategory)

[Policy 10](#policy)

[Policy Subcategory 10](#policy-subcategory)

[Marketing 10](#marketing)

[Marketing Subcategory 10](#marketing-subcategory)

# Executive Summary

South Africa's 2006 citrus production is expected to increase by 4.8%
from last year because of enough rain and normal temperatures in most
citrus fruit growing areas. Old Clementine orchards are being removed
and replaced, reducing the potential production for easy-peelers this
year. Lemon and lime production is expected to amount to 0.2 million MT,
oranges to 1.2 million MT, while the grapefruit harvest is expected to
amount to 0.3 million MT, which are increases of 2%, 4.9%, and 6.2%
respectively.

# Production

BACKGROUND

Citrus is a winter crop, with trees taking about 7-8 years to reach a
full production level of about 0.045MT a tree.

South Africa's citrus production regions are the Western Cape, Eastern
Cape, Mpumalanga, Limpopo, Northern Cape, Kwazulu Natal, and the North
West. A table below shows the citrus production areas in Hectares:

  ------------ ----------- ------------ ------------ ------------ ----------- ------------
  CITRUS                                                                      
  PRODUCTION                                                                  
  AREAS(HA) IN                                                                
  2004                                                                        

  DISTRICTS    Soft Citrus Oranges                   Grapefruit   Lemons &    **TOTAL**
                                                                  Limes       

                           Valencia     Navels                                

  Western Cape 2,798       2,260        3,845        17           953         **9,873**

  Eastern Cape 1,860       4,026        5,600        304          2,437       **14,227**

  Mpumalanga   395         4,957        2,300        2,815        468         **10,935**

  Limpopo      199         9,368        1,114        1,975        652         **13,308**

  Northern     67          147          \-           5            30          **249**
  Cape                                                                        

  KZN          66          1,150        799          1,675        371         **4,061**

  North West   7           \-           \-           \-           20          **27**

  **TOTAL**    **5,392**   **21,908**   **13,658**   **6,791**    **4,931**   **52,680**
  ------------ ----------- ------------ ------------ ------------ ----------- ------------

Source: Citrus Growers Association

South Africa's citrus farm sizes average at about 700 Ha in the Western
Cape, and about 2,000 Ha in other regions. Wine grapes compete for
hectares with citrus, followed by rooibos tea and vegetables.

South Africa's peak production period is August, September and October.
It takes maximum 6 weeks for weak varieties and about 11-12 weeks for
strong varieties fruit from tree to export markets. Fruit takes 1-2
weeks to travel from trees to local retail markets retails.

The Western Cape is South Africa's main supplier of citrus destined for
the U.S. market because of its black-spot free status. The Northern Cape
was also accredited a blackspot free status two years ago, and is
expected to slightly increase exports in the coming years.

# DEVELOPMENT OF THE INDUSTRY

Farmer Associations are concentrated in the Western Cape, while the
Northern regions are composed mainly of private companies.

Before the deregulations of the agricultural product markets in 1997,
Capespan was a single-channel fruit market countrywide. Currently, it is
now handling citrus exports of about 208 exporters, which is only 30% of
the total production.

SPECIAL EXPORT PROGRAMS

South Africa's citrus products destined for the United States are mainly
Clementines, Grapefruit, Lemons, Minneola, Navels, Satsuma, and Valencia
(including Delta seedless and midnights).

Other special export programs are with the U.S., the EU, Japan
(grapefruit, oranges, lemons) Navel Oranges), Taiwan (a quota of 1,000
MT -- grapefruit, Navels and Valencias), Eastern Europe -- Russia (95%
are oranges, and 5% is shared between lemons and grapefruit), and South
Korea (Valencia and Navels). New markets since 2001/2 are Thailand,
Israel and China.

Inspections

Quarantine pests from South Africa's fresh citrus products destined for
the United States are Mediterranean Fruit Fly, False Codling Moth,
Citrus Black Spot, and Mealy Bug.

Fruit destined to the U.S., are inspected at the fruit port terminal; at
Piketcor -- closest to production areas; and at Swellendam- a cold
harvest area. A total 8 U.S. APHIS inspectors a year conduct tests on
farms, packinghouses, shipping vessels, and monitor temperature control.
About 12 vessels in total leave the Cape Town port for the U.S. Main
destination ports are Philadelphia, New York, and Boston. Transition
vessel takes about 22-24 days to the U.S. at a required fruit
temperature of --5 degrees Celsius at arrival.

  ------------------ -------- ------------ -------- ------ ------------ -------- ------------
  SOUTH AFRICA'S                                                                 
  CITRUS EXPORTS TO                                                              
  THE U.S.                                                                       

  COMMODITIES        2003                           2004                2005     

                     MT       US\$         MT              US\$         MT       US\$

  ORANGES            25,589   10,341,624   24,077          14,240,282   29,796   18,260,535

  MANDARINS:         9,365    8,175,6452   10,374          10,163,564   11,709   12,358,499

  LEMONS & LIMES     1,044    558,130      551             289,506      422      297,947

  GRAPEFRUITS        371      101,358      70              21,667       4,800    7,778
  ------------------ -------- ------------ -------- ------ ------------ -------- ------------

  -------------------------------- ------------------- -------------------
  SOUTH AFRICA'S EXPORTS OF EASY                       
  PEELERS' CITRUS TO THE U.S.                          

                                   2004                2005

                                   MT                  MT

  CLEMENTINES                      9,141               54,287

  MINNEOLAS                        945                 2,055

  MANDARINS                        46                  252

  **TOTAL easy peelers**           **10,132**          **56,596**
  -------------------------------- ------------------- -------------------

Source : CGA's Citrus Special Export Programs

## Production Subcategory

South Africa's production of Valencia oranges is declining, and
overtaken by Clementines, at an annual increase of about 10% per year.

+-----------+----+----------+----+----------+----+----------+--------+
| South     |    |          |    |          |    |          |        |
| Africa,   |    |          |    |          |    |          |        |
| Republic  |    |          |    |          |    |          |        |
| of        |    |          |    |          |    |          |        |
|           |    |          |    |          |    |          |        |
| Oranges,  |    |          |    |          |    |          |        |
| Fresh     |    |          |    |          |    |          |        |
+-----------+----+----------+----+----------+----+----------+--------+
|           | 20 | Revised  | 20 | Estimate | 20 | Forecast | UOM    |
|           | 04 |          | 05 |          | 06 |          |        |
+-----------+----+----------+----+----------+----+----------+--------+
|           | US | Post     | US | Post     | US | Post     |        |
|           | DA | Estimat  | DA | Estimat  | DA | Estimat  |        |
|           | Of | e\[New\] | Of | e\[New\] | Of | e\[New\] |        |
|           | fi |          | fi |          | fi |          |        |
|           | ci |          | ci |          | ci |          |        |
|           | al |          | al |          | al |          |        |
|           | \  |          | \  |          | \  |          |        |
|           | [O |          | [O |          | [O |          |        |
|           | ld |          | ld |          | ld |          |        |
|           | \] |          | \] |          | \] |          |        |
+-----------+----+----------+----+----------+----+----------+--------+
| Market    |    | 01/2005  |    | 01/2006  |    | 01/2007  | M      |
| Year      |    |          |    |          |    |          | M/YYYY |
| Begin     |    |          |    |          |    |          |        |
+-----------+----+----------+----+----------+----+----------+--------+
| Area      | 3  | 36350    | 3  | 36700    | 0  | 36700    | (HEC   |
| Planted   | 63 |          | 67 |          |    |          | TARES) |
|           | 50 |          | 00 |          |    |          |        |
+-----------+----+----------+----+----------+----+----------+--------+
| Area      | 2  | 26670    | 2  | 26800    | 0  | 26800    | (HEC   |
| Harvested | 66 |          | 68 |          |    |          | TARES) |
|           | 70 |          | 00 |          |    |          |        |
+-----------+----+----------+----+----------+----+----------+--------+
| Bearing   | 1  | 11480    | 1  | 11500    | 0  | 11500    | (1000  |
| Trees     | 14 |          | 15 |          |    |          | TREES) |
|           | 80 |          | 00 |          |    |          |        |
+-----------+----+----------+----+----------+----+----------+--------+
| No        | 39 | 3960     | 40 | 4000     | 0  | 4000     | (1000  |
| n-Bearing | 60 |          | 00 |          |    |          | TREES) |
| Trees     |    |          |    |          |    |          |        |
+-----------+----+----------+----+----------+----+----------+--------+
| TOTAL No. | 1  | 15440    | 1  | 15500    | 0  | 15500    | (1000  |
| Of Trees  | 54 |          | 55 |          |    |          | TREES) |
|           | 40 |          | 00 |          |    |          |        |
+-----------+----+----------+----+----------+----+----------+--------+
| P         | 11 | 1144     | 11 | 1210     | 0  | 1170     | (1000  |
| roduction | 30 |          | 40 |          |    |          | MT)    |
+-----------+----+----------+----+----------+----+----------+--------+
| Imports   | 10 | 8        | 10 | 10       | 0  | 10       | (1000  |
|           |    |          |    |          |    |          | MT)    |
+-----------+----+----------+----+----------+----+----------+--------+
| **TOTAL   | ** | **1152** | ** | **1220** | *  | **1180** | *      |
| SUPPLY**  | 11 |          | 11 |          | *0 |          | *(1000 |
|           | 40 |          | 50 |          | ** |          | MT)**  |
|           | ** |          | ** |          |    |          |        |
+-----------+----+----------+----+----------+----+----------+--------+
| Exports   | 7  | 784      | 7  | 820      | 0  | 800      | (1000  |
|           | 60 |          | 60 |          |    |          | MT)    |
+-----------+----+----------+----+----------+----+----------+--------+
| Fresh     | 1  | 243      | 1  | 260      | 0  | 250      | (1000  |
| Dom.      | 70 |          | 70 |          |    |          | MT)    |
| Co        |    |          |    |          |    |          |        |
| nsumption |    |          |    |          |    |          |        |
+-----------+----+----------+----+----------+----+----------+--------+
| P         | 2  | 125      | 2  | 140      | 0  | 130      | (1000  |
| rocessing | 10 |          | 20 |          |    |          | MT)    |
+-----------+----+----------+----+----------+----+----------+--------+
| **TOTAL   | ** | **1152** | ** | **1220** | *  | **1180** | *      |
| DISTR     | 11 |          | 11 |          | *0 |          | *(1000 |
| IBUTION** | 40 |          | 50 |          | ** |          | MT)**  |
|           | ** |          | ** |          |    |          |        |
+-----------+----+----------+----+----------+----+----------+--------+

+----------+-----+----------+-----+----------+----+----------+------+
| South    |     |          |     |          |    |          |      |
| Africa,  |     |          |     |          |    |          |      |
| Republic |     |          |     |          |    |          |      |
| of       |     |          |     |          |    |          |      |
|          |     |          |     |          |    |          |      |
| 65       |     |          |     |          |    |          |      |
| Degrees  |     |          |     |          |    |          |      |
| Brix     |     |          |     |          |    |          |      |
|          |     |          |     |          |    |          |      |
| Orange   |     |          |     |          |    |          |      |
| J        |     |          |     |          |    |          |      |
| uice(MT) |     |          |     |          |    |          |      |
+----------+-----+----------+-----+----------+----+----------+------+
|          | 2   | Revised  | 2   | Estimate | 20 | Forecast | UOM  |
|          | 004 |          | 005 |          | 06 |          |      |
+----------+-----+----------+-----+----------+----+----------+------+
|          | U   | Post     | U   | Post     | US | Post     |      |
|          | SDA | Estimat  | SDA | Estimat  | DA | Estimat  |      |
|          | Of  | e\[New\] | Of  | e\[New\] | Of | e\[New\] |      |
|          | fic |          | fic |          | fi |          |      |
|          | ial |          | ial |          | ci |          |      |
|          | \   |          | \   |          | al |          |      |
|          | [Ol |          | [Ol |          | \  |          |      |
|          | d\] |          | d\] |          | [O |          |      |
|          |     |          |     |          | ld |          |      |
|          |     |          |     |          | \] |          |      |
+----------+-----+----------+-----+----------+----+----------+------+
| Market   |     | 01/2005  |     | 01/2006  |    | 01/2007  | MM/  |
| Year     |     |          |     |          |    |          | YYYY |
| Begin    |     |          |     |          |    |          |      |
+----------+-----+----------+-----+----------+----+----------+------+
| Deliv.   | 210 | 125000   | 220 | 140000   | 0  | 130000   | (MT) |
| To       | 000 |          | 000 |          |    |          |      |
| Pr       |     |          |     |          |    |          |      |
| ocessors |     |          |     |          |    |          |      |
+----------+-----+----------+-----+----------+----+----------+------+
| B        | 6   | 6003     | 6   | 2511     | 68 | 2111     | (MT) |
| eginning | 003 |          | 503 |          | 03 |          |      |
| Stocks   |     |          |     |          |    |          |      |
+----------+-----+----------+-----+----------+----+----------+------+
| Pr       | 22  | 14000    | 22  | 16000    | 0  | 15000    | (MT) |
| oduction | 200 |          | 500 |          |    |          |      |
+----------+-----+----------+-----+----------+----+----------+------+
| Imports  | 300 | 637      | 0   | 800      | 0  | 720      | (MT) |
+----------+-----+----------+-----+----------+----+----------+------+
| TOTAL    | 28  | 20640    | 29  | 19311    | 68 | 17831    | (MT) |
| SUPPLY   | 503 |          | 003 |          | 03 |          |      |
+----------+-----+----------+-----+----------+----+----------+------+
| Exports  | 9   | 10129    | 9   | 10000    | 0  | 9000     | (MT) |
|          | 500 |          | 500 |          |    |          |      |
+----------+-----+----------+-----+----------+----+----------+------+
| Domestic | 12  | 8000     | 12  | 7200     | 0  | 7000     | (MT) |
| Con      | 500 |          | 700 |          |    |          |      |
| sumption |     |          |     |          |    |          |      |
+----------+-----+----------+-----+----------+----+----------+------+
| Ending   | 6   | 2511     | 6   | 2111     | 0  | 1831     | (MT) |
| Stocks   | 503 |          | 803 |          |    |          |      |
+----------+-----+----------+-----+----------+----+----------+------+
| TOTAL    | 28  | 20640    | 29  | 19311    | 0  | 17831    | (MT) |
| DIST     | 503 |          | 003 |          |    |          |      |
| RIBUTION |     |          |     |          |    |          |      |
+----------+-----+----------+-----+----------+----+----------+------+

+-----------+----+----------+----+----------+----+----------+--------+
| South     |    |          |    |          |    |          |        |
| Africa,   |    |          |    |          |    |          |        |
| Republic  |    |          |    |          |    |          |        |
| of        |    |          |    |          |    |          |        |
|           |    |          |    |          |    |          |        |
| Lemons,   |    |          |    |          |    |          |        |
| Fresh     |    |          |    |          |    |          |        |
+-----------+----+----------+----+----------+----+----------+--------+
|           | 20 | Revised  | 20 | Estimate | 20 | Forecast | UOM    |
|           | 04 |          | 05 |          | 06 |          |        |
+-----------+----+----------+----+----------+----+----------+--------+
|           | US | Post     | US | Post     | US | Post     |        |
|           | DA | Estimat  | DA | Estimat  | DA | Estimat  |        |
|           | Of | e\[New\] | Of | e\[New\] | Of | e\[New\] |        |
|           | fi |          | fi |          | fi |          |        |
|           | ci |          | ci |          | ci |          |        |
|           | al |          | al |          | al |          |        |
|           | \  |          | \  |          | \  |          |        |
|           | [O |          | [O |          | [O |          |        |
|           | ld |          | ld |          | ld |          |        |
|           | \] |          | \] |          | \] |          |        |
+-----------+----+----------+----+----------+----+----------+--------+
| Market    |    | 01/2005  |    | 01/2006  |    | 01/2007  | M      |
| Year      |    |          |    |          |    |          | M/YYYY |
| Begin     |    |          |    |          |    |          |        |
+-----------+----+----------+----+----------+----+----------+--------+
| Area      | 38 | 3800     | 38 | 3800     | 0  | 3800     | (HEC   |
| Planted   | 00 |          | 00 |          |    |          | TARES) |
+-----------+----+----------+----+----------+----+----------+--------+
| Area      | 26 | 2670     | 26 | 2670     | 0  | 2670     | (HEC   |
| Harvested | 70 |          | 70 |          |    |          | TARES) |
+-----------+----+----------+----+----------+----+----------+--------+
| Bearing   | 14 | 1410     | 14 | 1410     | 0  | 1410     | (1000  |
| Trees     | 10 |          | 10 |          |    |          | TREES) |
+-----------+----+----------+----+----------+----+----------+--------+
| No        | 12 | 1200     | 12 | 1200     | 0  | 1200     | (1000  |
| n-Bearing | 00 |          | 00 |          |    |          | TREES) |
| Trees     |    |          |    |          |    |          |        |
+-----------+----+----------+----+----------+----+----------+--------+
| TOTAL No. | 26 | 2610     | 26 | 2610     | 0  | 2610     | (1000  |
| Of Trees  | 10 |          | 10 |          |    |          | TREES) |
+-----------+----+----------+----+----------+----+----------+--------+
| P         | 1  | 199      | 1  | 203      | 0  | 203      | (1000  |
| roduction | 80 |          | 90 |          |    |          | MT)    |
+-----------+----+----------+----+----------+----+----------+--------+
| Imports   | 10 | 0        | 10 | 0        | 0  | 0        | (1000  |
|           |    |          |    |          |    |          | MT)    |
+-----------+----+----------+----+----------+----+----------+--------+
| **TOTAL   | *  | **199**  | *  | **203**  | *  | **203**  | *      |
| SUPPLY**  | *1 |          | *2 |          | *0 |          | *(1000 |
|           | 90 |          | 00 |          | ** |          | MT)**  |
|           | ** |          | ** |          |    |          |        |
+-----------+----+----------+----+----------+----+----------+--------+
| Exports   | 1  | 102      | 1  | 103      | 0  | 103      | (1000  |
|           | 20 |          | 30 |          |    |          | MT)    |
+-----------+----+----------+----+----------+----+----------+--------+
| Fresh     | 20 | 20       | 20 | 20       | 0  | 20       | (1000  |
| Dom.      |    |          |    |          |    |          | MT)    |
| Co        |    |          |    |          |    |          |        |
| nsumption |    |          |    |          |    |          |        |
+-----------+----+----------+----+----------+----+----------+--------+
| P         | 50 | 77       | 50 | 80       | 0  | 80       | (1000  |
| rocessing |    |          |    |          |    |          | MT)    |
+-----------+----+----------+----+----------+----+----------+--------+
| **TOTAL   | *  | **199**  | *  | **203**  | *  | **203**  | *      |
| DISTR     | *1 |          | *2 |          | *0 |          | *(1000 |
| IBUTION** | 90 |          | 00 |          | ** |          | MT)**  |
|           | ** |          | ** |          |    |          |        |
+-----------+----+----------+----+----------+----+----------+--------+

+----------+----+----------+----+----------+----+----------+-------+
| South    |    |          |    |          |    |          |       |
| Africa,  |    |          |    |          |    |          |       |
| Republic |    |          |    |          |    |          |       |
| of       |    |          |    |          |    |          |       |
|          |    |          |    |          |    |          |       |
| #        |    |          |    |          |    |          |       |
| ###### G |    |          |    |          |    |          |       |
| rapefrui |    |          |    |          |    |          |       |
| t, Fresh |    |          |    |          |    |          |       |
+----------+----+----------+----+----------+----+----------+-------+
|          | ** | **R      | ** | **Es     | ** | **Fo     | **    |
|          | 20 | evised** | 20 | timate** | 20 | recast** | UOM** |
|          | 04 |          | 05 |          | 06 |          |       |
|          | ** |          | ** |          | ** |          |       |
+----------+----+----------+----+----------+----+----------+-------+
|          | ** | **Post   | ** | **Post   | ** | **Post   |       |
|          | US | E        | US | E        | US | E        |       |
|          | DA | stimate\ | DA | stimate\ | DA | stimate\ |       |
|          | Of | [New\]** | Of | [New\]** | Of | [New\]** |       |
|          | fi |          | fi |          | fi |          |       |
|          | ci |          | ci |          | ci |          |       |
|          | al |          | al |          | al |          |       |
|          | \  |          | \  |          | \  |          |       |
|          | [O |          | [O |          | [O |          |       |
|          | ld |          | ld |          | ld |          |       |
|          | \] |          | \] |          | \] |          |       |
|          | ** |          | ** |          | ** |          |       |
+----------+----+----------+----+----------+----+----------+-------+
| **Market |    | **0      |    | **0      |    | **0      | *     |
| Year     |    | 1/2005** |    | 1/2006** |    | 1/2007** | *MM/Y |
| Begin**  |    |          |    |          |    |          | YYY** |
+----------+----+----------+----+----------+----+----------+-------+
| Area     | 69 | 6900     | 69 | 6910     | 0  | 0        | (HECT |
| Planted  | 00 |          | 10 |          |    |          | ARES) |
+----------+----+----------+----+----------+----+----------+-------+
| Area     | 39 | 3910     | 39 | 3990     | 0  | 0        | (HECT |
| H        | 10 |          | 90 |          |    |          | ARES) |
| arvested |    |          |    |          |    |          |       |
+----------+----+----------+----+----------+----+----------+-------+
| Bearing  | 15 | 1570     | 16 | 1600     | 0  | 0        | (1000 |
| Trees    | 70 |          | 00 |          |    |          | T     |
|          |    |          |    |          |    |          | REES) |
+----------+----+----------+----+----------+----+----------+-------+
| Non      | 10 | 1080     | 10 | 1050     | 0  | 0        | (1000 |
| -Bearing | 80 |          | 50 |          |    |          | T     |
| Trees    |    |          |    |          |    |          | REES) |
+----------+----+----------+----+----------+----+----------+-------+
| TOTAL    | 26 | 2650     | 26 | 2650     | 0  | 0        | (1000 |
| No. Of   | 50 |          | 50 |          |    |          | T     |
| Trees    |    |          |    |          |    |          | REES) |
+----------+----+----------+----+----------+----+----------+-------+
| Pr       | 2  | 290      | 2  | 330      | 0  | 310      | (1000 |
| oduction | 50 |          | 60 |          |    |          | MT)   |
+----------+----+----------+----+----------+----+----------+-------+
| Imports  | 2  | 2        | 2  | 2        | 0  | 2        | (1000 |
|          |    |          |    |          |    |          | MT)   |
+----------+----+----------+----+----------+----+----------+-------+
| **TOTAL  | *  | **292**  | *  | **332**  | *  | **312**  | **    |
| SUPPLY** | *2 |          | *2 |          | *0 |          | (1000 |
|          | 52 |          | 62 |          | ** |          | MT)** |
|          | ** |          | ** |          |    |          |       |
+----------+----+----------+----+----------+----+----------+-------+
| Exports  | 2  | 223      | 2  | 290      | 0  | 260      | (1000 |
|          | 00 |          | 10 |          |    |          | MT)   |
+----------+----+----------+----+----------+----+----------+-------+
| Fresh    | 7  | 7        | 7  | 10       | 0  | 10       | (1000 |
| Dom.     |    |          |    |          |    |          | MT)   |
| Con      |    |          |    |          |    |          |       |
| sumption |    |          |    |          |    |          |       |
+----------+----+----------+----+----------+----+----------+-------+
| Pr       | 45 | 62       | 45 | 32       | 0  | 42       | (1000 |
| ocessing |    |          |    |          |    |          | MT)   |
+----------+----+----------+----+----------+----+----------+-------+
| **TOTAL  | *  | **292**  | *  | **332**  | *  | **312**  | **    |
| DISTRI   | *2 |          | *2 |          | *0 |          | (1000 |
| BUTION** | 52 |          | 62 |          | ** |          | MT)** |
|          | ** |          | ** |          |    |          |       |
+----------+----+----------+----+----------+----+----------+-------+

# Consumption

South Africa's total citrus local consumption is expected to increase by
7% to reach 288,000 MT in 2006 because of a rise in total production.

# PROCESSING

South Africa's citrus fruit is processed into juice, liquor, oil and
cattle feed. Citrus oil, which is used as a base for industrial flavors
and perfumes, is extracted from the peel using U.S. imported FMC
machines with special centifigures for maximum extraction. The peel is
further processed through drying and used as cattle feed and molasses.

Juice concentrates are mainly stored in 200 Litre steel drums or tanks
in refrigerated rooms of a temperature of --15 degrees Celsius.

South Africa's processors are expected to comply with the following
accreditations: HACCP - for traceability from the farm to the final
product; ISO 9001:2000 (SGS) - for quality standards; ISO 18,000 - for
food safety, and ISO 14,000 - for environmental safety. Extra
accreditations that may be required special markets are SGF-IRMA - a
German based quality controlled system; Kosher; and Halaal.

# Trade

South Africa's citrus exports are estimated at about 52% of the total
Southern Hemisphere's market shares.

According to Citrus Growers Association's statistics, in 2005, South
Africa became the second biggest citrus exporter globally. She followed
Spain and was above the U.S., largely because of the previous year's
poor weather conditions in Florida.

About 700,000 MT of oranges are exported annually, mainly to China,
Russia, Eastern Europe, and the U.S.

In 2006, the industry expects a lower production of citrus and changes
in sugar levels because of water deficiency in some regions.

## Trade Subcategory

TRADE LOGISTICS

Geographically, South Africa is closer to the E.U. than to the U.S.
South Africa's loading ports for citrus are: Cape Town (23% of total
citrus fruit), Durban (49%), Maputo (8%), and Port Elizabeth (21%).

South Africa's annual citrus exports to China starts in July and ends in
November. 44% of the total citrus exports to China are transported
through the Eastern Coast, while the rest goes through the Western
Coast. A total of about 95,000 MT are usually exported to China, of
which 30,000 MT are Navels, 18,000 MT are oranges, 6,000 MT are
Midnights, another 6,000 MT are Clementines, and about 35,000 boxes are
lemons

South Africa's citrus exports to Australia are transported through the
Western Coast.

# 

COLD TREATMENTS AND TEMPERATURE CONTROL

Temperature requirements differ between countries. Although majority of
countries requires a normal refrigeration temperature of 4 degrees
Celsius, others require much lower temperature. Lemons, because of their
cold sensitivity that degrades their quality, are not easy to export,
hence their volumes are expected to remain constant from 2006. Even
locally, lemons are not easily marketable because there are more bad
years than good for production. The U.S. has been receiving about 36,000
MT yearly of lemons from South Africa.

  --------------------------- -------------------------- ---------- ---------
  Export Trade Matrix                                               

  Country                     South Africa, Republic of             

  Commodity                   Oranges, Fresh                        

  Time Period                 Jan-Dec                    Units:     MT

  Exports for:                2004                                  2005

  U.S.                        24,077                     U.S.       35,753

  Others                                                 Others     

  Netherlands                 121,192                    Mid.East   168,154

  Russia                      69,002                     S.Europe   87,804

  U.K.                        61,397                     U.K.       84,651

  Spain                       59,619                     Russia     59,981

  Italy                       56,276                     Hong Kong  28,289

  Saudi Arabia                46,947                     Canada     25,512

  HongKong                    33,464                     Far East   14,448

  Belgium                     32,216                     Japan      11,174

  U.A.Emirates                31,621                     China      1,095

  Canada                      27,786                     Korea      903

  Total for Others            539520                                482011

  Others not Listed           172,994                               266,236

  Grand Total                 736591                                784000
  --------------------------- -------------------------- ---------- ---------

Source: 2004 data= WTA, 2005 data=CGA

  ---------------------------- --------------------------- ---------- ---------
  Export Trade Matrix                                                 

  Country                      South Africa, Republic of              

  Commodity                    Grapefruit, Fresh                      

  Time Period                  Jan-Dec                     Units:     MT

  Exports for:                 2004                                   2005

  U.S.                         70                          U.S.        

  Others                                                   Others     

  Japan                        68,474                      Japan      98,380

  Netherlands                  40,910                      U.K.       19,726

  Mozambique                   22,988                      S.Europe   18,519

  U.K.                         17,402                      Far East   6,007

  Italy                        10,098                      Canada     4,165

  Belgium                      9,862                       N.Europe   2,881

  Spain                        5,647                                   

  France                       5,146                                   

  Russia                       3,532                                   

  Germany                      2,940                                   

  Total for Others             186999                                 149678

  Others not Listed            10,613                                 140,322

  Grand Total                  197682                                 290000
  ---------------------------- --------------------------- ---------- ---------

Source: 2004 data= WTA, 2005 data=CGA

# Policy

CHALLENGES

International fruit quality restrictions are a major problem for South
Africa's citrus exporters, and the industry indicates that the U.S. is
posing more SPS restrictions compared to its 62 other exporting
countries.

## Policy Subcategory

# Marketing

Sales of South Africa's citrus in the U.S. are most difficult around
July, which is during the U.S.'s back-to-school programs. At this
period, prices of South Africa's citrus are lower because of competition
with the alternative products, the U.S.'s local peaches and melons.
South Africa also avoids competition with Californian citrus by avoiding
the market during California's peak period.

SPECIAL MARKETS

South Africa citrus exporters consider the U.S. as a high-value market,
although its production costs are also high, averaging between 35-40% of
the revenue. A suitable grower for export to the U.S. is specifically
trained to serve this market, and his farms are registered with the
Department of Agriculture. The Department of Agriculture also conducts
tests for SPS and specific grading.

Normal trade to the U.S. is difficult for the South African citrus
exporters. They therefore employ U.S.- based fruit buyers, to guarantee
supply to supermarkets. Other strategies used to draw retailers' and
buyers' confidence are: tailor-made programs, knowledge building, and
South African branding.

In the last 2-3 years, the South African exporters report that their
trade with the U.S. had been difficult mainly because of the
implementation of the Bio-terrorism Act and stricter Sanitary and
Phyto-Sanitary measures.

## Marketing Subcategory

The South African fruit exporters are concerned about the growing demand
of U.K. retailers' food safety specifications against usage of plant
protection products (PPP), which are additional restrictions from the EU
pesticide regulations, and are also beyond both the EU's Maximum Residue
Level (MRL) and South Africa's MRL legislation.

The UK retailers demand a grower commitment prior to the production
period to use a predetermined and reduced range of pesticides. The UK
Consumer groups also put pressure on growers through food chain supply
chain to use fewer pesticides. Some of the retailers are said to be
aiming at zero tolerance residue levels within the next 15 years. The
country's CGA and CRI are negotiating for a reduction of the restriction
with the UK retailers.

The Southern African Citrus industry compiled a quarterly food safety
risk management model, 'the Recommended Usage Restrictions For Plant
Protection Products On Southern African Citrus'. This model specifies
the most recent MRL changes in key markets, and the appropriate usage
restrictions that help the growers to meet the MRL targets. This model
can be accessed at: [www.cga.co.za](http://www.cga.co.za/)

# RESEARCH TO SATISFY MARKETING TRENDS

South African citrus researchers plan to develop new varieties of Navels
and easy-peelers to maintain existing major citrus markets. According to
the citrus exporters, the U.S. consumers base their citrus buying
decisions on color, sugar, and seedless, while acid levels are most
important for the U.K markets. Also, European and U.K. consumers demand
an improved 'eating orange'.

As a follow-up from the citrus industry plan to access new markets, the
South African citrus researchers are working at producing hardy fruit
with long shelf-life for new markets that lack refrigerated storage
facilities, like India.

Citrus researchers also plan to develop cultivars that mature very early
or late in the season, to avoid competition from other existing
cultivars. Their aim is to improve quality niche market cultivars --
like,

-   Seedless, easy-peeling citrus fruit with excellent internal and
    external qualities;

-   'Lunch-box' fruit, which is a miniature variety with good internal
    qualities; and

-   GMO fruit with disease fighting properties are also future
    considerations.

COMPETITIVENESS

South Africa's citrus producers do not receive government subsidies.
Farmers complain that they incur higher transaction costs. Their annual
costs increase average between 15-35% for transport and between 15-35%
for cold storage of the total logistic costs.

Land costs depend on farm profitability and location. For example, in
2005, an established orange farm in the Western Cape, which has an
economic value expanding to 25 years, was estimated at about US \$
2,380-00 to US \$ 11,111-00/Ha.

LAND

Water allocation is included in the title deed. Water levy is paid to
the local municipality.

A farmer may build a storage dam, which is a huge capital investment,
when no surface water is available.

+----------------+------------------+----------------------------------+
| **ITEMS**      | **COSTS**        |                                  |
|                |                  |                                  |
|                | *                |                                  |
|                | *Rand/Ha/annum** |                                  |
+----------------+------------------+----------------------------------+
| Labor          | 20,000/ha        |                                  |
+----------------+------------------+----------------------------------+
| Land           | 30-70,000/Ha     |                                  |
+----------------+------------------+----------------------------------+
| Irrigation     | 0 -- 3,000/annum | Allowable: 12,000 m3 & store     |
| (100ha)        |                  | 6,000m3                          |
+----------------+------------------+----------------------------------+
| Fertiliser     | 6,000 -- 9,000   |                                  |
+----------------+------------------+----------------------------------+
| Energy         | 8,900            |                                  |
+----------------+------------------+----------------------------------+
| Equipments     | 1,500            |                                  |
+----------------+------------------+----------------------------------+

Source: Citrus Industry Representatives

The citrus industry's promotional programs are also free from government
subsidies. Exporters are therefore lobbying to government against stiff
global competition from subsidized citrus products.

+----------------------+---------------------------+------------------+
| ###### 2006          |                           |                  |
| APPLIED TARIFF RATES |                           |                  |
|  FOR CITRUS PRODUCTS |                           |                  |
+----------------------+---------------------------+------------------+
| HS#                  | COMMODITY                 | TARIFFS          |
+----------------------+---------------------------+------------------+
| 080510               | Oranges                   | 5%/kg            |
+----------------------+---------------------------+------------------+
| 080540               | Grapefruit                | 5%/kg            |
+----------------------+---------------------------+------------------+
| 080550               | Lemons                    | 5%/kg            |
+----------------------+---------------------------+------------------+
| 200911               | Fresh Concentrated Orange | 25%/Litre        |
|                      | Juice                     |                  |
+----------------------+---------------------------+------------------+
| 200919               | Orange Juice, not frozen  | 25%/Litre        |
+----------------------+---------------------------+------------------+

Source: Jacobsen's Book of Tariffs