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Draft Minutes of CMF Meeting

held at Willow Park, Johannesburg

On24th March 2010 at 10h00

  1. Welcome

Stuart Symington, chairman of this meeting, welcomed everyone.

Apologies

Anton van Zyl (Unichoice), Marguerite van Staden, Jan van der Berg (Colours), Kobus Lonte (Dole), Mari Yanagawa (Lona), Wiekus Hellmann (Capespan), Adolf Kieviet (Freshworld), Riaan Ellis (Unifrutti), Feinier Meyer (Favourite Fresh), Wessel Zietsmann, Ernst du Toit (Cape Citrus), Per Noddeboe (United Plantations), Piet Smit (Bosveld Citrus) and Tim Wafer (Bolton Sugar Estate).

  1. Election of Chairperson and Vice-Chairperson

Two nominations were received from the floor for Chairperson, Stuart Symington and Justin Chadwick. By majority vote the meeting agreed to retain the current arrangement whereby Stuart and Justin would rotate the chairmanship. No vice-chairman was elected.

  1. Approval of Minutes of meeting held on 16th September 2010

The minutes were approved (nominated by Andre Van Bloemenstein, Seconded by Cyril Julius). The meeting requested Gloria (CGA) to send out the minutes to the wider CMF participants.

  1. Completion of Agenda

New items were added to the agenda under 5.5.7, 5.5.8 and 6.3, as recorded in these minutes. The agenda was revised to cover 5.1 to 5.4 by way of presentations per variety.

  1. Strategic Session

Items under 5.1 to 5.4 were covered by way of presentations per variety by John Edmonds (CGA). The 2010 estimates per variety are summarized in Annex 1.

Lemons:

  • The Lemon Focus Group (FG) for 2010 would be chaired by Rikus Groenewald with the vice-Chair being Tini Engelbrecht.
  • 2010 Estimate 8,990,000 cartons(2009 = 8.66m)
  • Argentinean lemon volumes in 2009 were considerably lower than normal and it is anticipated that they will again have a lower export volume in 2010. The exchange rate has moved in their favour. The lemon oil price is high thus pulling more fruit into the industrial market. The shortage of lemon oil may help to keep fresh fruit prices reasonably high in 2010.
  • Turkey production is considerably higher (50%) than last year, compensating for lower volumes in other Med. countries.
  • The Middle East market in 2009 was oversupplied, which was largely a function of a smaller fruit size year. The meeting agreed that CRI should re-circulate their Cutting Edge addressing fruit size management strategies in order to promote an increase in the proportion of larger fruit, thus creating more opportunities (markets) for (otherwise small) lemons. While most strategies to increase fruit size are beyond implementation this late point in the season one remaining option available to growers is to hang lemons on the tree for longer. The drought in the Eastern Cape might further limit the options to increase fruit size. Logistics constraints at the ports preclude the storage of fruit there.
  • Exporters and growers were reminded that weekly statistics about the fruit size is available in the weekly variety reports available on the CGA website.
  • The Eastern Cape region requested a second representative on the Lemon FG given their contribution to the overall supply from SA. Justin Chadwick explained that this is possible in that the second representative could freely participate in the FG activities, but for official communication the elected representative (Hannes Joubert) would be the point of contact.

Navels:

  • The Navel Focus Group (FG) for 2010 would be chaired by Pieter Nortje and the vice-chair being Gabrie van Eeden.
  • 2010 Estimate 21,514,810 cartons (2009 = 19.4m)
  • Senwes and Eastern Cape anticipate larger fruit while the Western Cape is about the same or smaller than last year. Overall it should be a normal spread out of SA.
  • The meeting noted that effectively there has been no change in the volume of traditional navels in recent years, while the growth in navel exports has come from the late varieties.
  • The Navel FG highlighted a concern from the 2009 season where a price differential was observed between count 72/88s, particularly in the Middle East. Traditionally these counts have been sold at the same price.
  • The Navel FG was also concerned about the likely impact of the strong rand on fruit prices and costs of production.

Valencia:

  • The Valencia FG for 2010 would be chaired by Deon Joubert and the vice-Chair being Peter Nicholson.
  • 2010 Estimate 41,338,341 cartons (2009 = 36m). The Valencia FG concluded that the final number would probably be somewhere between 39 and 42 million cartons.
  • In terms of sizing it appears to be a normal fruit size season, although there are some slight variations between the growing areas.
  • The meeting noted that much lower volumes materialized in 2009 after the initial estimate was put on the table in February 2009. The value of the FG must be recognized here as once this trend became obvious the updated and corrected figures were sent through to the markets and service providers to plan for a lower crop.

Grapefruit:

  • The Grapefruit FG for 2010 will be chaired by Tim Wafer with Charlie van Veyeren acting as vice-Chair.
  • 2010 Estimate (in 17kg equivalent cartons):
  • Red: 8,760, 467 Cartons (2009=10.1m, 2008= 8.3m)
  • White: 2,303,279 Cartons (2009= 2.4m, 2008= 3.1m)
  • Clearly White volumes are declining over time as orchards that have reached the end of their productive life are being replaced with other citrus types or other crops.
  • The point was made that it is more appropriate to compare the 2010 estimates with the 2008 volumes (which was another “off” bearing season). And that typically in “off” bearing seasons the estimate tends to be on the high side when compared to what actually materializes (i.e. usually an overestimate happens in an “off” season).
  • It was also noted that “off” bearing years tended to result in large fruit size, which means less grapefruit in a carton. Given the manner in which grapefruit is eaten (cut in two as opposed to slicing or juicing) it is the number of fruit that is consumed that is important, and not necessarily the number of cartons sold.

Soft Citrus:

  • The Soft Citrus FG for 2010 will be chaired by Jock Danckwerts with Martina Odendaal acting as vice-Chair.
  • 2010 Estimate
  • Clementine:2.66m cartons (2009 = 2.51m).
  • Mandarin: 2.95m cartons (2009 = 2.54m).
  • Satsuma: 1.88m cartons (2009 = 1.73m).
  • The Soft Citrus FG brought to the attention of the meeting the fact that Clementine volumes have been declining, and will continue to decline in future, while at the same time the mandarin volumes have been increasing. This ratio is somewhat out of kilter with the general and global consumption patters for easy peelers where clementines are consumed to a far greater extent.
  • It is reported that recent Nova budwood sold will potentially result in approximately one million new trees, which means between 2.5 – 4 million cartons of Nova in two to five years’ time. The question was raised whether there was a market that would accept these additional volumes? It is known that Europe and some pockets of SEA receive Nova’s but this greater volume might be difficult to find buyers for. The meeting requested John Edmonds to provide more detail about the Nova budwood sales such as where they are being planted.
  1. Strategic Session
  2. Market Conditions

Overall there are two main considerations for the 2010 season. 1) The exchange rates. The Rand is 20% stronger than this time last year. Under these conditions stakeholders are encouraged to consider what is profitable to export and what is profitable to keep at home? 2) 2009 may have been a lot worse than it was as many exporters had forward cover. This will not have the same effect in 2010. The Rand may even get stronger.

5.5.1.Northern and Southern Europe & UK (Bernard Treptow)

  • Argentinean lemons are expected to start arriving in two week’s time. There are lots of Spanish Verna around which have been selling at 9 euros last week. SA lemons were selling at 13 Euros.
  • Good demand for easy peelers.
  • Grapefruit from Israel, Turkey and Florida is around which means SA fruit should be well received. Uncertainty about the SA crop estimate (maybe lower) is making planning difficult.
  • Oranges: exporters have moderate expectations about the orange market (cautiously optimistic). Generally the NH has had a short crop of citrus and summer fruits.
  • Economies are still struggling, especially the southern member states. More competition is expected from Chile in 2010 given the shift in US$/Euro ratio.
  • East Europe (incl. Russia) (Hannes Nieuwoudt)
  • Argentineans will be very competitive in Russia during 2010 given the currency differential and probably lower shipping rates (particularly container rates due to backhaul). It important that SA supply good quality.
  • Marketers are encouraged to keep to the FOB payment terms and not to sell fruit on consignment – this has traditionally been a FOB market.
  • It seems likely that Russian vessels will make regular calls to Maputo port in 2010 which should help congestion in the Durban port.
  • Middle East (John Taillard)
  • Last year was a low volume/price year in the ME and it is hoped the market will return to normal this year. SA anticipates large volumes going into the market in July and Ramadan is earlier than last year.
  • Credit crunch has impacted ME.
  • Maputo port remains a challenge for ME fruit but it is expected that the conventional:container ratio will be 90:10 in 2010.
  • The market is looking for good colour and quality.
  • It is not clear how the new CBS management system will impact on volumes.

5.5.4.Far East (Flippie Viljoen)

  • American fruit in Asia is of excellent quality, probably the best in the last number of years. It is essential that SA packs good quality to come in after the US finishes their programmes.
  • The market anticipates fruit well coloured, must be a heavy pack (16.5kg) and must be good eating quality (favourable brix).
  • Markets seem to be stable and SEA economies doing OK, consumption levels of fruit are good to date.
  • Malaysia has been rather sensitive to the volumes going into that market and caution about sending the wrong type of fruit there must be noted.
  • Indonesia has required additional food safety checks for fruit destined for Indonesia. Please consult the Dept of Agric ( or CGA ( website for the Indonesian SOP which describes the key requirements.
  • Japan (Stuart Symington)
  • Currently only Florida and small volumes of Texas fruit are in the Japanese market. Weekly delivers gradually increasing, with approx 200 000 more cartons in stock vs. same time last year (= same levels as in 2005!).
  • Much Florida fruit expected when SA first arrivals get to Japan (perhaps as much as 7 weeks of stock).
  • Demand is weaker than last year, which was weaker than the year before.
  • The market seems somewhat depressed and importers described as “nervous”.
  • Justin Chadwick also explained the market promotion initiative being pursued by the Grapefruit growers. It is hoped that this will have a positive impact on sales in Japan (and UK). The meeting agreed it would help if the CMF wrote to the NAMC indicating support for the promotion initiative. Justin was asked to write the letter.

5.5.6.North America (Gabrie van Eeden)

  • The US economy is really battling and will take years to recover.
  • Again the “wild card” is Chile as it is not clear what volume they will send to the US. In 2009 approx 1.5 m cartons of navels were exported to the US. It may be 2m cartons in 2010. Fortunately Chile enters the market later than SA and also does not have the same eating quality (although looks better).
  • Australian volumes are expected to be 300 000 cartons down as they compete more directly with Chile.
  • SA volumes to the US are expected to be up including grapefruit exports of between 30-60 K cartons. It will be interesting to see how well the grapefruit handles the cold sterilization protocol.
  • The motto for the US market is Quality, Quality, and Quality.

5.5.7.Status of Nova, Cara Cara and Clemingold to Japan

  • The meeting was interested to know if there had been any further developments around gaining access to the Japanese market for Cara Cara, Nova and Clemingold varieties.
  • Prof Vaughan Hattingh indicated that according to DAFF there had been no movement from the Japanese (MAFF) on approving these varieties. It is not possible to pack a Nova or Clemingold under the “Clementine” variety. CRI/CGA continue to put pressure on DAFF to engage with MAFF on this issue.

5.5.8.Impact of Rand strength

  • Peter Nicholson raised the issues around the impact of the strong Rand on the costs and returns along the supply chain. He requested the meeting to raise awareness among growers, exporters and importers of these implications.
  • For example where Rand costs have not changed (unless they have increased) these may not be covered while returns from the market will be considerable less (if Euro prices are the same as in previous years).
  • If costs continue to exceed returns growers will be compelled to exit the industry.
  • Consideration and comparisons should be given to shipping, which type of carton is used, etc to work out what is required to cover costs.
  1. Progress Reports/Inputs – DAFF (Bernard)
  2. Food Safety
  • DAFF apologized to the meeting for the delays in the publication of the official quality Standards applicable for 2010. These were published on the 19th March 2010.
  • The Standards have now been posted on the DAFF website.

6.2.Phytosanitary

  • Mike Holtzhausen is in Rome. No report from DAFF available.

6.3.DDAC

  • Paul Hardman was requested to provide an update on the use of DDAC. This can be summarized as:
  • The Japanese authorities (via the Importers Association) have advised that DDAC should not be used on fruit destined for Japan until further notice.
  • The analytical method used in Japan has been adopted by SABS and validated there.
  • This method at SABS is able to detect QACs based on small scale trials conducted by CRI.
  • It is not clear whether the EU are using this Japanese analytical method
  • It is not known to what extent the EU are testing for DDAC.
  1. Feedback PPECB (Cyril Julius)
  2. General
  • Cyril introduced Mdu who has taken over from Malcolm Dodd as cold chain specialist at PPECB.
  • Cyril highlighted significant changes to the Quality Standards, discussed the CBS training of PPECB inspectors, and other implications for phyto markets in 2010. It is not certain yet whether Spain will be categorized as a NI market by DAFF for 2010 with associated implications for resources to conduct phyto inspections.
  • More ambient loading trials are being conducted and results will be communicated in due course.
  • Growers and exporters were alerted to the changes in the marking requirements on the consignment note to include target region and country details – this will facilitate better EDI and information to the industry. See attachments for details on country codes.
  • Access to information
  • Justin illustrated the potential information and value that could be derived from having high-level information from Paltrack. This would aid planning and initiatives to improve logistics significantly. The meeting agree that Justin should write to the exporters and grower exporters to request this information be made available to the industry.
  1. CMF Budget (Justin Chadwick)

Justin explained the CMF budget for 2010 which has two main components (1) access to weekly information (R330K) and 2) meeting venues (R30K). Justin requested the meeting to consider a third component which was the contracting of a lawyer to provide advice to the CMF on the scope of discussion in light of the parameters of the Competition Commission (R20k), to which the meeting agreed. It was indicated the CEF and CGA Boards should take this matter up.

  1. CMF Meeting Calendar

It was agreed that another meeting should be held before the Soccer World Cup. Date will be suggested but will target middle to end of May 2010.

  1. Matters arising from previous meeting (CGA)

No mattes arose.

  1. General

Jacomien De Klerk (Citrus Academy) made a short presentation about the recently released Post-harvest training DVD.

  1. Closure

Participants were thanked and the meeting closed at 13H15.