The Herald

EDelivers: Citrus export earnings bloom with China protocol

Edgar Vhera 

Agriculture Specialist Writer 

ZIMBABWE citrus export earnings rose 64 percent from US$7, 40 million in 2017 to US$12, 15 million last year with the figure expected to increase further this year due to the opening up of the Chinese market.    

Statistics from Zimbabwe National Statistics Agency (ZimStats) show that citrus export earnings have grown from US$7 396 888 in 2017 to US$12 150 439 in 2022. 

The volumes rose 44 percent from 48 million kilogrammes to 70 million kg over the same period. 

The citrus products consist of fresh or dried oranges, mandarins, fresh or dried grapefruit, peel of citrus fruit or melons, citrus fruit and orange juice. 

The country’s citrus products have predominantly been exported to the European Union (EU) market with some destined for the African market. 

As citrus is a bulky low value product it is transported by road from Zimbabwe to South African ports from where it is shipped to international markets. The opening up of the Chinese market has given the country more options to use, for instance, the port Beira whose use the citrus industry is exploring. 

Zimbabwe and China last year signed a citrus trade protocol that was initiated in 2015 for the export of oranges for smallholder growers under the Shashi irrigation scheme. 

The general administrator of customs of China recently released a list of registered Zimbabwean orchards and packhouses for fresh citrus exports to China. 

The fresh citrus products to be exported to China from Zimbabwe include sweet orange (Citrus sinensis), mandarin orange (Citrus reticulata), grapefruit (Citrus paradisi), lemon (Citrus limon and aurantifolia) and sour orange (Citrus aurantium). 

Citrus production is expected to increase, as recently planted trees mature and come into production.   

The Chinese market is the largest for citrus consumption in the world. The country will start citrus exports to China this year with exports going via the port of Durban as the Port of Beira currently does not have cold sterilisation required by China.  

Lands, Agriculture, Fisheries, Water and Rural Development permanent secretary Dr John Basera recently observed that the Government would provide support to ensure that the long-awaited citrus exports are achieved in line with engagements being done by the Second Republic that have led to the widening of market access. 

The Horticultural Development Council’s (HDC) 2022 end of year seasonal update revealed that 4 193 hectares of land were under citrus production in 2022 with 2 600ha of the trees below three years of age. 

What are some the policies that the 2nd Republic introduced to spur this growth?

Horticulture Recovery and Growth Plan (HRGP) 

The HRGP seeks to increase citrus area under conventional horticulture from 3 301ha in 2020 to 4 317ha by 2025. 

Citrus Recovery and Growth Programme 

The plan is to increase area under citrus by 15 000 ha at a cost of US$1 800 per hectare including inputs. The marketing of citrus will be carried out by the Citrus Growers Association of Zimbabwe (CGAZ). 

The programme will develop irrigation, provide equipment and virus free planting material, good agronomic practices and will be based on cluster models to promote aggregation of produce and access to markets. The programme will be funded by Government, private sector and donors to the tune of US$27 000 000. 

Upward review of retention thresholds for exporters  

The Reserve Bank of Zimbabwe (RBZ), under exchange control directive RY002/2023 reviewed upwards the retention thresholds for export proceeds from horticulture exporters from 60 to 75 percent. The balance of 25 percent of the export proceeds being sold to RBZ at the prevailing interbank rate.  

RBZ governor Dr John Mangudya said his bank supported horticultural production by providing foreign currency through the auction system for importation of key raw materials and equipment, arranging facilities (that include letters of credit to finance essential imports such as fuel, equipment, chemicals and herbicides among others) and structuring self-liquidating external finance. He said this at the inaugural HDC investment conference in 2021. 

Downward review of the intermediated money transfer tax (IMTT) 

Ministry of Finance and Economic Development reviewed downwards the IMTT from four to two percent as it was viewed by most businesses as a big cost driver and its lowering reduced the cost of doing business transactions intermediated through banks. 

US$30 million Horticulture Export Revolving Fund (HERF) 

The Ministry of Finance and Economic Development last year introduced a US$30 million HERF to provide short and long-term financing to horticulture exporters to increase production. Banks work with the Finance and Agriculture ministries to administer the fund. 

Repayment of foreign loans prior to liquidation 

Government granted business the ability to repay foreign loans registered through local financial institutions prior to liquidation. 

Zimbabwe Investment and Development Agency (ZIDA) 

ZIDA recently acknowledged that HDC was advancing the production of blueberries, citrus, coffee, and flowers.  ZIDA is providing facilitation and assistance with land identification and acquisition, creation of special export horticulture economic zones, creation of specialised export horticultural parks for value addition and beneficiation so that HDC is able to achieve its set target of a US$1 billion horticulture industry by 2030. 

Tugwi-Mukosi  

The Tugwi-Mukosi master plan identified a total of 4 544 hectares of irrigable land although the Dam has the potential to irrigate a total of 40 000 hectares, with some of the irrigable land being 80 to 250 km away from the dam. The Tugwi-Mukosi Dam is likely to expand citrus production in that region, which will make it imperative to use the port of Beira for exporting horticulture products to the Far East market. 

Joint venture incentive and practice 

Government has put in place the following incentives – joint ventures (JV), suspension of duty on agriculture capital equipment (Statutory Instrument 6 of 2016), anchor farmer incentive, value added tax (VAT) zero rating of farm inputs and rebate of duty granted on materials used in the preparation and packaging of fresh produce for export [Section 132 of the Customs & Excise (General) Regulations] to benefit horticulture exporters. 

Chegutu citrus hub 

Sable inclusive business model lawyer Mr Rangu Nyamurundira recently said Sable Business Park was granted a US$13, 5 investor’s licence by ZIDA to invest in commercial citrus production in November 2021.  

“Sable is now applying for special economic zone (SEZ) from ZIDA for increased benefits such as waiver of import duty on various equipment used for citrus production, waiver on tax charged for processing services provided at pack house, tax breaks equivalent to five percent of citrus revenue generated, waiver of remittances on export of citrus for first ten years from planting of citrus and guaranteed long term water security citrus to cover for potential drought by ZINWA,” he said.  

Sable Business Park is establishing joint venture arrangements with A1 and A2 farmers to increase area under citrus production in Chegutu district to establish a citrus hub. To date 350 hectares have been established under citrus from a low figure of 127ha before the JV arrangement with phase three of the programme targeting 1 000ha. 

Previously, the district had a maximum of 650ha under citrus production. 

To support the citrus hub, Sable Park Estates (the investor) in 2018 secured a 20-year water rights agreement of up to 4 000 mega litres from surrounding dams to irrigate up to 5 800ha. 

Commenting on the development soon after the citrus investment indaba in May this year HDC said: “It is a unique model that incorporates local farmers bringing state land assets into commercial production, without the farmers having to struggle with securing capital. Sable Park Estates will secure and guarantee financing for the venture, while managing the entire plantations and ensuring access to markets once the tree begin to produce fruit.”   

The statement from HDC revealed that from planting of the trees to producing fruit for the market, the farmer was guaranteed an accumulative “stipend” or form of rental for the use the land. By the tenth-year of the citrus plantation time span, the investor expects to have settled all debt incurred for establishing the plantations.  

“Within 10 years of the farmer not having had to guarantee any investment capital or carry its risk, the investor expects to have settled the primary debt associated with establishing the plantation. It is then that the farmer finds himself owning 51 percent of a commercially viable and bankable debt free asset, with the option to buy out the investor’s 49 percent over an agreed period,” continued the HDC statement. 

According the HDC, citrus production in the country started in the early 1900s in Mazowe district. Between 1960 and 1970 it expanded to Beitbridge with Chegutu joining the bandwagon from 1970 to the early 1980s. Today, citrus farming is done in Mazowe, Beitbridge, Chegutu and Mvurwi. New orchards are being established in Mashonaland and Midlands provinces. 

In a recent twitter post, HDC said the country can establish between 8 000 and 10 000ha of citrus, with a maximum of 20 000ha if investment incentives and patient long-term finances that are suited to the tenure of the crop are availed by 2030.  

Stakeholders in the citrus industry are now lobbying ZIDA to include all of the country’s citrus farming areas under their SEZ mapping. 

SEZ are designated geographic areas within an economy where business activity is subjected to different rules that are more free-market oriented than customary or national law. These regulations cover trade, taxes, customs and investment conditions. 

A farmer from Dodhill in Chegutu, Mr Pete Breitenstein presented the citrus development zone wherein he disclosed that the global citrus export market grew by 14, 1 percent to US$16, 3 billion between 2019 and 2020 and within the African continent, South Africa accounted for 11 percent of global trade valued at US$1, 84 billion in 2020, from its estimated 82 000 ha citrus land. 

“Currently Zimbabwean citrus produce is consolidated with South African exports as the country has only an estimated 3 200 hectares of export citrus. There is an opportunity to recover and grow citrus production for export.  

“With the coming in of the country’s trade protocol with China, it is possible for a Zimbabwe special brand. Furthermore, there is an increased opportunity in the juice market with the collapse of the Florida citrus industry,” said Mr Breitenstein at the citrus indaba.  

“To incorporate new farmers and those on A1 and A2 land-holdings, a joint venture (JV) structure has been proposed to de-risk new citrus farmers and leverage Dodhill’s export and production history,” said Mr Breitenstein. 

He called upon interested farmers and investors to partner and join the proposed citrus SEZ.