An analysis of the relationship between orange production and exports in South Africa, from 2003-2023

Abstract

The South African orange production is highly export-oriented, contributing approximately R3 billion in foreign exchange and positioning the country as the third-largest exporter. Over the past two decades, the citrus industry has expanded its orange production area and improved yields through technological advancements, advanced farming techniques, strategic investments in export infrastructure, and favourable climatic conditions. The cultivation of the Valencia and Navel cultivars across diverse climatic regions enables South Africa to supply international markets during Northern Hemisphere off-seasons, thereby strengthening the competitive advantage of the country. This study analysed the relationship between orange production and export in South Africa for the periods between 2003 to 2023. The study had two objectives which were to describe the trends of orange production and exports in South Africa from 2003 to 2023 and to determine the relationship between orange production and export volumes from 2003 to 2023. The study used secondary time series data sourced from Department of Agriculture, Land Reform and Rural Development (DALRRD) and Citrus Growers Association (CGA). To achieve the objectives, the study employed descriptive statistics, Augmented Dickey-Fuller (ADF) tests, Johansen cointegration, Vector Error Correlation Model (VECM) and Vector Autoregression (VAR) model. Descriptive statistics results reveal that both production and oranges reveal a non-linear, fluctuating patterns over the study period. Production and exports alternated between periods of expansion and contraction. Orange production displayed several upward movements between 2005 and 2008, and again between 2010 and 2014, with a peak output of 1.81 million tons in 2013. These upward trends correspond with favourable conditions and improved production efficiency. Inversely, production experienced prominent downward movement after the 2013 peak, with reductions recorded between 2014 and 2016, and again between 2021 and 2023. Similarly, exports followed a fluctuation course, with increases observed between 2009 and 2014 and again between 2018 and 2021, culminating in a peak in 2021 at 1.17 million tons. The upward trends correspond with improved export logistics and favourable global demand. Conversely, exports also experienced downward trajectory, particularly in between 2003 and 2004, 2071 and 2018, and 2021 onwards due to stricter phytosanitary requirements, and global supply chain instability. The Augmented Dicky-Fuller (ADF) test was used to determine the stationarity of the time-series variables and the results confirmed that the variables are non-stationary at levels but become stationary at 1st difference. The Johansen Cointegration test confirmed that a long-run equilibrium relationship exists between orange production and exports. The Vector Error Correction Model (VECM) indicated the presence of a positive long run relationship between orange production and exports from 2003 to 2023, meaning that an increase in production results in a positive increase in exports in the long run. The Error Correction terms (ECM) revealed that production is the variable that responds to external shocks to restore equilibrium. Based on these findings, the study recommends investments in farming technologies, efficient irrigation systems, and climate-resilient practices to enhance productivity and maintain fruit quality. To improve bargaining power and market penetration, diversification of production and formation of cooperatives are recommended. Policy interventions should prioritize upgrading the deteriorating logistics infrastructure, improving ports and transport networks, and ensuring reliable electricity supply to improve export efficiency. Future researchers should seek to incorporate more variables such as exchange rates, global prices, government expenditure, and more frequent intervals such as monthly or quarterly to better capture short-run dynamics.