Testing times for Chilean grapes

The international marketing magazine for fresh produce buyers in Europe
Maura Maxwell

BY MAURA MAXWELL

@maurafruitnet

Testing times for Chilean grapes

Northern Chile’s export window is being squeezed by increased competition from Peru and an extended Californian season

Testing times for Chilean grapes

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Table grape producers in northern Chile are calling for urgent action to deal with the crisis facing the industry. With returns for the 2016/17 season down 40 per cent on average on last year, they say more most be done to halt the slide in profitability.

Last week, Sociedad Agrícola del Norte (SAN) called on the agriculture ministry to establish a public-private committee to look at ways of avoiding a similar situation from occurring in future seasons, including more varietal investment and greater market diversification.

In the US East Coast – Chile’s biggest market – exporters are being squeezed by the surge in Peruvian production and the extension of the US domestic season.

With an abundance of land and water and a cheaper workforce, Peru in particular has had a profound impact on Chile’s profitability since the start of the decade.

“Before we were alone in the market [between December and April], but the Californians have developed new varieties in order to prolong their season, which now extends into January,” SAN's José Corral said in an interview with Semanario Tiempo.

He claimed Chile was now trailing its competitors due to years of underinvestment.

“In genetics, for example, Peru can today import genetic material, leave it in quarantine and start producing immediately. Legal restrictions mean that we face a five-year delay compared to Peru,” Corral explained.

He pointed out that other countries were more attractive for investors than Chile and this was making the development of the fruit industry difficult.

“Unfortunately we have to import much of our research requirements today because our own is out of date and this costs a lot of money.”

Corral said that whereas last season, limited supply kept prices firm and led to growers in Coquimbo seeing relatively good returns, the reverse is true this season and growers have not even been able to break even.

The fact that the warm weather had brought forward production in northern Chile by 15-20 days this season compounded the situation, Corral added.

“We were shipping 4m cartons a week in January whereas consumption was running at 2m cartons – in the end the fruit starting rotting and we had to pay to throw it away.”

One US importer told Fruitnet that there were some deep-rooted issues at play in the US market that needed to be addressed if profitability was to be restored.

“When this season ends, Chile will have shipped a similar amount to last year – that means much less volume than a few years ago and lower weekly volumes than the Northern Hemisphere season,” he said.

“That the significantly lower FOB prices are a function of weekly volumes and the slow movement is only a function of retail prices is overly simplistic. Run a regression analysis of five years of data and you will see a weak correlation and no causality. There are other factors causing this market condition and it concerns me greatly.”

The importer said it was “no fun” to pay ocean freight, repack and try to sell something only to end up throwing it away. On the upside, he said he the market to improve during the latter stages of the season.

 

 

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