Chilean growers battle exchange rate, high inputs

06/27/2013 07:38:00 AM
Andy Nelson

Fruits from ChileWhen exchange rate fluctuations and rising input costs are taken into account, the value of Chilean fruit crops has fallen substantially in the past nine years, according to a new report.

But it isn’t significantly affecting exports to the U.S.

In Decline in Chile’s Agriculture Sector, published June 3, the U.S. Department of Agriculture’s Foreign Agricultural Service measures Chilean growers’ competitiveness vs. producers in other countries.

“The fruit sector suffers the most from the loss of competitiveness,” according to the report. “The past nine years have seen a cumulative decrease of 55%, with a staggering drop of 16% in the 2012 harvest.”

That “decrease” measures the value of crops to growers when other factors like exchange rate and higher labor costs are added to the equation, FAS officials said.

“The challenge for Chilean farmers is that they’re selling their fruit and receiving dollars, which are low against the Chilean peso,” said Rachel Bickford, an official in FAS’s Santiago office. “Meanwhile, all their input costs are in pesos: labor, water, very expensive electricity (and others).”

According to the report, labor costs have risen 88% in the past decade.

As for the effect on volumes of Chilean fruit shipped to the U.S., Karen Brux, managing director of the Chilean Fresh Fruit Association, San Carlos, Calif., said that while volumes have been lower this season, Mother Nature, not economics, is the main culprit.

“It’s clear that weather conditions had a negative impact on volume this past season, but shipped volumes to North America have been very robust throughout the past several years,” she said.

Through Chilean Citrus Committee, the Chilean Blueberry Committee and other Chilean fruit marketing efforts, volumes of many exported commodities are growing, Brux said.

About 705,000 tons of Chilean fruit had been exported to the U.S. in the 2012-13 season through June 11, according to the Chilean Export Association. About 864,000 tons were exported in 2011-12, but that was up slightly from the 2010-11 total.



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