Vineyards close as prices fail to offset outputs - The Packer

Vineyards close as prices fail to offset outputs

01/15/2010 02:30:46 PM
Abraham Mahshie

Low grower returns for Chilean grapes in recent years have led to the failure of some vineyards. This year, others are poised to exit the market if sufficient prices do not materialize.

“We could arrive at a mid-term situation where producers can disappear,” said Rodrigo Echeverria, president of Fedefruta, the Santiago-based federation of Chilean fruit growers.

“Table grapes — in the majority of varieties — are very close to break-even. In the long-term, this cannot be maintained and other fruits can replace them.”

Manuel Jose Alcaino, president of Decofrut, Santiago, agreed that there is a point at which it is not commercial to undergo high investments in growing and labor costs to export table grapes.

“Some of these growers are leaving these vines for wine or raisins, which of course don’t require any of the intensive labors that the table grapes do,” he said, noting that his estimate of a 7% reduction in table grapes is conservative, and does not include vineyards that may go out of business.

“If we sell at same prices as last year, growers are going to get a lower return because of the exchange rate. Compounding that, they are seeing reduced yields,” said Josh Leichter, director of the grape category in the Vancouver, British Columbia-based Oppenheimer Group’s Newark, Del., office.

“The Chilean growers have not had great results the last couple of years. It is very important that we manage the crop as best as possible so that we can provide the growers with a sustainable return.”

Leichter said the key to maintaining the system will be maintaining weekly arrival volumes and promotional programs with retailers.

Clamshell programs and red and green seedless promotions for Valentine’s Day and St. Patrick’s Day will help prevent fruit from backing up in coolers and deep discounts that hurt growers, he said.

Several suppliers said increased costs and insufficient returns have contributed to the failure of vineyards or the reduction in table grape exports.

“Returns from the past few years really have not been sustainable for the growers,” Leichter said.

He also said it is the concern of Oppenheimer and growers to deliver outstanding quality and value to customers while providing sustainable returns to growers.

“Vineyards are going out of business,” he said.

Alcaino said the grape business has gotten very tough, especially for growers of varieties as thompson seedless that require a high investment to produce.

“Only very few people could make money last year and the vineyards that are going out of business are mostly old vineyards that don’t have the capacity to yield high productions,” he explained.

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