Suppliers of Peruvian citrus say the recession did not have a negative impact on the summer citrus deal, but some of last year’s players will still sit out the deal in 2010.
“Would it be a better seller though if the economy was better? Yes, yet consumption of imported citrus was up,” said David Mixon, senior vice president and chief marketing officer for Seald Sweet International, Vero Beach, Fla.
“We actually shipped more fruit last year than the year before.”
Mixon said the real question will be whether pricing structures will be acceptable to some of this year’s exporters.
Beatriz Tubino, director of agro exports for the Peruvian Association of Exporters, Lima, said that exports of Peruvian citrus overall fell, but not as a result of lower demand in the U.S.
“With respect to 2008, in the year 2009 the net tonage fell by 22%,” she said.
“Nonetheless, we must consider that the exports to the U.S., the country that represents our number one destination for citrus exports, grew by 12% with respect to the year 2008.”
Fernando Cilloniz, general manager of data analyst Inform@ccion, Lima, said last year’s volumes overall fell as a result of the agricultural phenomenon of alternation —“a year of strong production is followed by a year of low production.”
He said Peruvian citrus will increase in volume again this year with high prices.
Ismael Benavides, former Peruvian Minister of Agriculture and general manager of the Huamani Group, Lima, said that as the economic crisis affected the European market and the exchange rate from euros to dollars dropped by 17%, the income of the Peruvian citrus industry fell as a result.
“The demand is uncertain due to the advent of the Greek crisis,” he said. “In the USA we expect demand will not increase substantially, so the outlook for prices is uncertain.”
Uncertain prices mean uncertain grower returns, though suppliers do not expect returns to be as poor as they were when the market was flooded in 2008.
“Two years ago returns were poor but it wasn’t because of lack of consumption,” Mixon said.
“It was an improper manner of marketing, nothing to do with the production side.”
Mixon said the Peruvians are more mature in the market and they understand market desires and processes better now.
“They will continue to be successful if the market conditions remain at a level that is acceptable in their returns,” he said.
Estuardo Masias, general manager of Lima-based Prolan and part owner of La Calera, Chincha, Peru, said that in 2009, climactic conditions led to lower volumes especially in satsumas and clementines, but the international economic crisis did not really affect the deal.
“The local market was very high thanks to our sustained growth, so we could take refuge on local prices,” he said.
“The export prices did achieve normal to higher prices due to the lower export volumes out of Peru.”
Masias said early summer arrivals of clementines allowed Peruvians to obtain high f.o.b.s.
“We can not complain that on a difficult year for the rest of the world and harvesting a low crop, we had extraordinary results,” he said.
Mark Greenberg, vice president of procurement for Cape Town, South Africa-based Fisher Capespan agreed early and late season crops do particularly well, but there is a midseason period of two or three weeks where weaker sales translate to low returns.
Benavides said costs have also gone up because of the revaluation of the Peruvian currency, the nuevo sol, against the dollar by about 12.5% in the past year.
“While on the one hand the cost of fertilizers and other dollar-based inputs has dropped, on the other hand our costs (labor, energy, fuel, etc.) in soles have increased due to the revaluation,” he said.
Exiting the deal
Suppliers sitting out this year’s Peruvian citrus deal gave different reasons for doing so, while those in the deal challenged the claims made.
“There just wasn’t enough volume for us to really keep at it,” said Joe Berberian, sales manager for Bee Sweet Citrus Inc., Fowler, Calif.
Berberian said Peru did not help fill a timing gap for him, and he felt frustrated with Peruvian suppliers.
“Truthfully, it’s a headache,” he said about direct importing product from Peru. “I wouldn’t buy Peru over Chile.”
David Marguleas, vice president and chief marketing officer for Sun World International LLC, Bakersfield, Calif., said his reason for ceasing to import Peruvian citrus had nothing to do with quality.
“We imported Peruvian citrus for a couple of seasons and realized that the Peruvian minneolas that we imported did not fit with our customers’ needs, and we are focusing on the importation of Peruvian grapes instead in the fall,” he said.
“It had nothing to do with color or brix or anything else.”
Greenberg said he could not understand how importers could claim frustration working with Peru.
“The people that we work with are extremely sophisticated shippers,” he said.
“Three or four years ago, their product was not viewed positively in the market because color was not as deep as other oranges coming in the market. In the last four years, they have come a long way in developing a product that is attractive to the North American taste.”
Greenberg said Peru’s success is a matter of supply and demand where Peru can fill the shortages left by other producing countries.