National Editor Tom Karst Several months ago I had a blog post titled “Peruvian grapes: stealing Chile’s sunshine?” and I notice the post continues to get hits.
I’m not sure if that means there is more and more worry about the state of the Chilean fruit export deal, but it might be a good time to review recent reports on Chilean fruit.
Checking out the website for Fedefruta, the Chile’s National Association of Fruit Producers, there is palpable concern and growers and exporters about the state of the exchange rate in Chile.
Excerpts from the news release(Google translate edition):
FEDEFRUTA President of the Central Bank and government officials: "We must react now"
Thus, Cristián Allendes insisted exchange intervention and the implementation of public policies to prevent further deterioration of the competitiveness of the fruit industry.
With a sense called "react now and not wait for the export sector have to go bad times to do it," the president of the Fruit Growers Federation of Chile (Fedefruta), Cristian Allendes, insisted Thursday in urgent need that the Central Bank and government authorities involved the exchange market and implement public policies that raise the price of the dollar and prevent further loss of competitiveness of the fruit industry.
"The exchange rate deteriorated by more than 10% last year, starting from a very low base and, as was 524 pesos per dollar. Today the market is in a range of 470 pesos and wonder what must happen for the Central Bank and the government do something?. With that, our industry lost about 500 million dollars a year, "said Allendes.
TK: Allendes goes on to say the sector is experiencing a “perfect storm,” of labor shortages, high energy and transportation costs and worsening exchange rate. Growers and exporters say they would like the peso to dollar exchange to be about 550 pesos per dollar to restore competitiveness to the sector.
More immediate concerns to the U.S. trade are lighter than normal arrivals so far this year. Through Jan. 5, season to date Chilean grape volumes to the U.S. were 47.5 million pounds , down 33% from 70.5 million pounds a year ago at the same time. From January through November , U.S. imports of Chilean grapes were 338,000 metric tons. That compares with complete year totals of 400,000 metric tons in 2011 and 406,000 in 2010.
Alluding to light early season supplies from Chile, the Jan. 11 USDA fruit and vegetable retail report showed that 1,200 U.S. stores were promoting red seedless grapes at that time, down from more than 5,000 stores at the same time a year ago. Advertised prices for red seedless in early January were $2.69 per pound, up from $2.38 per pound a year ago. White seedless grape promotions were down from 2,885 stores last year to 1,895 stores this year. Ad prices for white seedless grapes were $2.81 per pound, up from $2.69 per pound a year ago.
Market sources say berries are small and early season volume has been below normal because of the cumulative effect of drought in some growing areas and untimely rain in other regions. Promotable supply of Chilean grape isn’t anticipated until February.
The USDA reported f.o.b. prices for Chilean perlette grapes in mid-January were $24-26 per carton, up from $14-16 per carton at the same time a year ago
Manuel Alcaino of Decofrut said that the industry in Chile expects overall grape export volume to be off 2% to 4% compared with a year ago. Alternative markets like Korea, Indonesia, China, Brazil and others compete for fruit with the U.S.
"The reaction of the American market to these reduced volumes will be the clue to the final results; if prices keep strong, as they are now, the reduction will obviously be less," he said in an email. He also said the behavior of "La Niña" will be very important to the ability of the market to keep strong prices, Alcaino said.
More backup: The USDA’s Fresh Fruit Annual Report on Chile , released In late October, acknowledged the challenges of the Chilean deal:
From the executive summary:
In spite of favorable weather conditions during this last winter months (Jun-Aug. 2012) with almost no frost in most growing areas and sufficient cold hours accumulated which should have a positive effect on budding to assures a good production, the industry predicts a harvest volume similar to that of last year (an unusually low harvest due to adverse weather conditions). As severe drought continues to adversely affect a large area of table grape production output is expected to be similar in volume than the previous year.
The industry predicts a similar in volume to last year’s harvest as the northern production areas are being affected by a severe drought. The Atacama (Copiapo), Coquimbo and Valparaiso Region is being affected by this drought for the second year. This area represents an estimated 52 percent of the total planted area in the country. Chile produces over 36 varieties of table grapes for export. Thompson Seedless and Flame Seedless account for the bulk of production. Varieties like Red Globe, Superior Seedless, Crimson and Autumn Royal continued to increase in the last few years, as most of the replanting has been with these varieties. Table Grapes are planted from Atacama Region (Copiapo) to Maule Region (Curico-Talca). Crop Area Industry sources agree that new plantings are not likely for the next few years as economic returns have been affected by increasing costs and in general falling prices for table grapes. Additionally, a revaluation of the Chilean peso against the dollar has not being helping the fresh fruit export industry in general, as their cost are in pesos and the income is in dollars.
Stealing Chile’s sunshine or not, Peru’s season to date grape exports to the U.S. are also down, with 23.4 million pounds imported through Jan. 5 compared with 54 million pounds a year ago. Generally speaking, however, Peru is on the uptick. Check ouit the June 2012 USDA FAS report on Peruvian grapes.
TK: We love our grapes, but the business of delivering grapes to the North American market amid the challenges of exchange rates, weather, labor shortages and high energy costs is taxing the patience of grape exporters in Chile.