National Editor Tom KarstThe Chilean port strike is garnering attention this morning. The Chilean growers group, Fedefruta, had coverage about the effect of the strike on fruit exports to the U.S.
According to the translated report, 2.3 million boxes of fruit bound for the U.S. and Korea are affected by the port strike, with an economic impact that could reach $50 million.
If the port strike persists, then grapes headed for the U.S. could arrive after the April 10 marketing order effective date, which would result in a greater percentage of failed arrivals.
Here is the Feb. 4 2010 rule that moved the California desert grape marketing order effective date from April 20 to April 10. Because of that rule, beginning April 10 every year, imported grapes must meet the U.S. No. 1 grade standard for table grapes to enter the U.S. market.
The rule explained why the marketing order effective date was bumped up by 10 days:
“.., the beginning date of the regulatory period was changed from April 20 to April 10 of each year to respond to the marketing and technology changes that have occurred within the imported grape industry. Improvements in cold storage technology have enabled large quantities of imported grapes to be imported prior to the beginning of the marketing order regulatory period, when the order requirements come into effect, and subsequently be held in cold storage for long periods of time.
"This can potentially allow the stored product to be marketed after the start of the regulatory period in competition with regulated, domestically produced grapes. Establishing the earlier beginning regulatory period date for the marketing order helps ensure that imported table grapes marketed in competition with domestically produced table grapes meet the minimum marketing order quality standards.
"The basic rationale for such standards is that only satisfied customers are repeat customers. Thus, quality standards help ensure that consumers are presented a product that is of a consistent quality, helps create buyer confidence, and contributes to stable market conditions. When consumers purchase satisfactory quality grapes, they are likely to purchase grapes again, and inspection helps ensure a quality product. It is anticipated that this action will improve the orderly marketing of grapes and benefit producers and consumers of grapes."
Chile has had an uneven season, but USDA statistics now reveal season to date imports are about on par with a year ago. Grapes represented 14% of all retail fruit ads on March 22, according to the USDA retail report.White seedless grapes from Chile were being promoted in 11,772 retail stores on March 22, up from 6,988 a year ago. Advertised prices were reported at $2.02 per pound, up from $1.86 per pound a year ago.
While grape imports from Mexico and Peru have climbed in recent years, U.S. imports of Chilean grapes have slid from $740 million in 2010 to $630 million in 2011 to $580 million in 2012. Unfavorable exchange rates for Chilean exporters have been a big story line in the recent struggle, but worries about water and labor have also been part of the chatter.
Certainly a port strike adds more cause for worry late this season.
It is perhaps likely the port strike will be settled quickly. If not, the USDA should consider pushing back the marketing order requirements by several days so that Chilean grape shipments can arrive to the U.S. with minimal economic impact to importers and consumers in the U.S.