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Argentina unable to export fruit to China due to lack of quality and high logistical costs

During the visit of President Mauricio Macri to China, the Minister of Agricultural Business, Ricardo Buryaile, and the Minister of Production, Francisco Cabrera, will sign a Strategic Plan and Phytosanitary Protocol for the export of table grapes to China. Despite this, local producers say they will be unable to ship this fruit to China because of a lack of quality and because of logistics costs. 

The agreement, which sets out a work plan for health and phytosanitary issues for the 2017-2019 period, will be established together with the Chinese Minister ZHI Shuping of the AQSIQ. In addition, together with Minister HAN Changfu Buryaile they will sign the 2017-2022 Agricultural Cooperation Strategic Plan, which renews the one they signed in 2012.

Low quality, quantity, and competitiveness
Alejandro Toroga, a producer and exporter, said that at some point 80% of exports were sent overseas, mainly to Russia and Europe, while the remaining 20% were sent to Brazil. However, as transportation costs have increased, Argentina currently only allocates grapes to Brazil and to the internal market. "As it became less profitable, the area devoted to this crop fell, so we don't have the volume needed to open up new markets." 

In addition, the local producer said, Argentina does not have the necessary quality to export to China. "First of all, we've had so many rains that have caused damages to the grapes, so the product is not in line with what China demands." Therefore, Toroga said, Argentina currently doesn't have the conditions to open up new markets. 

Producer Diego Salvarredi agreed with Toroga. In addition, he said, Argentina can't compete with the quality and prices that Chile has. 

Moreover, Chile has more than 15 seedless varieties and the qualities demanded by the world and the Asian giant, while "Argentina only has two varieties and a very low production; we can't even send samples." 

Finally, he said, the table grapes would not arrive to their destination because of their quality. "They wouldn't withstand 45 days on a boat. If we want to reach demanding markets we must have a complete overhaul and lower costs, mainly in logistics," Salvarredi stated. 

In turn, Jose Molina, the head of the Chamber of Wine Producers of San Juan, said that "the Strategic Plan is done, the protocols need to be updated, and we need to see how competitive the exchange rate and logistics are. This is something to be worked in the medium and long term."

"The table grape's situation is currently complicated. We use our production to supply the internal market. There is no room for export and costs are high."

World Supermarket
The challenge is great since the President Macri also wants to open the door to new food export niches to China. In fact, on Tuesday, the President ratified it at the Business and Investment Forum in Beijing  where said: "We no longer want to be the world's breadbasket, we want to be the world's supermarket and add value to the raw materials."

84% of Argentine exports to China are of food, mainly soya and meat. The goal, then, is to enter more products to this market. 

Sales abroad fall
Argentina's fresh grape production has fallen considerably in recent years, and it deepened in 2016. In fact, the country went from producing 433.130 quintals of fresh grapes in 2006 to 92.712 quintals in 2016; production in 2015 stood at 163.530 quintals. 

In addition, 90% of the production of the grapes in the country is located in San Juan, which produced around 161.063 quintals in 2015, while Mendoza only produced 2.456 quintals, according to data published by the INV. 

From 2007 to 2015 fresh grapes declined by more than 250% and Argentina lost a total of 20 markets in that period. Currently, Argentina sells fresh grapes to 17 countries.

In 2007, the country exported 51,468,672 kilograms of fresh grapes and in 2015 exports amounted to 14,586,022 kilograms. The main destination was Russia with 35% of the market share, followed by Europe with 32%, Brazil with 31% and then North America with 2%. Southeast Asia, which in 2007 was a more important destination, follows.


Source: losandes.com.ar

Publication date: 5/18/2017


 


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