The initial euphoria for the opening of the Brazilian market to Argentine citrus has dwindled as the weeks go by. Why is this? "There are no credits for working capital", summarized Mariano Caprarulo, the Executive Director of the Chamber of Exporters of Citrus NEA (CECNEA).
Caprarulo does not fail to compliment the official policies that finally unlocked the access to Brazilian supermarket shelves. However, he insists they need more: "Brazil has been brilliant, the United States with lemon has been brilliant, the sweet citrus is brilliant because the focus is on it, but right now we can't harvest our crops and comply with all the requirements due to a lack of cash. And we need to get that cash through the banks. This is happening to us with all markets."
"The national government and Entre Rios has worked very well with CECNEA and SENASA to open markets, but we have a problem that affects our access to any market: we have had a very large setback, for many years, that eroded working capital. Last year we raised this issue in the Ministry of Agricultural Industry. We're not asking for a gift, we are asking for credit to harvest our fruit, to work, and to be able to export," he added.
Caprarulo said that without immediate credit support "it will be difficult to live up to the competition in the Brazilian market." "It is a demanding market, both in health and quality, it requires a great effort and, in addition to the having the farms in optimal conditions, we need working capital, funds to harvest and pay our people, processes and exports. And right now that's complicated," he admitted.
The Executive Director of the CECNEA said that the sector was willing to accept "one year credit funds, to pick up the harvest, so we can export and pay it back the next year and so on."
According to Caprarulo, "it'll be impossible to export without that accompaniment, our competitiveness problems come from long ago, and have not been corrected." The tax burden is very high for the exporting producers who work the entire formal chain. It is perhaps one of the highest fiscal pressures in the world, if not the highest. In addition, the exchange rate isn't at a point were we can sell abroad with the same prices as South Africa, Chile, Peru, Uruguay, which makes everything very difficult."
"Worse of all," he added, "since 2013, the government has promised to help us with the REPRO for our people but the Ministry of Labor never grants it to us, even though our case fits perfectly into the recovery program and the companies comply with a lot of formalities."
Pear and apples need the same
The Citrus Exporters Chamber of the NEA is closely following the reality of other important fruit productions in Argentina, such as pear and apple.
"We understand that there will be contributions for the pear and the apple, which are going through the same situation as us. We hope this is true, because it is also a sector that has been very affected. We need the same here, the exporting producers of citrus and the producers for the domestic market need the same: credits for working capital."
"Of course it would be great if we had access to long-term credits to improve everything, i.e. varieties, technologies, and tools. However, in order to export today, knowing what fruits we have and that we have markets, we need immediate credit support for working capital," he insisted.
Complicated balances
Caprarulo spoke about the difficulties that the companies were facing to gain support from banks.
"There are companies in the region that exported products years ago and are no longer able to export. The ones remaining, which have been working for 20, 30 or 40 years, have balances that are far from optimal because of the dragging effect of the crisis, and the government should look for ways to provide funds so that they can work and create jobs, as a regional and social lever, to be returned the following year, until the sector recovers. National banks see us as a high risk, and no one supports us."
"The banks make announcements about credits and contributions of many millions, but then they say they can't endorse the technical part so the process does not prosper. We're missing a national political decision. It's difficult to understand this, as we are the most important regional social lever in the region. All over the world the governments set active policies to favor producers and exports, here it's been exactly the opposite for a long time."
To Brazil, by truck or by boat?
The high cost of transport is one of the competitiveness issues affecting the citrus sector.
"The government is trying to correct this situation, but it will take some time. The cost of freight to bring the fruit to Buenos Aires by truck is 16 or 17,000 pesos, which is more expensive than sending a container to Europe. It's ridiculous," Caprarulo said.
- Is it more expensive to go from Entre Rios to the port of Buenos Aires than from the port to Europe?
- It's weird, but it's like that. It wouldn't make sense in any economy in the world. We thought it was going to be a problem with Brazil. So much so that, despite being a short route that can be covered by land, we thought about resorting to maritime traffic. But the truth is that Brazil is organized differently. They send their fleets of trucks, which are huge, and top it all out in packaging.
At the gates of the United States
The executive director of CECNEA is moderately optimistic when asked about access to the North American market.
"According to reports we received from the agricultural aggregate, there is an agreement between the two presidents in favor of bilateral trade so the risk analysis for sweet citrus is rapidly progressing. I was directly told about this by the agricultural aggregate last week; It is public knowledge, it's not confidential," Caprarulo said.
"Entering the United States is of great importance for us. Uruguay has almost the same competitiveness problems as us, but is able to sustain itself thanks to the United States, because of its growing demand, as consumers eat a lot of mandarin and do not have much local quantity. That's why the Americans are interested in receiving good mandarins, like the one that Uruguay sends them and the one that Argentina could send them."
Caprarulo said they would have to work harder to satisfy American tastes: "We will have to do our homework and improve on varieties, because we are behind in quality. We'll be able to send some varieties but there are others that we won't be able to send. The United States pays well, and it pays better if you send good fruit."
The export sector prefers not to set a date for the entry into the US, although there is no doubt that expectations are centered in 2018. "We are following the topic. Maybe it won't happen this year but we think that we'll do well in the next season," he concluded.
Source: El Entre Ríos