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"Giving price recommendations in July is irresponsible"

Spain: Citrus harvest prospects don't go hand in hand with exported volume

A higher citrus harvest forecast does not necessarily go hand in hand with a proportionally greater export, and in the same manner, a smaller production does not entail a proportional reduction in the volume sold overseas. This has been confirmed by a report from the Citrus Management Committee (CGC), the association that brings Spain's main private exporters together, after analysing the development of the last ten seasons. In this respect, it should be recalled that in order to calculate the actual profitability achieved by the producer and/or the exporter, the price obtained in the purchase and sale is as important as the volume traded/exported, because with lower or equal prices, but more kilos sold, it is equally possible to obtain a higher income.

Consequently, the CGC has censured the use of official harvest prospects to predict future prices or the possible profitability. This applies especially to the price recommendations made on the basis of informal assessments, carried out without the minimum means required or any rigor, since they are based on the estimates of a producing region (Valencia) which only accounts for 55.8% of the national citrus production and for 15.5% of that of the Mediterranean.

"Giving price recommendations to producers in July or August based on improvised and skewed calculations is irresponsible. Doing that in September-October, once regional volume estimates are announced, can also be risky, because prices still depend on supply and demand, and during a campaign there are too many random factors that will affect prices and the volume exported," warns the president of the CGC, Vicente Bordils. "The prices and profitability don't depend on an increase or decrease of the harvest volume, especially when you are only taking the Valencian one into account," insists Bordils.

In fact, a GCC report based on official data confirms that only in one of the past ten seasons analysed (in 2015/16) was there a correspondence between the decline in the national citrus crop forecast released around September-October (-12.5%) with the actual fall experienced in exports (-13%). And such unusual parallelism was only possible because the comparison was made with 2014/15; an anomalous campaign in which the historical record in foreign sales (4.15 million tonnes) was reached.

Of the nine comparisons made (over the last 10 seasons), only in five campaigns was there an increase in the forecast capacity coinciding with an increase in exports or a fall in volume coinciding with a decline in sales to foreign markets; in the other four, the opposite trend was observed (more exports with a smaller volume or similar or lower exports despite higher production prospects).

The behaviour of the markets seems to follow a more stable pattern, away from the fluctuations observed in the first estimates or even of the balances on the final harvest. In fact, as also pointed out by the study, volume reductions of up to -12.5% ​​in the forecast (at the start of the season) or of -14.3% in the national balance sheet over the last seven campaigns have in no way translated into exports below 3.6 million tonnes; a not inconsiderable volume which is, in fact, the fifth largest citrus fruit volume exported from Spain, and more than enough to meet the needs of large European distributors. As a matter of fact, even though the difference in volume between the 2015/16 and the 2016/17 marketing year will likely not be of less than one million tonnes (with an increase in the production), the export volume will remain at a very similar level.

For all these reasons, the CGC concluded that, as long as the Spanish citrus fruit production is protected, with the necessary means to prevent the entry of pests and diseases such as HLB or Xylella (Variegated Chlorosis), which pose a serious threat to the country's citriculture, Spain will have sufficient production to overcome the vicissitudes of each campaign and guarantee the supply to all European customers in the Mediterranean winter.

Publication date: 8/24/2017


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