In the last year, Chilean exporters have reoriented their destination markets with a greater emphasis on the United States, which increased by more than 36%, while the export volume for all shipments only increased by 1.5%. Chile is the United States' second biggest supplier of lemons.
Chile's lemon supply has been declining since 2013, with a decrease of more than 25% in 2017. This relative stagnation of production, accompanied by the increase in exports, have been the fundamental causes of the contraction in the available domestic supply, as imports have clearly grown since 2011.
"The largest year-on-year reduction in the supply of lemon to the wholesale distribution centers (-20.4%) took place in 2017. This led to a 31% increase in wholesale prices over the previous year. The first months of this year indicate that the supply to distribution centers and the increase in wholesale prices will continue, when compared to the same period of the previous two years," stated Jaime Piedrahita-Yepes, an economist and agribusiness consultant.
"This year, we expect to have the lowest price margins in the last decade, due to the correlation between the implicit export prices and domestic wholesalers. The reduction of the external and internal price margins has been a disincentive for the export activity," Piedrahita stated.
He also wanted to clarify that the margin of the implicit export prices (in FOB unit values), in relation to the domestic wholesale prices of 39% presented in 2017, were comparable with what happened in 2011 (31%), which was followed by two consecutive years in which the quantities exported and domestic prices decreased.
The volume of Chilean lemon exports isn't expected to increase in 2018 because of the timid increase in production, the reduction in domestic supply, rising domestic prices, and the revaluation of the peso; that is, unless exporters manage to sell their product at better prices than those of 2017.
Situation of Chilean lemon production.
There are four regions that concentrate the production of Lemon in Chile: the Metropolitan region, Coquimbo, O'Higgins, and Valparaiso. According to the latest regional fruit registry carried out by ODEPA, these regions have a greater participation of the area in production compared to the total area sown, which denotes a relative stagnation in the planting of new areas and future limitations for the increase of total production volumes.
Valparaiso is the exception, as its participation of the area in production decreased between 2013 and 2017. Based on the behavior found at the regional level, the estimates of the area in production amount to 5,676 hectares for the year 2018, i.e. 2.5% more than in the previous year. Similarly, the national lemon yield average for 2018 is 31.3 tons per hectare.
According to estimates, national average yields have decreased by 4.3% in the last four years. However, although with fluctuations, the total production grew during the last four years; in 2018 it increased by 1.3% over 2017.
The producers of lemon in three producing regions, Coquimbo, Valparaiso, and O'Higgins, export their products, with shares that fluctuate between 43.9% and 27%. Meanwhile, the producers of the Metropolitan region, the largest producer, destines almost all of its production to the domestic market (99%).
Except for Coquimbo, which devotes 6.3% of its production for agribusiness, and O'Higgins with 0.2%, the rest of the production is destined for the fresh consumption market.
According to the information of foreign trade by place of origin, the Coquimbo region is the largest supplier of citrus for export, followed by Valparaiso, and O'Higgins.