The lack of an export route that allows Mendoza to place its apples and pears abroad and an internal market with a weak demand has forced Mendoza to discard some 8 million kilos of apples and pears. The Association of Producers and Exporters of Fresh Fruits (Aspeff) estimates that, in the best scenario, only 60% of the 1 million boxes of fruits remaining in cold storage will be placed in the market.
According to data from ProMendoza, exports in the first half of the year went from 9.1 million kilos of fresh pears in 2014 to only 5.5 million kilos in 2015, representing a 39% fall. Meanwhile, apple exports in the same period decreased by 45% going from 1.1 million kilos in 2014 to 655,000 kilos in 2015.
Among other things, the decrease in exports has been the result of the low prices paid to producers this year and the blockage imposed by Brazil for three months following the detection of the codling moth in the shipments of fruit. The conflict that originated in March and came to an end in July left an exportable surplus in the country that could not be placed elsewhere and that will be discarded.
"The conflict with Brazil caused us serious drawbacks when placing pears and apples in that market. A product not sold can't be recovered. Additionally, the prices in the domestic market are below production costs. Currently, a box of pears or apples costs around $150 in the export markets while it costs between $70 and $80 in the central markets. The producer loses money. This is due to the oversupply of fruit from Patagonia and also to the consumers' purchase will," said Raul Aruani, manager of Aspeff.
According to Aruani the situation became worse after the devaluation in Brazil, which left producers from Mendoza and Patagonia less able to compete. "In this context, it becomes harder to realize operations in this market," he said.
It also complicates the scenario for fruits, as Mendoza is very dependent on Brazil.
Meanwhile, Juan Riveira, producer and head of Aspeff, said that "at this time of year with nearly one million boxes of pears (30%) and apples (70%) in stock, i.e. about 20 million kilos of fruit. The delay in shipments to Brazil caused us to have a higher amount of fruits in cold stock than usual."
He added that, "we'll have to discard about 40% our stock, that is, about 8 million kilos. That fruit has no destination because of the number issue, the problem with Brazil and the devaluation of our business partner."
The businessman said that the fruit with major problems and that was committed the most was the apple.
In turn, packer Daniel Brunetti warned the situation was worse: "Currently, nothing is being exported and the prices in the domestic market are very low. We've heard that many packers won't pack the fruits in the forthcoming season."
Meanwhile, the manager of the Foreign Trade Chamber of Cuyo, Mario Bustos Carra, said, "it is clear that there will be a lower production and export volumes."
The leader said that this was a time of the year when exports to Brazil usually increased because of the proximity of the holidays, but that things were still quiet and there was no movement. It's worth noting that Brazil fell into recession in August, which, apart of the competitiveness problems of Argentinean products, means they will be buying less from abroad as they are consuming lesser amounts.
Bustos Carra believes that having Brazil as their main market isn't wrong; "What is wrong is that our country doesn't have the conditions to unable us to maintain a stable and enduring trade flow in time."
On this point, he said, the next government must decide how to solve the competitiveness problems of the regional economies to offset the devaluations in the neighbouring countries.
"They have favoured their exports to the detriment of imports and we have not been able to define anything to address the problems that causes on prices and competitive opportunities. There is a dependence on Brazil, but we have also lost markets through our loss of competitiveness and the exchange rate appreciation," he concluded.
Concerns regarding the new protocol
After the reopening of the border with Brazil, local producers are very concerned about the new requests to implement the Risk Mitigation System (RMS).
Brazil sent our country a new protocol that toughens penalties upon pest detection, making the production unit, packers, and exporters responsible. It also requires more control points and forces growers to use pheromones in all the orchards intended for export to combat the pest.
"We have to define what are Brazil's demands regarding RMS. That really worries us in face of the new season. In addition, our lack of competitiveness is greatly complicating our output to markets. Currently, the only alternative we have would be a freight compensation," Aruani said.
We tried getting in touch with the regional leader of Senasa but the agency claimed that there still wasn't any news about this situation and that they were holding meetings to discuss the steps.
"We are very concerned about the new RMS. There are proposals and counterproposals and nothing is defined. We don't know how things will work next season or under what conditions we'll have to do them. We can't work under the current conditions, the requirements are excessive," said Riveira.
Personnel from the Alco plant in Catamarca was suspended
According to sources from the food guild, the staff suspensions applied by the food company ALCO left the company virtually inactive, since the operators who are going to the company only perform maintenance and cleaning activities. According to said sources, 90 percent of the Catamarca plant isn't working, so only a fraction of employees attend the plant to fulfil their tasks.
The company owned by the Canale group, which produces canned tomatoes and canned vegetables, has suspended 125 employees for several days, said the general secretary of the Union of Workers of the Food Industry (STIA), Jose Ocampo.
The union said the suspended workers belong to the plant located in the area Sumalao of Catamarca.
He noted that the employees were owed a month and half in wages, plus the retroactive of the new scale that took effect in May.
The plant is located in Catamarca and has 150 permanent employees, plus an additional 30 temporary workers in harvest. However, currently only 25 workers are going to the plant to clean and do maintenance.
The conflict began months ago due to the difficult moment that the business group was going through. In August Catamarca's Production Minister, Raul Chico, said that the situation was very complicated, but not only in Catamarca.
"As a group (Canale) is having a hard time, so they are requesting a loan nationwide. We are helping to alleviate the situation with the workers," claimed the provincial official.