New changes in legislation have seen the minimum wage in Brazil rising to new heights. The current minimum wage is now 622 reais per month. What's more, the minimum monthly allowance has now been linked to two things - inflation and GDP. Clearly this offers workers a higher standard of living, but this is of course only half the picture - it has to be paid for. Speaking of the impact that this was having on the fresh produce industry, Daniel Watanabe, Commercial Director of Grupo JD, a major grape grower and supplier from Brazil's northeast, said, "Inflation is 5-6% per year, GDP growth can change, but we know that next year the government is looking at a minimum wage rise of 7.35%, to 667.75 reais per month."
Rising production costs
Daniel said that this contained difficulties for the fresh produce industry as a whole, not just in terms of increased salary obligations, but also through knock on effects.
"This does make things complicated for us as it is difficult to get the market to pay for it. This is especially the case if you consider that there are other factors increasing our operational costs - the rising cost of fertiliser, transportation and packaging for example."
However, it would be wrong to ascribe all the problems faced by the industry to soaring costs, there are other labor related things that are also impacting on the sector. As Daniel says, "In Brazil the bulk of the manufacturing used to be carried out in the Southeast, as opposed to the Northeast. However, the social development has changed, regionally, in the country. Now there is more wealth in the Northeast and big companies are coming here and building factories. So there are more jobs for people to choose - not least in the construction industry that is part of the process of change here. This means we have to compete with these companies for labor."
Labor shortage
"This is having a very big impact. It's getting more difficult to find well qualified people as they are choosing to work in the factories. It is hard work on a farm and the factories offer people more comfort. There is temperature control for a start. In the Summer temperatures in the field can reach as high as 40 degrees C, that's difficult for people to work in and factories can offer people an alternative to this.
It certainly seems to be affecting the agricultural industries across the board and not just regionally, as Daniel says, "It's the same for the citrus growers in the South, they too are finding if difficult to compete and are facing acute labor shortages."
Asked whether such labor problems were encouraging growers to turn away from the industry, Daniel said that he was certainly aware of growers changing they way they operated.
"For sure there are growers who turn away from seedless grapes and back to seeded varieties for the local markets, as these promise a better yield."
The search for new varieties
"Certainly some of the varieties we have used in the past - sugarone, crimson and Thompson - are becoming less economically viable.
"For example, if you take the change in climate in Petrolina, where the rain comes earlier now, which means a shorter harvesting period. You need to harvest the white grapes first, as these are less rain tolerant. This means leaving the crimsons until later, but if you then get a warm period they do not colour very well."
The challenges that the industry is facing then, are not limited to the higher cost of labor, but are a multi faceted series of complications that requires the industry to be flexible and dynamic. Grupo JD are certainly facing the challenges head on; they are carrying out research into over 80 new varieties and have been doing such work for the past three years. This is proving successful - "We have found reds that colour well, despite warm periods later on they are better than crimson. For the white we are looking at those that are more rain resistant," Daniel says.
The solution
Surprisingly, perhaps, it is research and development such as this that may contain the answer also to labor issues faced by the industry.
"We need new varieties to stay in the market. What we need are those that not only provide higher yields and face climatic changes, but also those that can be stored for longer periods and which require less labor intensive work to harvest.
"Currently, we need around 3,000 workers to gather grapes - you are looking at 3 people per ha. With the current varieties it is certainly labor intensive, the future really depends on new varieties to a large extent."
For more information:
Daniel Watanabe
Grupo JD
[email protected]
www.grupojd.com.br