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Chile opens market to Argentine oranges

The news is very good for Argentine producers: the production and export of this fruit has been declining, Chile pays well and is next to the northwestern Argentina region (NOA) -the second largest producer after the northeastern Argentina region (NEA) -, where the freight costs are taking the regional economies out of competition.

However, according to a report from Federcitrus, last year’s frost and drought had impacted the harvest of citrus (lime, orange, tangerine, and grapefruit) so hard that Argentina’s citrus production this year would fall from 2.83 million kilos in 2013 to 1.67 million kilos, and the country, which ranked 8th in the world production of citrus would slip to the 11th position. No other country in the world’s top 20 rankings had an annual fall so pronounced and several, including Brazil and Uruguay, increased their production, which suggests that economic factors aggravated the impact of the damage caused by the climate.

Beyond the climate, Argentina’s orange exports have been declining since 2007, when they amounted to almost 200,000 tons. Last year, the country dispatched less than half of that, 88,600 tons, and in the first 10 months of this year they have only exported about 66,300 tons.

Some of the reasons for the debacle are exogenous. The economic crisis hit European demand, the paramount destination for Argentine oranges.

However, the main reason for the debacle is that South Africa’s supply, which is produced in the same latitude as that from Entre Rios and Corrientes, is increasing, has a better quality, and competes in sales at the counter season in the northern hemisphere at the same time as the Argentinian supply. South Africa has had a firm policy for the export of this fruit in recent years and some Argentine citrus producers, such as San Miguel, have even invested in the country.

According to Federcitrus, last year, Argentina harvested 860,000 tons of oranges, i.e. 4.31 percent of the southern hemisphere’s production and 5.65 percent of its exports.

Other factors for the decline of the Argentine orange sector are the increase in input costs, labour costs that companies have been facing for more than five years, the strong exchange rate appreciation, and the delay in tax and VAT rebates.

Thus, the Chilean market becomes more auspicious. According to the Chilean Ministry of Agriculture, last year the country imported 2,268 tons of oranges, worth 2.88 billion dollars, on a trend that is on the rise.

Source: La Nacion

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