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Argentina and Chile

Apples and pears: Russian crisis and record production

Gone are the great prospects that countries like Argentina and Chile had after Russia closed its border to European exports. The prediction was that the gap left by European pears and apples would be filled with fruit from the Southern Hemisphere.

For Argentina, the situation expected for 2015 is very worrying. The interannual devaluation of the Rouble, of around 50%, and of the Euro, by 10%, and Brazil's prospect for an exchange rate of one dollar for three Real, should result in lower returns at its main markets, and makes it clear that Russia will not be able to purchase the fruit that was originally intended for Europe, neither will it import the same volumes as in previous seasons.

Alberto Diomedi, Fruit Growing Secretary of the province of Rio Negro, Argentina, said in an interview to the newspaper Río Negro that "the situation in Russia is unbelievable. The shipments that departed during the last quarter of the year are bringing in negative returns. There are huge losses and this will certainly affect the sector."

In this context, Argentinian growers are wondering what to do with the 1.7 million tonnes of pears and apples that were expected to be harvested in the valley of Rio Negro this year.

According to Diomedi, it will only be possible to market 400,000 tonnes with positive returns; a situation which would leave about 1.3 million tonnes unharvested or shipped to the processing industry, which pays prices below production costs.

As a result, a report from the Argentina Chamber of Integrated Fruit Growers noted that losses for the sector next season are estimated to reach about 200 million dollars.

Across the Andes, Chile has recovered its production levels, after a season marked by frosts, which resulted in lower volumes and an abundance of small calibres.

"While the campaign will start in February and it is a little early to give accurate estimates, we expect a recovery in production volumes, back to the levels registered in the 2012-2013 season. Production is likely to increase by between 3% and 4%," said Edmundo Araya, General Secretary of ASOEX.

One of the country's largest fruit exporters reported to FreshPlaza: "Our fruit shipments to Russia used to represent up to a quarter of all our operations, while today they are almost negligible. The shipments made shortly after the introduction of the Veto brought very negative results. We will only export fruit that has been fully paid in advance and I don't think many importers will have the liquidity to make large purchases."

"We realise that Russia is not an option, but in any case, this country is not as important to us as it is to Argentina," said Araya, adding that: "The big question is how the markets will react next year, because the Northern Hemisphere has had a much larger production than in previous campaigns."

In line with Araya's opinion, the record apple harvest in Washington has resulted in large stocks, which will cause a significant reduction in U.S. imports.

Furthermore, the cost reduction brought by strong currency devaluation will allow Chileans to be much more competitive than its Andean neighbour.

"The devaluation is good news after almost five years with a very cheap dollar, and this will give us some peace of mind," states Araya, adding: "We expect a quiet year as regards the development of new markets, and Latin America will be particularly important to us."

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