The Citrus Federation of Entre Rios (Fecier) conducted a study of the costs of the production and marketing chain and the results were really alarming. Currently, producing a kilo of fruit costs 1.80 pesos but producers are only receives between 35 and 40 cents per kilo. "Producers are currently losing between 15,000 and 16,000 pesos per hectare. Many farms are being abandoned because the producers that can work in another activity do so," Fernando Borgo, the president of Fecier, said.
In mid-2016, the Citrus Federation started a study with the National Agricultural Technology Institute (INTA) and a private consultant to find out what the costs and profit margins of the citrus chain were.
"This study shows that the cost of producing and marketing a kilo of fruit, without taking into account the profitability of the actors, is 5.80. The production cost amounts to 1.80 pesos, the remaining 4 pesos are marketing costs," Borgo stated.
The citrus leader said that labor accounted for 55 percent of those costs. "This shows how important this activity is to generate work and the incidence that citrus production has."
Working at a loss
According to the study, producers are currently getting 35 or 40 cents per kilo of fruit while the year's average stood between 70 and 80 cents, which means producers are losing between 15,000 and 16,000 pesos per hectare.
It might be hard to believe that there are still producers working in an activity were they lose money, but things are not that simple. The consequence is that "producers are abandoning this crop. Generally they don't replace it with citrus. In the census we conducted we saw the amount of citrus hectares we've lost and that, in general, the producers that can change to another activity, opt for doing it. However, not everyone can do it. It's not easy to change because when producers make an investment they are thinking about 10 or 15 years into the future."
No answers
According to Borgo, producers would have to sell a box of 18 kilos of citrus at 100 pesos in the central market to have any kind of profitability. However, this box is currently being sold at 60 or 70 pesos. "That will always affect producers the most because they have the lowest prices in the chain." In fact, according to the study, producers are currently only receiving 20 percent of their production cost. "There are no big winners up until the distribution centers."
The head of Fecier said they met with officials from the Ministry of Agriculture and Industry on Thursday, but that they didn't have any solutions to address this problem.
Source: portalagropecuario.com.ar