South American country loses position on global market

Argentinian grapes are more often ending up as raisins

Argentinian grape growers continue to see their competitive position on the global market crumbling. This has various causes, but there’s only one consequence. A decreasing export of grapes in recent years, because growers sell their plantations or process their production into raisins and grape juice. Estimates for the coming year show an increase in volume, but some people thought that bad weather will influence quality.

The grape harvest is estimated to increase by nearly 13 per cent, so that volume amounts to 45,000 tonnes. A year earlier, volume was still at 40,000 tonnes. Rain affects quality, but not volume. Figures have decreased compared to the historic volume of 100,000 tonnes. Last year, the harvest was also lower, and estimates were adjusted downwards. The causes are the frost in November 2016 and the unfavourable economic circumstances, so that growers don’t market the grapes as fresh product, but as raisins or grape juice. Others choose to throw in the towel. In 2016, the harvest amounted to 60,000 tonnes, but production was much lower because large volumes were marketed in dried form. That was also a consequence of the country’s difficult competitive position and the strong competition from other production countries and phytosanitary restrictions from Brazil.

Not very profitable, not much room to invest
About 90 per cent of the grape production can be found in the province of San Juan. The area remains stable at 8,000 hectares. The area is gradually decreasing due to a lack of economic means for growers to maintain their plantations, such as thinning out. Ever-increasing parts of the area are used for the production of raisins. Flame Seedless in particular is used to this end. Other activities are viniculture and grape juice production with which growers try to make a profit. This transition was mostly seen in 2016, when growers, after planting the table grapes, discovered it was more profitable to harvest the grapes as raisins or process them into wine or juice. This trend continued in 2017. According to estimates, the province of San Juan has 3,000 hectares of Flame Seedless grapes, more than 95 per cent of which is processed into raisins. That contrasts sharply with their historic use as table grape.

The grape varieties grown most are Superior Seedless and Red Globe, the majority of which is meant for export. The Cherry and Moscatel varieties are meant for the domestic market. During the 2017/18 season, export is estimated at 4,000 tonnes, a decrease compared to the 4,400 tonnes from a year earlier. That is a consequence of the worsening competitive position of the country on the global market. In recent years, export has become less profitable, so that growers lack the means of focusing on export markets.

Difficult position global market
For the market year 2016/17, estimates have been adjusted downwards by 45 per cent. In the end, the harvest was lower than expected. The export remains below the historic average, since growers are becoming less competitive on the international market. In 2016, export amounted to 10,900 tonnes. During that season, export to traditional markets, the EU and Russia, decreased by 50 and 30 per cent, respectively.

The production of grapes is currently under pressure because not just small growers, but also large companies are turning their backs on the production. The declining competitive position on the global market is the most important cause of this. Small and mid-sized companies that continue to grow grapes sell product unsuitable to export to the raisin industry or on the domestic market increasingly often.

In August this year, Argentina and China signed an agreement to set up a protocol for the grape export. According to the sector, there’s insufficient quality available to supply grapes to the Chinese market, in addition to the difficult situation on the market regarding the competitive position of the sector. In 2013, Brazil implemented the norm that grapes must undergo treatment with methyl bromide. That treatment is unusual in Argentina because it affects quality. The Argentinian export to Brazil decreased by 35 per cent. Brazil sticks to the implemented norm. Besides, Argentinian exporters have seen the requirements from import markets becoming stricter and stricter, because Peru, Chile and South Africa also export grapes. 

Please click here to read the USDA’s report.

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