The price pressure, high logistical costs, and competition from countries with more favorable conditions, such as Mexico and China, compel Peruvian exporters to work more efficiently and flexibly, and to seek strategic niches to retain their market share in the United States, Europe, and Central America.
Agroexportadora Sol de Olmos, one of the companies operating in this scenario, has had to adjust its strategies to face this volatility. Avocado prices, for example, started high this season ($2.20/kg), but quickly fell. "Prices have dropped considerably in recent weeks," stated the company's commercial manager, Paulov Sifuentes Fernández. This is mainly because Mexico's season started earlier than expected and flooded the market. In addition, transit times play against the Peruvian product. "It's difficult to compete with Mexico, as they can harvest today and have their products in the U.S. market tomorrow. Meanwhile, our avocados are on the road for 40 days on average before they arrive on the market."
Meanwhile, Peruvian lemons enjoy a seasonal advantage from November to April, when production in Mexico and Colombia decreases. Outside of that period, prices plummet. "Now the FOB price has dropped to $0.80 per kilo," Sifuentes stated. However, he added, "The Peruvian lemon is displacing the Mexican and Colombian products thanks to its quality."
In contrast, the situation is better for garlic. White garlic— a more profitable and versatile variety for the industry—has gained ground. "This garlic, originally from China, is ideal for the industry, unlike the other varieties that we have in Peru," he stated. Additionally, the U.S. has raised tariffs on China to 55%, prompting U.S. importers to seek more suppliers. As a result, the price of garlic reached $4.50/kg.
The situation is different for paprika, where competition from China, which produces on a large scale and at extremely low costs, limits growth opportunities. "China produces paprika on 100,000 hectares, at a cost we can never reach," Sifuentes said, emphasizing the effects of subsidies and economies of scale.
Logistics also poses a challenge. Freight rates have risen, increasing from $3,800 to $6,500 per container, and delays disrupt the supply chain. "Sometimes containers are abandoned at another port. It's a very complicated situation," he stressed.
To face these challenges and continue growing, Agroexportadora Sol de Olmos has invested in two new processing plants: one in Arequipa to pack garlic and a state-of-the-art facility in Barranca for peeled garlic and garlic paste, Sifuentes stated.
For more information:
Paulov Sifuentes Fernández
Agroexportadora Sol de Olmos
Perú
Tel.: +51 982 509 468
Email: [email protected]
www.soldeolmos.com