What next for Chilean grapes?
01 December 2007 15:04
Maura Maxwell - Editor
These are challenging times for Chile’s grape producers. The sliding dollar and rising labor costs have eroded the sector’s profitability, sparking a period of upheaval and change whose repercussions are being felt across America.
Dole, for example, has almost halved its Chilean grape program in just five years, citing external pressures as being largely responsible for its decision. Chiquita, too, is permanently scaling back growing operations to concentrate strictly on marketing after several poor seasons.
Is this the beginning of the end of what history will judge to be the golden era in Chilean fruit production, or merely a painful period of readjustment that’s vital to put the industry back on a steady course for the future?
Currency woes aside, analysts point out that it was only a matter of time before something had to give. Buoyed by a series of record-breaking seasons, planted area has soared in the past decade, coinciding with similar production increases in other Southern Hemisphere countries. As one US importer puts it succinctly: “the days of minimum pricing guarantees are a thing of the past”.
Thompson production is already being scaled back – particularly in the south of the country – and growers who are in it for the long haul are anticipating better returns once supplies start to fall.
But with South Africa giving exporters a run for their money in Europe, the US is set to remain its core market. The weak dollar will no doubt put some exporters off in the short term, but the leading players will not wish to risk damaging the long-term relationships they have carefully cultivated with US importers and retailers throughout the years.
The outlook is by no means entirely gloomy. For some US companies, such as Paramus, New Jersey-based Pro-Fruit Marketing, the multinationals’ decision to scale back operations presents an exciting opportunity to expand own their programs by forging new relationships with the country’s growers.
And the short-term prospects for growers aren’t looking at all bad. The late start of both the Chilean and Peruvian deals should result in a shortage of fruit during the peak Christmas and New Year period, bolstering returns and providing a glimmer of Christmas cheer at least.
These are challenging times for Chile’s grape producers. The sliding dollar and rising labor costs have eroded the sector’s profitability, sparking a period of upheaval and change whose repercussions are being felt across America.
Dole, for example, has almost halved its Chilean grape program in just five years, citing external pressures as being largely responsible for its decision. Chiquita, too, is permanently scaling back growing operations to concentrate strictly on marketing after several poor seasons.
Is this the beginning of the end of what history will judge to be the golden era in Chilean fruit production, or merely a painful period of readjustment that’s vital to put the industry back on a steady course for the future?
Currency woes aside, analysts point out that it was only a matter of time before something had to give. Buoyed by a series of record-breaking seasons, planted area has soared in the past decade, coinciding with similar production increases in other Southern Hemisphere countries. As one US importer puts it succinctly: “the days of minimum pricing guarantees are a thing of the past”.
Thompson production is already being scaled back – particularly in the south of the country – and growers who are in it for the long haul are anticipating better returns once supplies start to fall.
But with South Africa giving exporters a run for their money in Europe, the US is set to remain its core market. The weak dollar will no doubt put some exporters off in the short term, but the leading players will not wish to risk damaging the long-term relationships they have carefully cultivated with US importers and retailers throughout the years.
The outlook is by no means entirely gloomy. For some US companies, such as Paramus, New Jersey-based Pro-Fruit Marketing, the multinationals’ decision to scale back operations presents an exciting opportunity to expand own their programs by forging new relationships with the country’s growers.
And the short-term prospects for growers aren’t looking at all bad. The late start of both the Chilean and Peruvian deals should result in a shortage of fruit during the peak Christmas and New Year period, bolstering returns and providing a glimmer of Christmas cheer at least.
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