Chile: Producers of cherries and blueberries from Ñuble recognize "a season to forget"

For most cherry and blueberry growers, this has been the worst season in 30 years. With very high costs, shortage of containers, congestion at the shipping ports, excessive travel delays, delays at the destination ports and at the respective customs, the fruit did not arrive in good condition, and its price was punished, a good number it was simply lost, because it was already spoiled, and in the case of cherries, arriving after the Chinese New Year, they were paid for at a much lower price.

The logistical factor, without a doubt, spoiled the season for many fruit producers in the region who had already suffered from the shortage of labor for the harvest, and who today are waiting for the arrival of the liquidations, an instance in which they will finally know how much was paid for the fruit, how much will they receive and whether this year they will go to a loss or not, although according to some farmers, such as Álvaro Gatica, a blueberry producer, in many cases the costs will not be covered, and even worse, they will not be able to pay on time the financial commitments made precisely to carry out these investments.

Regarding the returns to the producer, Gatica, who is a leader of the Ñuble Farmers Association, stated that, although the settlements have not yet arrived, in the case of fresh blueberries, if in the previous season between 2,7 and 2,8 dollars per kilo, in this the value will vary between 1,5 and 1,6 dollars, and can reach 2 dollars; while, in the case of cherries, he recalled that last year was very bad, due to the effect of false news about a container contaminated with Covid-19, and they paid, on average, 1,5 dollars per kilo, and in this season the value would be lower.

“We have never had such a bad year in the last 30 years, with low cost numbers. A real disaster, which not only affected cherries and blueberries, it is a logistical problem, on the ships. The returns that are going to arrive -I haven't been liquidated yet, except for one company- are going to be below production costs, so it's going to be a year to forget, and besides, it comes together with this issue of banks and interest rates, it is a very complicated time for fruit growing and agriculture in general," said Gatica.

He warned that the returns will not be enough to cover the loan installments for investments in cherry and blueberry plantations. “They are not going to cover, in any way. The returns are not even going to cover the costs, and in the costs I do not include those commitments, I mean what you spend to produce during a year, such as labor and fertilizers, for example, in blueberries, the cost of production is at US$1,3-US$1,4 per kilo, and we are going to have returns below that. I never cry, but now there is the broom”.

In that sense, Gatica indicated that “last year we didn't have very good prices either, but at least they were blue numbers, this year, on the other hand, they are definitely red numbers. The outlook is very complicated, especially due to the debts with the banks, because these are long-term investments, we must not forget that these orchards come into production after five years."

excessive delay

According to Jorge Valenzuela, president of Fedefruta, “returns are something that we are currently analyzing. Every season has its problem. It can be a summer rain like last year, a very big frost like that we had in 2013, and this harvest was marked by the logistical blockage in the national ports, and in the delay of the routes and the rise in freight costs. and supplies. In a season in which we had no weather problems, the logistical factor complicated everything. This problem, without a doubt, we never had at this level. The logistics issue has been the big problem, due to freight costs that have tripled. There is fruit that is not being harvested because shipping is more expensive than leaving it on the tree."

In the case of cherries, Carlos González, president of the Ñuble Farmers Association, recalled that, based on the experience of last season, in which a large quantity of fruit was harvested, "we farmers learned the lesson that quality must be harvested, therefore, this season very good quality was sent. But we had problems: the pandemic, which this year has continued to affect, there was a tremendous shortage of containers and ships, therefore, a lot of fruit was stored; fast ships, which used to take 22-25 days, took 30-40 days; when the fruit arrived in China, it usually took 4 days for Customs inspections, but this year it was taking 20-25 days. And when that was ready, there was also difficulty in transporting it to the interior to distribute the fruit, due to a series of regulations and obstacles. There was a perfect storm. So, between the trip and the time it took to market it in China, a lot of fruit didn't last, so its quality dropped a lot, and that meant the price went down."

Jorge Valenzuela noted that “due to delays in logistics, about 4 containers of Chilean cherries did not reach the Chinese markets on time. Before the Chinese New Year we had a very good campaign, but the problems were seen after that holiday. We have a perishable product that must arrive at the right times, and this season it was very difficult to fulfill. A lot of fruit was in the sea for a long time.”

In that sense, Carlos González, who is a cherry producer, predicted that "this is going to be a very complicated year, most of us have not received liquidations, by the end of the month the panorama will be clearer, but I think from bad to very bad. It is possible that some producers can be saved, those who manage their costs very well, but no lesser percentage are going to lose a lot of money this year, and that is going to mean that many orchards are not going to have much development because they are not going to have silver, there is a financial wad with the banks, because they have to pay what they asked for the fruit”.

Álvaro Gatica added that "the issue of cherries is very special, because the big drama took place from Curicó to the South, because the producers from Curicó to the North did very well, because they arrived before the Chinese New Year and had the opportunity to sell relatively well, and the fruit that arrived later, this year was a disaster, in addition, if the ships were delayed 30 days, this time it was 50, then the quality of the fruit was not optimal either."

Gatica stressed that the pandemic has slowed down all logistics processes. “For example, in the Panama Canal the ships were stopped for 10-15 days, to China it took 50 days instead of 30, when clearing customs instead of taking a day it took a week, and for the blueberries that traveled to the United States United States, instead of taking 22 days, they were taking 40, so the fruit arrived in poor condition; The whole logistical issue, due to the pandemic, was very complicated and that brought us tremendous consequences," said Gatica, who emphasized that in terms of production, the season was good, with good-quality fruit and good caliber, "but not it withstood these long trips, a lot of fruit arrived with fungi, a lot of soft fruit, and it sold lousy, the one that could be sold, there were entire containers that were thrown away.”

When asked about blueberries, Valenzuela, from Fedefruta, declined to give percentages, but acknowledged that "many loads of blueberries have been affected by delays. We have received information that blueberries have been the most complicated fruit due to this logistics crisis. The loss of condition is naturally reflected in non-sale and falling prices”.

Frozen blueberries

Faced with the problem, Carlos González maintained that not a few blueberry producers chose to sell for frozen, but indicated that this led to an overproduction that pushed prices down "and today frozen is worth nothing."

Álvaro Gatica added that "there were some producers from Los Angeles to the south who have opted for frozen ones, who harvest with machines, thus reducing the cost of labor, and although the prices are not very good, at least there is profitability”.

"In our area, the organic frozen blueberry had a reasonable price, while the conventional frozen one was more mediocre, we are talking about US$1,1 per kilo, which dropped to US$0,9 when there was a lot of supply, in circumstances where the cost of harvest (labor) is 1 dollar per kilo,” Gatica said.

New investments

Gatica maintained that, in terms of new investments in items such as cherries and blueberries in Ñuble, he is very cautious. “I say this in a personal capacity, I cannot get into the thoughts of the rest, but note that we, in Ñuble, in cherries have had three bad years: In the first, we started with the pandemic; last year we got the fake news; and this year the logistics issue with the ships in which the fruit arrived after the Chinese New Year. So, to anyone who asks me about planting cherry trees in this area, I will say that he is crazy.”

For his part, Jorge Valenzuela stated that “investment depends on many other factors. One, the water crisis, something other than drought, since the water crisis is due to a lack of policies to ensure water for people and all activities, in a context of drought and climate crisis. Another factor is the constituent process, we sent a letter to the Constitutional Convention, implying the concern of our represented by articles that, although not yet passed to the plenary session, compromise the productive activity of the field. The new Water Code was recently enacted, a reform that took more than a decade of very difficult work, and we are guiding producers to comply with the new requirements. However, at this stage, the conversation at the convention is very complicated.”

Lessons

Regarding the lessons that can be learned from this season, the president of Fedefruta, Jorge Valenzuela, stated that “as producers, we talk to the ports, especially Valparaíso, regarding shipments of table grapes and late-season blueberries. We believe that, in these weeks and time of year, the fruit should have shipping priority, and that is something we are working on."

According to Álvaro Gatica, "the most important lesson, in the cherry tree sector, is that we have to diversify markets, we cannot continue sending everything to China, and here there is a criticism of the sales representatives of the exporters, who trusted that the price did not it was going to go down a lot after Chinese New Year, because prices had been relatively good before Chinese New Year, and they decided to keep shipping to China. I think there is a commercial error there, because the fruit should have been sent to the United States or Europe, where clearly we were not going to obtain the returns that we used to obtain in China, but they were reasonable returns, with some utility, something that did not happen this year. I think that with what happened, from Curicó to the South, this year the exporters are going to have to diversify markets for cherries, and the truth is that there are markets, in the United States there is a market that is not tremendous like China, it has lower returns, but the important thing is that they are blue numbers, and in Europe it is the same case.

As for blueberries, Gatica asserted that the outlook is also complicated. "Today we are facing super strong competition, Peru has already surpassed us and is producing much more than us, we have a small window left for us, but also later we are running into Morocco, which is sending a lot of fruit, so I don't see a easy scenario for blueberries. There I think that we have to take a good look at the issue of other markets, despite the fact that we are sending a lot to Europe and the United States, but we have to go looking, one cannot say, overnight, I uproot the orchards and I dedicate myself to something else, the investments are tremendously large.

In this scenario, Ingrid Quezada, director of ProChile Ñuble, reflected that, for cherry exporters, the challenge is to diversify destinations, and for producers, she added, the challenge is to become exporters, which will allow them to negotiate directly and save costs. important.

“It is very difficult to draw lessons yet, because this is not over, the Covid is not over, the logistical problems, the war is not over. What is going to happen if all of China begins to be confined? ”explained the professional.

“Regarding cherry trees, the producer who has volume, his certified fruit, should go from producer to exporter, so that he can negotiate the final price, for example. Because the youngest is the most harmed today, because they set the price for him, just like the blueberry grower. And they accept it because they want to continue being producers and not exporters," said Quezada.

The director of ProChile Ñuble added that "another important issue is that cherries, the preferred fruit of the Chinese, have to arrive before the Chinese New Year in order to get a good price, and the problem is that Ñuble cherries are not always They arrive on time, and I'm not just talking about the delays this year, since many of the cherries from our region are late, the O'Higgins region is the one that ships first. And you have to consider that after the Chinese New Year the price drops 30%-40%”.

So, he argued that, from the perspective of the exporter, the lesson is the importance of diversifying destinations, since today almost all cherry shipments go to China. “The next Chinese New Year will be on Sunday, January 22, the cherries from Ñuble will not arrive, so what do we have to do? We have to look for other markets, the United States and Southeast Asia are good alternatives and there is no pressure to arrive before the Chinese New Year, and we, as ProChile, can help them”.

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