Chiquita changes

The Cincinnati Enquirer reports on Chiquita's latest quarterly report.
From the story:

Chiquita Brands International Inc. (CQB) reported Tuesday it lost $3.4 million, or 8 cents per share, during the first quarter. Sales increased 3 percent to $1.2 billion.
The loss included a $5 million charge for Chiquita to exit unprofitable farm leases in Chile. During the same period last year, Chiquita earned $19.5 million, or 46 cents per share.

The changes in Chile don't came as a surprise, as large exporters have been troubled by unprofitable leases with growers in Chile for some time.


Here is an excerpt from a story I did last November in Chile:

SANTIAGO, Chile -- Innovation will be the driver of Chiquita's efforts with Chilean fruit, said Paulo Rosales, commercial director of Chiquita Chile.
Rosales appears well prepared to help with the mission. He joined the company in June with a background in consumer products, working in the Chilean wine industry and with commercial products, licensing for Disney in Chile.
Compared with the wine industry, Rosales said one of the great advantages of the fresh fruit business is its volatility.
"You can turn companies around from one year to the next, and that doesn't happen in the wine industry," he said.
One significant challenge in Chile is an increasing number of larger growers have established direct relationships with Wal-Mart, Costco, Sam's and other chains. At the same time, those growers devoted part of their inventories to traditional exporters like Dole, Del Monte and Chiquita, Rosales said.
Growers treated the fruit they gave to the large exporters "basically as fixed incomes in their portfolios," Rosales said.
Good growers could have a couple of big clients and give the rest of their fruit to exporters that diversify their risk by shipping to world markets where growers had no direct relationships, he said.
Under that model, large exporters allowed growers to access markets all over the world without investing in export managers and a sales desk. What's more, the exporters were reliable partners and would make good on their payments to growers.
That trend has had consequences in the way fruit is contracted, he said.
"It is so difficult to make relevant money in the current model that some exporters are saying "no more' to third-party growers," he said.
Now, larger exporters are becoming more selective, which will mean smaller growers or irregular producers will be left behind.