Chile fresh deciduous semi-annual 2008

The great long term expansion in Chilean fruit production is over - for now.Here is the link to the USDA FAS report released today concerning Chile's deciduous fruit crops. From the report:

Total Chilean fruit exports are estimated to continue to grow in 2008. There are some important factors that will continue to affect economic returns mainly of grapes and in lower degree for apples and pears, like the exchange rate. In general, prices for exported fruit have not varied much in dollar terms, but during the last three years the Chilean peso has gone through a significant revaluation process. The exchange rate for the peso has fallen from 740 Chilean pesos to only 450 pesos to the dollar during the first quarter of this year. Another factor is the cost of labor which has been increasing in peso terms. A new law was approved reducing the weekly workweek from 48 hours to 45-hours; industry sources claim that the effective work time does not exceed 40 hours in a week. Productivity has fallen significantly. This is an important factor for the labor-intensive fruit industry in Chile. In the case of table grape production, labor represents 70 percent of total costs. Increasing energy costs is also a big concern for fruit producers. Consequently, industry sources have indicated that increases of new plantings and production increases in the coming years are not expected, at least for apples, table grapes and pears.

About grapes:


As a result of unfavorable weather conditions in most growing areas, total output in MY2008 (Jan-Dec 2008) is estimated to be slightly larger than last year but smaller than our previous estimates. Lower than normal temperatures in late spring and early summer affected the volume and quality of the production, the bunches were reportedly smaller and lighter for most varieties, but mainly for the Red Globe variety. The lack of temperatures also delayed the start of the harvesting season by almost a month which was reflected better prices obtained for the fruit by early in the season producers. For the coming season, production is forecast to be similar than this season as total output increases due to a larger harvested area could be offset by a drought which is affecting all agricultural areas in the country. Additionally, industry sources believe that total planted area could fall as many producers will not replant orchards that are coming to an end of the production period due to a significant fall in the economic returns which is affecting table grape production for the last two seasons.


On apples:


Good weather conditions in most growing areas for apples during the Chilean spring (Sept-
Oct 2007) had a positive effect on production volume . But some production areas were affected by frost and a lack of good temperatures late in the spring and early summer that reportedly affected the quality of the production. As a result our new production estimates for MY 2008 were slightly adjusted downward. Nevertheless, exports are expected to be expanding slightly larger than the previous year. For the coming Marketing Year (2009) we can expect total apple production to be similar than this last year as a possible production expansion, due to an expansion of the production area and/or some orchards which are in the incremental stage of production, could be offset by a drought which is affecting almost all agricultural production regions in the country.