Argentina Citrus Annual 2009 - USDA FAS

Argentina CITRUS ANNUAL 2009

Fresh citrus production for CY 2010 is estimated to decrease to 2.4 million metric tons (MT). Lemon production is forecast to decrease due to drought and late frosts. Orange and tangerine production is expected to increase as a result of favorable weather conditions in CY 2009. Grapefruit production is forecast to decrease as area planted to grapefruit is being primarily devoted for sugar cane production. Exports of lemons and oranges are projected to increase due mainly to the recovery of export markets. Tangerine and grapefruit exports are estimated to remain stable. Lemon, orange, and grapefruit domestic consumption is expected to remain stable, and tangerine consumption is estimated to increase slightly.

Production: CY 2010 lemon production is forecast to decrease significantly to 1 million MT, as a result of a severe drought and late frosts in September 2009. Orange production is expected to rebound to 840,000 MT, and tangerine production is estimated to increase to 370,000 MT, as a result of favorable weather conditions in CY 2009, which favored blossoms. Grapefruit production is forecast to decrease to 225,000 MT, as area planted to grapefruit is being primarily devoted for sugar cane production since the grapefruit business is becoming increasingly unprofitable. Both international and domestic demand for grapefruit is gradually decreasing. In CY 2009, lemon production is expected to decrease substantially to 1.2 million MT due to a severe and long drought during the summer and autumn of 2009. Orange production is forecast to fall to 700,000 MT, and tangerine production is estimated to decrease to 310,000 MT, as a consequence of drought and frosts. Grapefruit production is also projected to fall to 230,000 MT, as area planted is decreasing. In CY 2009, area planted to lemons increased slightly, compared to CY 2008. There is a significant amount of new plantations, but production is down due to unfavorable weather conditions. Area planted to oranges and tangerines remained stable, and area planted to grapefruit is expected to decrease gradually as old plantations are being replaced by sugar cane and orange plantations. Citrus production costs in CY 2009 increased between 30-40 percent, compared to the previous year. The highest increase was for labor.

Trade: Exports Fresh lemon exports are expected to rebound in CY 2010 to 290,000 MT as export markets recover from the global financial crisis, and there will be less fruit availability in the Northern Hemisphere. Fresh orange exports are also projected to increase to 100,000 MT due to the recovery of export markets, and tangerine and grapefruit exports are estimated to remain stable. Fresh lemon exports in CY 2009 are expected to decrease drastically to 240,000 MT as a consequence of lower production, fruit oversupply in Spain and Turkey(Argentina’s main competitors in the international playground), as well as smaller export demand due to the crisis, and financial difficulties and local currency devaluations in some of the main export markets, such as Russia. In addition, the lemon industry has recently implemented a system to determine the highest quality standards of the fruit to be exported. Thus, the lemon export supply was restricted, preventing a steep decrease of international prices. In CY 2009, fresh orange exports are forecast to decrease significantly due to the impact of the crisis on export markets, and fruit oversupply in South Africa. Fresh tangerine exports are estimated to increase primarily due to smaller production in South Africa than initially expected, and fresh grapefruit exports are expected to decrease as a result of smaller international demand. Local producers have adjusted well to lower MRLs (maximum residue levels) that were introduced in Russia on October 31, 2008. Russia was the largest market for Argentine fresh tangerines, and second largest market for fresh lemons, oranges, and grapefruit. Implementation of the initial change in requirements for Argentine citrus, apples, pears, and table grapes, was delayed for 60-days after negotiations between phytosanitary authorities in both countries. The regulations are currently in effect, but have not had a major impact on exports. The new MRL levels are lower that those required by the E.U., Japan, Canada, and the U.S., among other countries. In CY 2008, Russia accounted for an average of 28 percent of total Argentine fresh citrus fruit exports: 40 percent of tangerines, 30 percent of grapefruit, 22.5 percent of oranges, and 19.5 percent of lemons. MRLs are becoming an increasingly important issue at multilateral meetings among representatives from fruit export and import markets. Argentine phytosanitary authorities continue negotiations with China to reopen the market for Argentine fresh lemons. Trade was interrupted in 2005 when China established cold treatment for all citrus fruit, which damaged the fruit quality. The industry has been focusing on other export destinations pending negotiations with officials in China. Currently, the market is open to fresh “sweet” citrus varieties. Moreover, there are on-going negotiations with the U.S. to reopen the market for Argentine fresh citrus fruit.