According to a survey undertaken by the Chilean fruit producer union Fedefruta, nine out of ten Chilean fruit producers fear they won’t be able to afford to prepare for the 2022/23 season due to rising costs and the fallout from the global logistics crisis.
The survey, which polled more than 300 companies from the country’s main producing regions, reveals growing disquiet among producers that they will not be in a position to finance their operations as the start of the new campaign approaches.
In Chile, 533,000 people are employed directly by the fresh fruit industry and 1.5 million indirectly. An astounding 6% of the total labor force in Chile is connected to the fresh fruit industry.
Fedefruta’s president, Jorge Valenzuela, said the sector faced “a collapse worse than the cyanide grape crisis of 1989” when grape shipments to the US were banned following allegations that a consignment had been injected with cyanide.
“The situation shows a very severe lack of financing, and many producers do not have a way to start the 2022/23 campaign because they have not received the expected income before this entire crisis,” he said.
Fedefruta has warned for months of the serious situation facing fruit growers due to logistics disruption and soaring costs.
The survey showed that 90 percent of the companies polled had sustained a loss in the previous season, with only 2 percent saying they had experienced no major complications and 7.2 percent stating that they still didn’t know if they had broken even or not due to a lack of information.
“We have been warning since March about the impact of logistical delays, and the consultation we carried out revealed that 64 percent of producers saw the condition of their fruit seriously compromised due to delays in reaching the destination ports,” Valenzuela continued.
LOGISTIC PROBLEMS
The survey revealed that problems with internal logistics are just as much to blame for the crisis as the global situation.
“Just 19 percent of respondents said they had experienced no shipping problems at Chilean terminals – something we must take note of if we want to ensure that the situation does not repeat itself in the coming season,” Valenzuela said.
Companies having difficulty securing spaces on the ships, services being canceled at the last minute, a failure in the delivery of containers, and fruit being diverted to northern ports due to the lack of capacity in Valparaíso and San Antonio were among the issues cited in the survey.
Half of the respondents said they had experienced a deterioration of 30-60 percent in the condition of their fruit due to the disruption.
This is why Fedefruta recently met with the Ministry of Agriculture and other parliamentarians to petition for a change in the law to prioritize imports and exports of perishable goods during the production season.
COSTS
The poll revealed that 60 percent of respondents had had to deal with a 20-30 percent rise in the cost of agricultural workers, while 65 percent reported an increase in internal transport costs of between 20 and 40 percent. Half of those surveyed noted that the cost of primary inputs such as agrochemicals and fertilizers had risen by between 30 and 50 percent.
“There are producers who did not receive their settlements for the loss of their fruit, especially table grapes, blueberries, stonefruit, and apples, and if you add the fact that debts for the purchase of supplies rose due to the dollar issue, we find ourselves in a critical liquidity situation,” Valenzuela said.
COLLAPSE
Fedefruta said 90 percent of respondents report a shortage of financing, with only 31 percent being able to obtain some working capital ahead of the new season. Many said that banks are more reluctant to provide loans.
The union said it had shared the survey results with the government and hoped to set up a meeting with the Treasury and leading banks to find solutions to the crisis.
INDUSTRY OVERVIEW
According to the data from the UN’s Food and Agricultural Organization (FAO), global fruit production was about 870 million metric tons in 2018.
Asia Pacific was the largest region in the global fruit farming market, accounting for 49% of the market in 2018. Western Europe was the second largest region accounting for 13% of the global fruit production.
China was the largest fruit-producing country in 2018, contributing about 240.8 million metric tons to world fruit production. India, Brazil, and The United States are also some of the top fruit producers in the world.
GLOBAL FRUIT EXPORTS AND IMPORTS
The total global fruit trade market has grown by an average of 40% over the last ten years. It has increased from 45 million tons to 63 million tons. According to the report from Fresh Plaza, Asia has the highest growth rate in the global fresh fruit trade.
Southeast Asian countries’ exports and imports of fruit have almost doubled in the last ten years. Western Asia is another region with a higher-than-average increase in fresh fruit exports.
Exports and imports in countries in that region have also doubled in the last decade. Exports from African countries have grown slightly faster than average. The growth of fresh fruit exports from Latin American countries is slower than average.
The fruit exports in EU countries are reducing as EU countries’ share in exports in the worldwide fruit trade sector is gradually decreasing. EU trade is still growing. However, both exports and imports in the rest of the world are increasing at a faster rate.
Regarding fresh fruit (excluding bananas) imports, there is significant growth in Asian countries. This increase is in both Southeast Asia and Western Asia. Fruit imports in North America and the Middle East are also increasing. Although Imports in European countries are on the rise, the growth rate is less than in the rest of the world.
The United States is the world’s largest fruit importer, and its import volume is increasing dramatically yearly. Over the past ten years, the US total fruit import increased by 3,2 million tons, representing a 77% growth over the decade. Mexico is the largest fruit supplier for the US market.
Latin American countries are some of the world’s top fruit exporters, exporting 85% of their fresh fruit to countries outside of their region. Of this, only 30% goes to North America. More than a third is sent to the EU, and 12% is aimed at countries in Southeast Asia.
African countries export nearly 90% of their fruit production to countries outside the continent. Only 40% of this goes to the EU, while 18% is sent to Southeast Asia. The Gulf States get 15%.
Among the most traded fruit products, bananas account for a considerable part of the global fruit trade.
It makes up 30% of this sector. Over the past ten years, the (net) export of bananas grew almost as fast as that of the remaining fresh fruit.
Guatemala is one of the world’s top banana exporters, with the highest growth rate in banana exports over the past decade. There was also strong growth in the large net banana import countries, including the United States, Russia, and China.
The German import of this product has been reasonably constant for the last decade. This also applies to the transit country of Belgium. The Netherlands is growing strongly as an importer and a re-exporter of bananas.