How Argentina’s fruit sector is fighting to regain a competitive edge overseas
Argentina's topfruit growers have been dumping their harvests in protest at the lack of profitability

How Argentina’s fruit sector is fighting to regain a competitive edge overseas

Héctor Riazuelo
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Argentina president Macri
Argentina’s president Mauricio Macri is a keen supporter of free-market policies

Traditionally a reliable exporter of apples, pears, lemons and cherries to the UK market, sendings from Argentina have been heavily affected in the last few years but all that could be about to change. Produce Business investigates  

Among the causes for the downturn in Argentina’s fruit-export fortunes have been an unfavourable exchange rate against the US dollar, and tax burdens imposed by the previous government.

The arrival in power in December 2015 of President Mauricio Macri, a keen supporter of free-market policies, has created great expectation among exporters. And the decisions of his government to lift exchange controls and do away with the 5% export tax have been met with approval.

“They were obstacles which undermined our competitiveness,” says Marcelo Loyarte, executive director of the Argentinean fruit-growers’ chamber, CAFI. “Argentina has always been a reliable, long-term exporter and what has helped us have been macro-economic policies.”

Fernando Moyano, sales manager for Europe and Africa at topfruit specialist Kleppe – one of the main apple, pear and cherry exporters in Argentina – also highlights the changes announced by the new government.

“They have served to ease a little the distressing situation the Argentinean fruit sector has found itself in,” he says, adding that expectations in the short to medium term are good.

Nevertheless, Moyano also emphasises there remains much to be done; including the need to lower inflation in the country. “Otherwise in the short term the effects of devaluation will be nullified by higher domestic costs, which will put us back to where we were before devaluation,” he points out.

UK topfruit attraction

Despite the crisis the sector has undergone, Argentina is still the southern hemisphere’s largest pear exporter and ranks fifth in the world for apple exports. Regarding sendings of these products to the UK, Loyarte hopes to make up lost ground, little by little.

“Currently we are exporting 4,000 tonnes of apples a year to the UK and a similar amount of pears,” says Loyarte. “We should be able to get back to 6,000t at least and to be able to continue to increase.”

Moyano also views the situation optimistically. “The British market is very important for Kleppe,” he says. “Some 5% of our production is exported there and it is a very attractive market, despite being very exacting in terms of quality standards.”

Looking to expand the company’s presence in the UK and continental Europe, Movano stresses the need to reach a free-trade agreement so products can gain tariff-free access.

Loyarte says this panorama is indeed opening up: “Argentina is improving its relations with the rest of the world and this should translate into advancements in bi-lateral trade relations.”

Producer protests

However, internally in Argentina there are complaints among producers that the measures taken by the government have only benefited exporters.

This was evident in the protests earlier this year when growers in the Río Negro and Neuquén regions dumped tonnes of apples and pears in the street to draw attention to the lack of profitability in their sector.

Carlos Zanardi, president of the local chamber of fruit-producers in Fernández Oro in Neuquén, tells Produce Business UK that as the apple and pear harvest began the producing sector realised it was going to be a government that is “pro-business, pro-exporters”.

“The only support governments have given, particularly the national government this season, has been to offer subsidised loans that only 40% of producers have attained,” he says.

Zanardi adds that by virtue of the “dispirited” state in which most producers find themselves, the sector hoped the government would decree a law to guarantee a price for pears and apples that covers the cost of production, plus a profit margin so primary production can be sustainable. 

Argentina - dumped fruit

Citrus expectations

At the same time, Argentina also remains a major citrus exporter, and this sector of the South American country’s economy is also contemplating the new political panorama with a degree of optimism.

Walter Ojeda, sales manager at citrus export giant San Miguel, points out that as a result of adverse climatic conditions in 2014, citrus output in Tucumán, which accounts for most of Argentina’s lemon production, slumped by some 60%. He adds that in 2015, yields were also below normal levels.

“In these two years lemon exports to the EU, including the UK, were approximately 26,000t,” he says. “For 2016 we are hoping volumes to the EU to reach 40,000t, of which some 5% will be destined for the UK.”

Ojeda also expects San Miguel’s fruit to have a longer window on the marketplace than in 2014 or 2015, given the lack of Spanish lemons.

Organic potential

On the other hand, with more than 3 million hectares under organic production, Argentina has enormous potential to develop this sector of the market too. In order to stimulate exports, the Macri government has already announced the abolition of taxes on products of plant origin.

“Argentina is one of the leading producers of organic apples and pears in the world,” says Loyarte. “We have the natural conditions, the aptitude and capacity for organic production. There should be financial and fiscal incentives to increase acreage.”

Increasing investment

Loyarte extends the need for financing to Argentina’s entire fruit sector. “The financial system should work more with the sector, especially seeing as we are now at a turning point with brighter prospects,” he urges.

San Miguel’s Ojeda agrees: “I believe a lot of the advances that the industry has needed have suffered due to a lack of investment in the last few years. Naturally the starting point is to reinvest in our industry to grow in terms of competitiveness and productivity; by incorporating technology in machinery, packing, processing, etc.”  

In this scenario of cautious optimism with regards to the recovery of export capacity in Argentina’s fruit sector, Loyarte concludes: “This is a transition year. If these conditions continue, next year will probably be better.”

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