The single biggest challenge many suppliers of Argentine blueberries voiced this year will be achieving a price point that will keep growers in business.
Last year's high transportation costs and spotty quality led to interruptions in the supply chain and many Argentine farmers bowing out of the deal once prices dropped too low.
This year, suppliers estimate a 13% drop in acreage of blueberries and increased caution from growers who are not afraid to halt exports.
"Last year was a disaster," said Marcelo Estrada, a freelance produce marketer based in Miami, describing an early freeze that destroyed many crops and led to low supplies and poor quality.
A subsequent drop in prices undercut many farmers, forcing them to stop exporting.
"Hopefully prices will be good enough to let the growers earn some money to keep the business alive," Estrada said.
The lack of a domestic blueberry market in Argentina resulted in reports of some growers leaving berries on bushes.
"There was a lot of fruit last year that wasn't harvested at all," said Bruce Turner, head of operations for Giumarra VBM International Berry LLC, Wanatchee, Wash., describing areas where farmers saw that returns would be below the cost of production.
Joe Barsi, director of business development at California Giant Inc., Watsonville, Calif., estimated that some 600 acres were lost in the Concordia region alone.
Estrada said although this year's good weather is pointing to a strong crop, the ruin of last year depleted the capital of some growers.
"From a financial perspective, it's not easy for growers to harvest, to pay the harvest and all those services," he said. "So, the ones who are in a good financial positions can ship the fruit (while) the others won't make it."
Keith Mixon, president and chief executive officer of Sunny Ridge Farm Inc., Winter Haven, Fla., agreed that a number of growers have left the blueberry market due to losses suffered last year, but a healthy consolidation may result.
"Mostly, what we are seeing as a result of this is a less fragmented market, which should prove beneficial during the coming season," he said.
In order for growers to prosper this year, Mixon said suppliers will have to provide quality, reliability and efficiency, while retailers will have to promote, listen to customers and plan ahead. Many suppliers are predicting that they will only be able to provide stability of growers are on board.
Looking out for growers
Janice Honigberg, president of Sun Belle Inc., Washington, D.C., said for the sustainability of the industry, growers must be taken into account.
"You're going to see that this is going to be a make-or-break season for many of the growers," she explained. "I think that we're seeing a consolidation of the shippers and a tremendous sensitivity to prices in the market."
Honigberg explained last year cheap prices led to heavy losses among growers, and this year she expects them to make demands on the market, including a willingness to cut off supplies if prices drop too much.
"Growers in Argentina and Chile are very attuned to that possibility and ready to stop when it reaches that critical point, and of course, that depends on the marketing," she said.
Mike Hollister, vice president of sales and marketing at Driscoll Strawberry Associates Inc., Watsonville, Calif., believes the biggest challenge to meeting grower needs for pricing will be peak weeks.
"We need to work with our key customers both early, at the peak and late in supply," he said, adding that he believed retailers are "pretty darn supportive of this product."
Mark Villata, executive director of the U.S. Highbush Blueberry Council, Folsom, Calif., said that even with high volumes entering the marketplace at a reduced price during peak weeks, the sheer volume will generate sufficient revenue for all parties.
"Their volumes are so much higher, even with reduced price they will be moving so much," he said.
Villata said that he expects consumers will prefer to see pints this year and stay in line with what they are growing familiar with from the domestic deal.
In addition to uncertainty about pricing, other factors that may impact this year's deal include inflation of the Argentine peso, political instability and as-yet undefined freight costs.
"Inflation has an effect because the grower is not in control of the price," Estrada said. "This is a commodity. The market decides how much the fruit is valued. So, having a inflation with a fixed exchange rate is explosive."
For much of the time since Argentina's economic crisis in 2001, the peso was pegged at 3-to-1 with the dollar. Recently, Estrada noted, the exchange rate has been allowed to readjust closer to 4-to-1, but the costs of goods are still rising rapidly.
Estrada said the adjustment should help exporters to have a better situation than last year.
As for the political infighting and farmer protests that have roiled Argentina over the length of Cristina Fernandez de Kirchner's presidency, suppliers said blueberries have been left untouched.
"This is not soy bean, corn or wheat, so this product doesn't have a compromised retention situation," Estrada said.
Barsi said another challenge facing the Argentine blueberry deal is an inefficient supply chain.
"Volume peaked heavily in weeks 43-47 last season and there wasn't an efficient enough supply chain to harvest the fruit and cool it in a timely manner," he said. "It is imperative that the growers/exporters improve their temperature control throughout the supply chain."
Barsi said, however, the expected decrease in airfreight costs this year should help improve grower returns.
Honigberg agreed, but said neither air nor sea rates had been posted by early September, leaving much speculation.
"The idea was to work with some of the pricing from last year that really incurred losses. If there were some reduction in the rates that would make it more viable," she said.
Honigberg warned that such savings would evaporate if there was an artificial "clamoring" for space that drives up rates before they are published.
"In the end, a grower needs to be able to survive and perhaps (they) can survive for a season but they will need prices to be higher to survive for the medium and long term," she said.