Climate makes Chile an ideal production area for organic produce, but the sector is still relatively small there, compared to conventional, produce marketing agents say.
“Chile is kind of unique in that it is the driest desert in the world in the north,” said Tom Tjerandsen, managing director for North America with the Sonoma, Calif.-based Chilean Fresh Fruit Association. “It has areas where it hasn’t rained in 100 years. It has those 20,000-foot Andes all down the ridge.”
High costs and a mandatory transition period from conventional to organic production has held back the category somewhat, Tjerandsen noted.
“What the importers are finding that the retailers are playing back to them is the greatest they can get in organic versus traditionally is narrowing to the point that the increase in costs for growing, distributing and selling organics is not covering the expense,” he said. “The retailer is also concerned about the higher shrink involved in organic. It doesn’t turn as quickly, so it’s not an area that is growing rapidly.”
He said the growth of organics appears dramatic, as it does in the U.S. But, he said, the reality is different.
“Actually, you could see a 20% increase per year, but still the organic sales in store, I think, are around 3%,” he said. “So, if you grow at a rate of 20% a year, in a few years, you might be at 4%. So, it’s not a market that Chile is aggressively promoting. They make products available in those areas, but it’s not one that is getting any particular promotion.”
Some items, such as avocados, don’t lend themselves readily to organic production, said Maggie Bezart, marketing director with the Aptos, Calif.-based Chilean Avocado Importers Association.
“We do grow some in Chile, but it’s not a very large percentage — less than 4%,” she said. “Avocados are protected by a natural skin, and really, when they talk about avocados, they say that’s one of the safest products. If someone chooses an all-organic diet, you’ll see more of that, but it’s a very small percentage of what is grown and offered in the U.S.”
Getting into organics isn’t an impulsive mood; it takes some planning and time, said Julio Ortuzar, Chilean consultant with Weston, Fla.-based Fresh Results LLC.
“We’re planning to get involved, but we’ll do it right,” he said. “That will be the next challenge. Just like asparagus, it’s beginning to grow. The growers are deciding they need to get into it. As blueberries grow and move huge volumes, you can’t have too much of a price difference between organic and conventional. I think the difference in pricing is not that significant now, with big volumes coming in. But there’s a lot being produced as organic. There is interest, but the motivation isn’t as big as it was a few years ago.”
It’s a small market that involves a delicate balancing act, Ortuzar said.
“There’s a growing limited market, but somebody has to supply that growing market,” he said. “There’s more production in organics than can be consumed at this point. Growth is very important but the market still exceeds, we’re capable of producing more than the market can handle. We’re waiting for the market to catch up. We can convert to organics and surpass demand quickly if we’re not careful. We’re trying to synchronize to certain extent.”
Mike Bowe, vice president of Dave’s Specialty Imports Inc., Coral Springs, Fla., agreed the process of taking on an organics program requires considerable deliberation.
“It’s a process,” he said. “It takes three years to get fields certified. We’ve got a couple of guys who are now at that stage where they’re coming of age and now are able to start shipping organically.”
Companies like Naples, Fla.-based Naturipe Farms said the organics category had dipped but is coming back.
“Organics have seen a nice rebound,” he said. “We are seeing significant interest from retailers. I think and I’m expecting increased interest, which is good, because we’re expecting more fruit.”
What drives it?
“I don’t know if the U.S. consumer has accepted the reality of our economy and now is getting more free with some of their disposable income, or they’re more health-minded or retailers are refocused on providing the consumers with organics more than in the last two or three years,” Bocock said. “It could be retailers looking to differentiate themselves. Organics become more in line with conventional pricing.”
Organics can help a retailer stand out against competitors, Bocock said.
“Retailers are looking to differentiate themselves and organics can help them do that,” he said. “Plus, the berry category is just on fire, so anything in berries that differentiates them from any of the other items in the store or even within the berry category, they’re going to gravitate to them.”
Glassboro, N.J.-based Sunny Valley International Inc. has a strong organics program, said Bob Von Rohr, marketing and customer relations manager.
“Our organic blueberries in mid-November and run through mid-January, and then we have another grower who will run from mid-Februrary through mid-March,” he said. “It’s growing every year for us. What helped that was the disparity in pricing between organic and conventional has narrowed. It used to be three or four times more.”
Organics from Chile can fuel sales at retail, said Dick Spezzano, president of Spezzano Consulting Inc., Monrovia, Calif.
“Chile is a lot like California. It doesn’t have a lot of pests,” he said. “It’s an ideal climate to grow organically. Because of that they have few natural pests. You don’t have need for a lot of chemicals. They’re growing the best organics, like California. It’s easy to grow, as it is in California.”
Chile plays a key role for the organics program at Watsonville, Calif.-based Driscoll Strawberry Associates Inc., said John Johnston, Chilean blueberry business director.
“It’s part of our year-round Berry Patch program,” he said. “Chile plays an integral role in our berry program from November through the end of March.”