Importers say they don’t expect any particular logistical problems with getting supplies of Chilean fruit into North America. A bigger concern for most is the weak U.S. dollar.
“I don’t foresee any significant logistical issues that will affect our ability to bring product into the U.S.,” said Julio Ortúzar, vice president of procurement, Fresh Results LLC, Weston, Fla. “Chile is a country of recognized excellence in exports and has always been able to get by the hurdles.”
What growers can’t get around so easily is diminishing profits resulting from dealing with U.S. buyers as the dollar continues to weaken. On Nov. 4, the Wall Street Journal reported online that Chile’s peso strengthened by 1.9% in reaction to the U.S. Federal Reserve’s bond-buying plan that will put $600 billion into the U.S. economy by mid-2011. The Journal reported that the value of one dollar fell to about 480 Chilean pesos.
About a week earlier, one U.S. dollar was worth about 491 Chilean pesos, and two years before that, it was valued at about 667 pesos.
Las Cabras, Chile-based grower-shipper Exportadora Verfrut SA’s profitability has been seriously affected, said Piero Vercellino, commercial executive in charge of the U.S. and Canadian markets for the company. The loss isn’t just from Verfrut’s business with U.S. buyers, but also from its business in other markets that fix prices in U.S. dollars, he said.
“We are having continued rises in fixed and variable costs, and the returns are always lower,” Vercellino said. “It is a very difficult issue for all of the Chilean produce industry.”
David Posner, chief executive officer and president of Awe Sum Organics Inc., Capitola, Calif., said his company tries to get sustainable returns for growers. He said the produce industry needs to be aware that the same dollar amount of returns is worth less now. Businesses’ losses are made worse by increased costs, including higher labor costs. To get equivalent returns with weaker dollars, prices have to increase.
Tristan Kieva, director of marketing and business development for Pandol Bros. Inc., Delano, Calif., said labor rates and carton costs are up in Chile. She said prices also are likely to be higher this season. The move to fixed-price programs helps control market volatility, but Kieva said Pandol predicts a more volatile spot market this season, with higher highs and lower lows than in the past.
While it’s important to monitor the exchange rate and its effects on growers, The Oppenheimer Group, Vancouver, British Columbia, doesn’t expect to see changes in its U.S. business this season, said Karin Gardner, marketing communications manager. Chilean production is expected to be good this season for most commodities, and the U.S. is Chile’s biggest export market, she said.
The weaker the dollar, the more attractive Asian and European markets begin to look. But North America still is the primary consumer of Chilean blueberries, said Brian Bocock, vice president of product management for Naturipe Farms LLC, Naples, Fla.
“A lot of product has to come to North America, almost regardless of what the dollar does,” he said.
Chris Kragie, import and deciduous sales manager, Western Fresh Marketing Inc., Madera, Calif., said that the weak dollar is a major concern, but it’s not the only weak currency.
“The world is having currency issues,” Kragie said. “Chile’s volume on most items is increasing, and the economy of Europe is as much a concern as the U.S. dollar.”
Chilean growers would export to other markets if they could, Posner said. Some other currencies are stronger, but shipping too much product to another market would result in flooding the market and lowering prices. The exporters need the U.S. market, but they can’t continue growing if they don’t get sustainable returns.
Chilean growers are working to develop new markets, Ortúzar said. They also are working to increase demand in the U.S. through marketing campaigns. Increased demand in any market could help raise prices.
Some companies maintain facilities in Chile, grow their own produce in Chile or maintain control over growers’ practices, while others are in part owned by Chilean growers. All of them have close ties to the Chilean produce industry.
“We deal with a lot of growers who are exporters as well, and we understand the grower issues, too,” said Gahl Crane, director of avocado sales for Fisher Capespan USA LLC, a division of St. Laurent, Quebec-based Fisher Capespan Inc. “Each year, they seem to get more efficient and organized.”
Ortúzar said his company this season opened a new division, Fresh Results (Chile) SA, Curico, to grow, pack and export berries and cherries. Ortúzar, who is Chilean, joined Fresh Results in October to help the company become a key industry player in the Chilean deal, he said.
For the past 10 years, Ortúzar grew, packed and shipped berries and cherries from Chile. He also has worked in the U.S. sourcing and marketing produce from South America and other locations. Ortúzar said his experiences led him to understand the entire supply chain, from growing to distribution and customer service.
“I think it is that experience and understanding that is crucial to be able to get the best results for both our customers and growers,” Ortúzar said. “The principals at Fresh Results share the same experience and background and that is why we have a strong commitment to the Chilean produce community.”
Naturipe is partly owned by Chilean company Hortifruit S.A., Santiago, which is owned by multiple Chilean growers. The relationship helps ensure availability of product for the U.S. market.