Buenos Aires: At the moment, Argentina is making very few lemon shipments. Only the northern provinces of Salta and Jujuy, which have the country’s earliest production, are currently exporting.
“Shipments from Argentina so far have reached 10% of what was exported in the same period of 2014. The reason for this is the fact that Tucuman hasn’t shipped anything yet,” affirms engineer Carlos Parravicini, Vice President of ALL LEMON.
With such rainfall as we had, delays were expected. But to what extent have the floods affected the production of the country’s main lemon-growing region?
“We have not reached 100% of our capacity, but in terms of production, Tucuman is doing much better than last year. We must remember that, last year, frosts and drought caused a 60% drop. The rain has an impact mainly on logistics and not on production, so the expected volumes in the province are undoubtedly higher than last year. How much better? To answer that question, we’ll have to wait until the end of the campaign,” explains Carlos.
Tucuman’s fruit shipments will kick off in the coming days; meanwhile, the low supply is resulting in good market conditions for Spanish Verna lemons and South African fruit.
“We perceive South Africa as largely limited by quarantine issues and its great dispute with Spain, which is very concerned in preventing diseases from entering its territory. Last year, South Africans prioritised other markets to the detriment of Europe and they always do well in Arab and South East Asian countries. These are markets that we are also interested in developing, since they are logistically interesting because of the affordable freight costs.
ALL LEMON, the quality seal for Argentina’s lemons for export
While for South Africans Europe remains the largest market, this year the shortage of large calibres, highly sought after in the European market, has resulted in more fruit being shipped to Asian markets, where smaller sizes are preferred and very good prices are paid for the fruit.
“In the European Union, I believe there will be some competition at the start between our lemons and the last Verna, but Spain will soon run out of lemons because they are being shipped at a very quick pace. Afterwards, Argentina will be left alone in the market for a period of between 12 and 15 weeks,” states Carlos.
Russia is another great market for Argentinian citrus, but the recent crisis is casting some doubts on its strength.
“With Russia, we have the same doubts as everyone else. During the fair World Food Moscow, the exchange rate was of 36 Rouble per dollar, and it now stands at around 50. We must be very careful, since importers have been telling us that they have to see how consumers respond to the rising prices of fruit,” he says, adding: “We cannot drop our prices too much to sell to the Russians, since Argentina has very high labour costs. Salaries in pesos increase by between 30% and 35% per year, while our currency is devalued by only 8% to 10%,” explains Carlos.
The trouble comes with the Euro and competition within the sector
“Argentina is not encouraged to start its fresh campaign in Europe because of the exchange rate. While last year prices started at 17-18 Euro, which meant 23 to 24 dollars, today we need about 22 Euro to achieve the same result,” points out Carlos.
And, ultimately, sales prices in the European market so far are similar to those of the same period last year, while the costs for Argentinian producers have increased significantly. The devaluation of the Euro has had a considerable impact. “We need the market to pay 15% more in Euro for production costs to be covered, and I believe we will succeed. We will start by taking the utmost care on the quality of our fruit to prevent prices from being negatively affected and be able to cover European demand with as much fruit as the market requires,” affirms Carlos.
Furthermore, there will be competition between the fresh and processing sectors. In Argentina, nearly 80% of the production is intended for the powerful domestic processing sector. This is due to the high quality and efficiency of Tucuman lemons for the production of oils, juice and zest, which is the result of the efforts made to meet the ALL LEMON certification standards.
“This year, processors will be another competitor for fresh marketers, since processed products are reaching historically high prices and the industry is absorbing a lot of fruit at good prices,” concludes Carlos.
