The Brazilian kiwifruit market wrap
The Brazilian kiwifruit market is an important earner for exporters from Italy and Chile, while in recent years New Zealand has raised its profile in the country. Local production of the fruit is limited both physical and in terms of varieties, due to the country’s climate conditions and number of cold hours that affect harvests. The Chilean Kiwifruit Committee interviewed their nation’s agricultural attaché to Brazil María José Campos, who gave an in-depth overview of the Brazilian kiwifruit market, a rise in organic production, and the fine points of regulation and quality management.
Could you comment briefly on the importance of Chilean fresh fruit in the Brazilian market?
Chile is the second-biggest supplier of fresh fruit in Brazil, with 17.7% participation compared to Argentina’s 48.9%. They are followed by Spain with 12.7%, Portugal with 8.2% and the United States with 4.1%.
During 2011, Brazil imported a total of 66,088 metric tons (MT) of fresh fruit from Chile at a value of US$87.6 million. There has been sustained growth rates, gaining ground over other suppliers, which shows the interest this market has in our country and the Brazilian preference for our products.
Chilean fruit has been present in Brazil for many years with a good perception of taste. However, that is not directly linked with Chile as a source, and so it is not so the fact that our country has a lot of history supplying a great part of the fruit Brazil consumes is not so well known.
What are the main demands from Brazilian consumers?
Defining the characteristics of Brazilian consumers means understanding the great changes in the income level, and the D and E classes to C class, which has been an effect of the country’s economic growth over recent years, leading to a high level of consumption.
In general, Brazilian consumers look for quality, convenience, image and information. The C class represents 54% of the population with more than 102 million people, and the increase in buying power has directly influenced consumption habits. In the last seven years this segment has risen by more than 40 million people that have seen their average income double, and who have favored the rise of processed foods over natural. In the A and B segment, corresponding to the highest incomes with almost 42 million people and representing 22% of the population, consumers are looking to differentiate. Aspects such as healthy and sophisticated are valued.
What requirements do Chilean kiwifruit need to meet to enter Brazil?
The requirements for kiwifruit entry in Brazil are established in the regulations from the Ministry of Agriculture, Livestock and Food Supply of Brazil (MAPA) in articles IN39/2008, IN 60/2008 y IN 15/2010, with IN39 being what establishes phytosanitary requirements for the import of fresh fruit.
It requires the submission of a Phytosanitary Certificate issued by the Chilean Agriculture and Livestock Service (SAG), declaring the fruit was treated with fumigation under official supervision (specifying the product, dose, temperature and time of exposure) for the control of the mite “Brevipalpus chilensis”.
Currently the fruit is fumigated with the product methyl bromide. An alternative measure with official declaration that doesn’t present a quarantine risk under the regulation, is through the application of integrated risk management systems, better known as a “System Approach”. This method even when permitted needs analysis and approval of the Chilean system from Brazil. This process is currently in the submission phase for evaluation from the Chilean health authorities.
Finally, as it is with the majority of plant origin products in Brazil, kiwifruit are inspected upon entry and subject to sampling to be analyzed by MAPA-accredited laboratories before they are released for domestic trading.
What is the perception of Chilean kiwifruit, is it well received by customers and what are the kiwifruit trends?
The perception is good and it is a fruit that is identified by its source. However, the pattern of wholesale buying in Brazil means that the product waits for a long time before being consumed at the table with a level of ripening that is not ideal and doesn’t allow it to reach its potential.
Chilean kiwifruit are sold at similar prices to domestic kiwifruit and much lower than the prices reached by the New Zealand product. We need to educate Brazil in new formats that Chile trades with in other markets with pre-ripened fruit, allowing access with a fruit that is ready to eat and sweeter.
Another important aspect, which has been observed especially in the local Kiwi/Quivi/Quiui (popular names) market is an effort to improve the product’s image through good quality packaging that catches attention, is well identified and gives more importance to product traceability.
Finally, the growth in the segment of organic Brazilian production has risen in recent years, based on a grower price that can be up to three times higher than what is received for regular kiwifruit, and with an increased in prices the harvest has increased by 30% compared to 2011 for organic growers in the state of São Paulo.
What volume of Chilean kiwifruit is currently consumed in this market?
Chile is the second-biggest supplier of kiwifruit to Brazil, after Italy. After the explosive growth of 2009 when the exported volume from Chile to Brazil surpassed more than double what was reached in 2008, a stable volume has been maintained over the last three years with approximately 11,500MT in 2011 at a value of US$12.6 million, keeping a market participation of 40.7%.
Who is Chile competing with?
In 2011, Brazil imported around 25,400MT at a value of more than US$31 million. Currently the import of kiwifruit in Brazil is authorized for fresh fruit from Mercosur countries, Europe (Italy, France and Portugal), and New Zealand. From these the main competitors are: Italy with 49.6% participation in Brazilian imports, and New Zealand with 9.29% participation. France, Portugal and Argentina are taking part in an incipient way with participations close to o.1% of import volumes in 2011. The growth of participation from New Zealand must be noted, which has positioned itself rapidly as the third-largest provider of kiwifruit to Brazil.
We cannot forget the local industry either, from whom we do not official data, but whose production we estimate to be in the order of 7,000-8,000MT, with the Bruno variety chosen by most for its lower quantity of cold hours needed, although other varieties such as Monty, Elmwood and Hayward are produced in smaller quantities.
Is Brazil a protectionist country of the sort where we need to be alert to non-tariff measures?
According to the Latin America Watch published by British consultancy Capital Economics, Brazil and Argentina led 75% of the trade barriers imposed from the period 2009 to 2011.
According to the same report, this role cannot be explained exclusively as a shielding measure for these economies from the effects of crisis. However, when you analyze the case of Brazil, a tendency can be observed with a balance between protection and pro-trade calls. Additionally, the focus has been more selective towards industries that have been adversely affected, either by depressed external demand or a large increase in imports.
In the case of fruit, Brazil, as a member of the WTO (World Trade Organization) and regional health committees, must justify measures on technical grounds. In this way, our main concern is maintaining caution in the processes and procedures established by Chilean health authorities, to arrive with products that don’t carry a risk for the plant heritage of Brazil.
Specifically in the case of kiwifruit, Brazil is mainly importing, as the local industry can only meet one fifth of domestic demand. In this way, the industry has always co-existed with imported product, and can reach similar and inferior prices to the imported product.
The planted surface area does not exceed 600 hectares in the whole country, with the biggest amount of surface area in the municipality of Farroupilha (Rio Grande do Sul) with 130 hectares and 85 growers. The state of Rio Grande do Sul accounts for more than 60% of national production, followed by Santa Catarina, São Paulo and Paraná.
What aspects need to be improved in the fruit?
Mainly flavor and appearance. The advances we could achieve so that kiwifruit can enter Brazil utilizing phytosanitary risk mitigation systems instead of fumigation helps in the attribute of appearance and in ripening. However, the buying patterns of the big distribution chains is for fruit that hasn’t been pre-ripened, remaining a long time in the supermarket, where the consumer doesn’t have all the necessary information to ripen it in the correct way, consuming acidic fruit. This affects the perception of quality compared to the New Zealand product.
The local industry also applies the harvest as soon as possible, in this case because they get the best price. To avoid this practice that makes the product reach the final consumer with inadequate levels of ripening and other conditions, there is a goal (34/1998) issued by MAPA defining norms of identity, quality, packing and presentation of kiwifruit for trading. This regulation disciplines the fruit trade with a minimum ripening level (no less than 6º brix), and appearance and packaging conditions, to allow its sale for direct fresh consumption, otherwise it is destined for industrialization.
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Source: Chilean Kiwifruit Committee