August 18, 2014 / Week N° 34

Opinion: why did Chilean grapes suffer in the U.S. market?

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April 23rd, 2013

By Isabel Quiroz, executive director of iQonsulting.com

isabelRecently I was speaking with a Flame grape producer about the disaster that the Chilean variety has faced on the U.S. market.

“Don’t tell me that you didn’t know this was going to happen. The fruit was bad,” I told him.

He placed the blame on exporters: “They are the ones that tell you to just pack.”

I did not want to continue with the conversation. I was stunned by the blame shifting. What is happening when madness can be justified and when experienced producers are not able to tell exporters, “I will not pack this fruit because it will never arrive”?

By the same token, how is it possible that traditional exporters still think that they can do business with deficient and frankly bad fruit? There is definitely something wrong in this business model and it needs urgent revision.

As with all things, there are an array of examples, including fruit of very good quality that had very good prices. This fruit, which made up 20% to 30% of volume, is not what I refer to.  These are the products that fit the business, that have consistent quality and that are managed by precisely run teams that you hear little about. This is the kind of fruit to aim toward.

In the 2012-13 season, there were serious quality and condition problems for table grapes, blueberries, cherries and stonefruit. Grapes, however, were the hardest hit. It had been a long time since so much trouble had been recorded in a year. Normally, the product is sold, sometimes with difficulty or discounts, but it is sold.

What happened this year then, between mid-February and the end of March, that caused prices to plummet?

The first adverse variable was the climate, including drought between the V (Valparaiso) and VI (O’Higgins) regions and changes in moisture that increased pressure on fruit. Despite a number of unwanted events, however, confidence was placed on producer knowledge to protect the fruit.

The second factor was labor, including cost and low availability, which has made it necessary to hire less prepared people to work in the field and resulted in low efficiency and lost opportunity. This meant unevenness and deficiencies in the overall quality of clusters.

Finally, the third negative variable and the most important was the foolishness of some exporters – some and not all – that looked at the high market price and thought they could do business with bad fruit. The greed provoked by high prices in December and January due to low supply came to clash with consumers who ultimately sustain the market. This time they chose not to buy.

During the second half of March, more than 2,000 pallets were dumped in Philadelphia, to add to the fruit sent for repackaging or sold at a discount for just a few dollars. The foolishness comes from believing that importer prices of more than US$30 a box would continue for bad fruit. This is naive; a good market is determined by the client.

Some producers and exporters forget about the basic rules of the economy. These include moving more than four million boxes a week from February on, which move easily at US$18-20 for the majority which are not always “premium.” But they don’t move at US$28-30, especially not with bad fruit pressuring the market. This causes fatigue for those that move the fruit, whether they be importers or final buyers at the supermarket. This situation did a lot of damage to country’s image and to those who do their work well.

www.freshfruitportal.com

 

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Comments (7)

  1. Thomas Mueller says:

    I too noticed the poor quality of Chilean grapes, sometimes priced low but in horrible condition. There is also the issue that Chilean grapes are treated with sulfite or sulfur dioxide for export to the USA, so I don’t buy.

  2. prosper says:

    Farming is a gamble. When fruit gets rained on, it doesnt really show much defects. So a grower packs and ships with the hopes that everything will be OK. As we say in the USA Hindsight is 20 20. its very easy for people to point fingers at growers and say why did you do that?
    Weather can make you or break you in farming.
    Red Flame without rain is a tough grape to export. It has a short life.
    Moisture and grapes dont mix.

  3. Andreas Economou says:

    It is only fair to mention that when an exporter asks a grower not to pack certain quality and condition of grapes to prevent undesirable results, the grower explains there is another who would take all my grapes. The reality of the situation is that volume is an integral business part of exporting companies.Furthermore the situation becomes more complicated when there is grower financing involved.

  4. Andrew Brantley says:

    This was the worst season for Chilean grapes by far. Most shippers feel that the wholesalers were “having a party” at their expense. This is not the case at all. There is no fun in taking in poor fruit only to sell it for a couple of bucks or to dump it.

  5. John Pandol says:

    And as we speak, grapes continue to be loaded to the US. I was shopping in the supermarket this weekend. I watched for about 10 minutes in the produce department. Almost everyone was buying strawberries and the last of the Calif citrus, navels and soft citrus. NOBODY picked up a grape.

  6. Kirk Crane says:

    Right on! It is about time someone calls the growers on their malfeasance! Ditto blueberries! The nerve of growers to come back and want their sales teams to make up money at the end for the grower’s poor decisions!!!

  7. Andreas Economou says:

    Congratulations! Well described and explained.
    We hope you are strong enough to handle the unjustified critisism you will receive from some people in the Chilean fruit Exporting Industry.

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