Market analysis | How southern hemisphere cherries went from dream to crisis—and what comes next

By Betina Ernst, agricultural engineer and President at consulting firm Top Info Marketing. 

For years, cherries were the "golden child" of Southern Hemisphere fruit exports. 

Attracted by high returns, Chile heavily committed to the crop, expanding its cultivated area explosively. China was the engine behind this evolution, with a seemingly virtually unlimited demand and the willingness to pay very high prices. 

But this seemingly perfect scenario is no longer what it once was, and over the last two seasons, Chilean cherry exporters have suffered a sharp setback. Prices dropped, fruit placement became difficult, and serious logistical complications compounded already common quality issues. 

The business took a turn, and the sharp supply increase was not finding enough markets willing to pay the high prices that originally drove growers’ enthusiasm.

Chilean cherries are facing a fork on the road

The latest Chilean cherry season ended with exports of 114 million boxes, equivalent to 570,000 tons. This represents a nine percent volume drop compared to the previous bumper year, which totaled 625,000 tons.

The decrease had three culprits—the weather (lack of chill hours, spring frosts, and rains), productive factors (alternance/biennial bearing), and commercial factors (price decline).

China remained the main destination, but its share dropped from 94 percent in previous years to approximately 87 percent of shipments. Other markets were only minor destinations: North America (five percent), other Asian countries (four percent), Latin America (three percent), and Europe (one percent). 

This shift in importance reflects the sector's efforts to diversify its markets, but the country’s progress in this front is still limited, making it very difficult to reduce dependence on China.

The season began 10 to 15 days earlier than usual, driven by favorable climatic conditions, more early varieties, and improved agronomic management. Prices at the beginning of the season were underwhelming due to quality issues reported in the first shipments to China. This led to overall pricing pressure that the industry believed would rapidly dissipate.

Unfortunately, it failed to recover later.

Additionally, the Chinese New Year fell later this year, misaligning Chilean cherry shipments with the peak of demand. To supply that commercial window, fruit was stored, which notoriously affected its quality and made optimal product unavailable during the festivities. This pressured prices downward yet again, and many operations closed the season with red numbers. 

The smaller volume shipped didn’t help either, and didn’t have the expected positive effect on prices.

Argentia's wish to bounce back

Following a bumper year, Argentina’s latest cherry season recorded a marked setback, with no region reaching previous export levels. The Río Negro Valley was the most affected, reporting a dramatic volume drop of over 50 percent.

The total volume exported was 5,000 tons, nearly 40 percent below the previous season, but the country was able to maintain a good market diversification. Asia accounted for 40 percent of shipments, North America approximately one-third, and Europe 30 percent.

Challenging cherry seasons on both sides of the Andes

For Chile, the last two seasons marked a turning point. Everything indicates that the boom-era prices will not return, drastically altering the business's profitability.

In this context, the country’s cherry sector faces a crossroads and is currently analyzing various lines of action:

• Guaranteeing quality: Prioritizing quality in productive management (early harvest, larger fruit size, etc.), betting on varietal renewal, and improving packing, storage, and transport processes.
• Establishing self-management protocols: Assessing mechanisms to unilaterally limit exported quality. This topic is being discussed, but for now, there is nothing concrete.
• Improving logistics: Much work has been done to reach destination ports as quickly as possible, including ensuring adequate warehouses, streamlining and simplifying unloading, and optimizing market placement. Examples of this include the Cherry Express or the opening of more ports in China. Despite the efforts, there is still work to be done.
• Improving communications and shipment planning: Although progress has been made on this front, this year showed that not enough emphasis was placed on the start of the season and the subsequent shortfall.
• Market diversification: Efforts must continue to reduce the country’s high dependence on China.
• Cost reduction: Improve efficiency throughout the entire chain.
• Acreage reduction: Some suggest that the nearly 193,000 acres currently planted exceed market capacity, especially considering that one-third has not yet reached full production. The productive potential of the current surface area is around 930,000 tons, raising questions regarding what market will absorb that volume and at what price. However, uprooting cherry trees would entail high economic costs for many producers, as well as social problems and territorial reconfiguration.

The scale of production and export in Argentina is significantly smaller than Chile's, so the challenges are different. 

For starters, high costs are a serious problem in the ag sector, leading to a retraction in most fruit production. This has not been the case for cherries, but the category might suffer a setback, leading to a sector shrinkage if the problem is not seriously addressed. 

One part of the issue lies with producers, who need to increase efficiency and productivity. But that won’t solve the problem, as the highest costs for fruit production are taxes, energy, and other supplies. Transportation issues, such as poorly maintained roads, expensive ports, and inefficiencies throughout the chain, compound an already complicated situation. 

Provincial governments in Argentina should recognize this issue and act on it, as they would benefit the most in the medium and long term from a flourishing sector. In this regard, reducing municipal and provincial taxes, negotiating energy costs, improving infrastructure, and supporting the sector in negotiations with the Nation (labor regulations, foreign trade) are fundamental.

Foreign trade is another issue waiting to be addressed, as Argentine fruit, in general, does not benefit from trade deals and often faces some of the highest tariffs. This reduces its competitiveness against other markets that have successfully negotiated better trade agreements. 

But the Argentinian cherry industry also faces several opportunities it should leverage in the near future. Such is its position as a niche supplier, which the country has consolidated by conquering smaller markets with its high-quality fruit, fast air delivery, and limited volumes. 

The sector’s variety portfolio is also an advantage, as in northern regions (Mendoza, Catamarca, Jujuy) and the southernmost regions (Chubut, Santa Cruz), production manages to cover very early- and very late-season spots. This is exactly when Chilean supply is low, giving Argentina the best chance at high prices ripe for the taking.  

*All images are referential. 

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