U.S. market 'demanding and competitive' for Chilean citrus
The U.S. market has become the top destination for Chilean citrus fruit but prices have been low this year due to an oversupply of Navel oranges and clementines. According to information given to www.freshfruitportal.com by the Chilean Citrus Committee, while the market is both significant and attractive, it is also demanding and very competitive.
The demand and supply profiles for citrus in North America have changed greatly in the last 15 years, with consumers now accustomed to eating new citrus fruits and year-round availability.
"Interest from retails and foodservice has also increased to supply a growing demand for summer citrus and for Chilean citrus," the committee said in a statement.
The committee highlights that Chilean clementines led the easy peeler category during the North American summer. With the harvest finished, shipments rose 4% year-on-year to a total of 34,000MT.
"Both Clementines and W. Murcotts are very appreciated fruits in the American market and the citrus committee has conducted a promotion campaign aiming to raise awareness of the growing availability of these fruits during the summer and fall period, and their quality attributes that make them appreciated by the consumer," the committee said.
"There is almost no overlap or competition with late Californian mandarins, but they [Chilean fruit] do compete with clementines from South Africa, the growing supply of late W. Murcott mandarins from Peru and other mandarins from Australia.
"In this campaign, the U.S. received a higher volume of Chilean and South African clementines, and Peruvian W. Murcott shipments from mid-June also increased the supply concentration in the U.S.
A lack of rain in Chile's central and northern regions meant that harvests and shipments were more concentrated this year than in previous seasons. The U.S. market received a higher volume of Chilean and South African clementines, which were particularly concentrated on the East Coast.
This led to a temporary oversupply in the July-August period, which as a consequence led to a fall in prices from their initial highs.
Prior to the end of the Chilean clementine deal there was a temporary shortage and prices rebounded from week 34, coinciding with a strong demand period when students returned to school. This meant shipments of Chilean W. Murcotts started in a recovered market with very fast movement and good prices.
The committee said various factors have led to an auspicious season for Chilean W. Murcotts, including good quality, the fact South African Clemengold volumes were limited and the lower availability of Northern Hemisphere summer fruits.
The committee expects a 35% increase in shipments of the fruit this season as a result of new orchards entering production. To week 39 the country had shipped 15,931MT of the fruit, representing a 52% year-on-year rise. Of this total, 14,238MT went to the U.S.
When it comes to Navels, the committee said higher competition was seen this year due to Californian stocks and a growth in shipments from Chile and South Africa.
The supply increase was different on each coast of the U.S., with Decofrut figures showing prices started decline in the first weeks on the East Coast, going from US$26-29 to reach US$19 per 15kg carton in week 33.
On the West Coast however, prices were stable to week 32 and fell just to an average of US$23-25 per carton, according to Decofrut.
On both coasts prices were stable during recent weeks and it is not yet sure if they will be able to rise before the start of new shipments from the Californian season at the start of November.
To week 39, Chile had shipped 66,120MT worth of Navels, representing a 17% year-on-year rise, while the increase with higher to the U.S. market, jumping 26% to 50,765MT.
The committee estimates shipments are starting to decline with no more than 5% of the harvest left to send. By the end of the season the entity expects total shipments will be up 20%.
It said the Navel season has not satisfied the expectations of Chilean growers and exporters, who have been obliged to hold fruit in cold storage and some lots have had to be repacked due to problems with condition.
"The growth of the Southern Hemisphere Navel supply has surpassed what the market could take at prices from previous seasons," said committee president Juan Enrique Ortúzar.
"During recent years a lot of oranges have been planted and while a sustained increase in Navel orange consumption has been seen in the summer months, the rate of growth for supply has been higher than that of demand for this period."
"While this has occurred this season, we believe there is a good future for Chilean oranges, but growers and exporters have to have a special concern for quality so they can differentiate themselves in the market with fruit in hold that doesn't have the same flavor."
He said it would be necessary to lower the rate of planting for some varieties that are harvested during periods of high supply, and it's possible some growers in areas with high risks of frost should change crops.
"The history of this industry is a history of permanent change. No one likes to see business narrowed, but it also can't grow faster than demand."
"Quality will be a key factor for differentiation and also a stimulus for the palate of demanding consumers in Asia and North America. We can't put all our chips in just one market, we have to continue with efforts in other markets.
"The competition in the U.S. is strong both with Australia and South Africa who are also looking to make the most of growth in this market."
New markets, quality and image
One of the industry's new objectives is to enter China and Brazil, with the committee focusing its efforts on opening these markets in conjunction with Chile's Ministry of Agriculture (MINAGRI) and the Agriculture and Livestock Service (SAG).
The entity is trying to improve the conditions of entry in markets and is supporting research that aims to lower the impact of Panthomorus cervinus detections in North America and South Korea.
To ensure a minimum standard the committee has an Orange Ripening Control Program (PMN), which is verified by different associated packinghouses.
"The PMN is an important tool that helps us verify our promotion campaigns in the U.S. and Korea for the livelihood of our associates' commitment to quality," says manager Monserrat Valenzuela.
Weather is also a concern, so the organization has an established process to prevent harvesting in areas hit by frost.
"If there are damages in the fruit from frosts, we have to make sure these fruit are not exported," says Ortúzar.
"While we haven't had problems this season, in the future it is important that orchards in zones at risk of recurrent frosts, invest in equipment to control frosts or change to another crop that tolerates the winter frosts."
Another important issue is the drought affecting Chile's north-central zone.
"One of the main challenges our industry is facing for the next season is related to the lack of rain this winter and the lower rainfall for irrigation in the IV (Coquimbo) region.
"While it's still early to predict the impact the drought will have on clementine production in the IV region, there is confidence the accumulated water in dams and the measures taken by irrigators could mean the season ends without any serious losses for this species.