New avocado plantings set Chilean industry back on track

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New avocado plantings set Chilean industry back on track

Cabilfrut was one of the first companies to invest heavily in avocado production in Chile's Petorca province; an area that accounts for around a quarter of the country's hectarage dedicated to the crop. Since those forays in the late 80s, Chile has moved from its position as an "indispensible" supplier to just an "important" one due to competition, according to Cabilfrut president Juan Pablo Cerda. Even though drought has scorched thelevel of volumes seen three years ago, he tells about projects further south to tap into better water access and regalvanize production. Avocado fields _ Cabilfrut

A strong concentration of orchards in drought affected areas meant Cabilfrut's avocado harvest was down to a third last year compared to 2010, but new orchards are expected to help recover volumes.

"According to official statistics, avocados in Chile come from a total surface area of 30,000-34,000ha of which the drought and weather conditions have affected 10,000-15,000ha that have losses or are not in production at the moment," said Cerda, whose company is 50% owned by California-based Mission Produce.

"They don't have irrigation and orchards have been pruned to wait out the rain cycle. We are entering our sixth year of drought.

"What we started to do in 2009 and 2010 was invest in new zones in Chile that allowed us to have water to be able to produce, and also extend the window of production."

He said these new plantings took place in the V (Valparaiso) region, mainly in the area close to the port of San Antonio.

"This year the first hectares planted there will enter production. It is a very ambitious project and there are also other growers that are producing together with us.

"We estimate that this year or the next we’ll reach no less than 1,000ha planted in that zone. That will allow us to extend the harvest period, covering February and March as a later area.

"In the higher zones here in Panquehue, San Felipe de los Andes, there are early harvests in July and August, and in these other zones we can be harvesting between October and March. So, we will almost be covering an important part of the gap that exists between Chile and Peru."

Current export season

Cerda said Cabilfrut's export season started around four weeks ago but now it was entering full harvest capacity with "more interesting" export levels.

"We are seeing an expectation of exports of 100,000-120,000 metric tons (MT), of which the bulk will be between Europe and the United States; there will be some 8,000-10,000MT going to other Latin American countries, and a little bit more to other markets like Japan and Hong Kong.

"With the majority of companies associated with the Chilean Avocado Committee, we are very self-demanding about the level of dry matter.

"That’s why even though prices have been really high in Europe and the United States, we haven’t been able to go at the speed we’d like because the ripeness of the fruit this season is a little bit later than in other seasons; we’d calculate it to be by two or three weeks."

He highlighted that a "normal" harvest in California meant there was less pressure on the U.S. market.

"North America in recent years has represented 60% of Chilean shipments, apart from last year which was the first year when we sent very little because there was a very big harvest in California, and a big harvest in Mexico with Flor Loca and Aventajada avocados, so the prices weren’t attractive.

"But this year California, in contrast to last year, had a normal harvest that was light on Flor Loca avocados, which partly explains the good prices on the market. That’s why Chile is now sending avocados to the United States in a significant way."

He mentioned that the domestic market was the most significant for Chile last year, both in terms of volume and profitability, and he expected around 100,000MT would be sold locally in the 2013-14 deal.

"The prices that the domestic market paid for the fruit last year were absolutely competitive with what was paid for exports."

"Very positive" results

The executive was optimistic for the avocado trade's future with the belief that growth projections for demand would outstrip production increases in the short to medium term.

"We see that there will be a lack of avocados. It might not always be that way but the figures are showing us that consumption in the United States and Europe are growing every year, and the prices have also been attractive - some moments have been complicated, but if we look over five-year periods the results have been very positive for the avocado trade.

"Together with Mission we saw the opportunity that to consolidate the market, the best thing to do was to integrate vertically to secure production of avocados, because global consumption is growing by more than production.

"We see a long term growth rate of no less than 10% in consumption, and in production at least there is no possibility in the short to medium term of global production growing by more than 3-4% in the best of cases."

He said the biggest supply gap for Chilean and Peruvian avocados was currently between March and May, but the integrated group with Mission Produce could source that supply from Northern Hemisphere production.

"The commercial plan for this scope of the company, and we're edging towards it rapidly, is to manage 150,000MT of Hass avocados."

And from a Chilean perspective, Cerda believed volume could be recovered but it would take time.

"As a Chilean hurts to say it, but the industry will continue to suffer from problems of drought and the weather, particularly in avocados. Chile will not return to the 300,000MT where we should be now, that we had in 2009-10, for at least three years more."

Photo: Cabilfrut

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