Drought may take its toll on Brazilian melon deal

August 15 , 2016

In a similar trend to what has already been seen this year with Brazilian papayas, the country’s drought is set to make a dent in melon production for the 2016-17 season.

Agrícola Famosa director Luiz Roberto Barcelos said expectations were that volume could be down 10% this upcoming season, and to adapt the industry was taking action to improve production methods.

He said the first 60 containers to Europe would be sent this week, followed by 120 the week after.

“But exports with heavy volumes start in week 34,” he said.

“Last season there was an increase in volume of approximately 10% and we had a benefit in prices because of the depreciation of the real, and that incentivizes exports a lot.”

However, the situation has changed since then with a slight improvement in the real in recent months.

“It reached four reals to the dollar and now the exchange rate is three reals to the dollar,” he said.

“This is a problem for us because as exporters we mainly sell not just in dollars, but also in euros and pounds, and the last two have lost value against the dollar and that has affected prices a lot.”

Production is still a major issue though, with complications mainly coming from a shortage of water.

“For five years we’ve had periods of low rainfall on average, leading us to have some sifficulties in some zones and farms where melons can’t be planted any more because aquifers are without water or with very high concentrations of salt,” he said.

Last year Brazil shipped around 14,000 containers of melons and watermelons, of which 7,500 came from Agricola Famosa.

“For this year we estimate there will be 10% less volume and that at a national level around 12,500 to 13,000 containers will be shipped. As Agricola Famosa we will also have a reduction, and we’re projecting 7,000 containers.”

He said Brazil’s melons and watermelons were mostly produced in the micro region of Chapada do Apodi, which is in the states of Río Grande do Norte and Ceará. However, with drought challenges Barcelos said his company and others were moving production to the Vale de Rio São Francisco in Pernambuco, and Vale do Rio Parnaíba in Piauí.

“We are looking for new farms and this brings with it a lot of investment because you have to buy land, perforate wells, have irrigation systems, have energy, packing, etcetera. We can’t continue where we are because there is no water.”

In terms of exports, around 85% of the country’s melons and close to all its watermelons are grown in the Chapada do Apodi area.

Agricola Famosa has 9,000 hectares of production, of which 85% are in melons and 15% are with watermelons.

New markets

Last year the company shipped 63% of its exports to Europe, mainly to England (30%), the Netherlands (30%) and Spain (20%).

“We are seeking new markets in the Middle East and Asia. We have problems with taxes in the American market (28%) which we are trying to resolve to have more competitiveness, but we also have our eyes on Asia.”

Negotiations for Chinese market access are very advanced. Brazil recently received a delegation from the country ro evaluate pest risks and to start working on an access protocol.

“We are working with China, Japan and Vietnam, where we are very advanced in processes for establishing access protocols. Also we now have the advantage of the expansion of the Panama Canal, so our fruit could arrive 10-12 days earlier to those destinations,” Barcelos said.



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