Opinion: Expectations for Chile's high-volume cherry season
By Juan Pablo Subercaseaux, agronomic engineer
According to official figures, in Chile there are currently 24,500 hectares of cherry orchards, and it is estimated that by 2020 the country will have close to 40,000 hectares if the current rate of growth is maintained.
It is the fifth-most planted crop by surface area, and it is anticipated that it could become the second-most planted in less than a decade.
Chile produces 2% of the world's production of cherries, but it is responsible for 85% of all cherry exports from the Southern Hemisphere to the Northern Hemisphere, which means that Chilean fruit dominates the market and is the most important player over the months of November, December, January and February.
Asia is the leading market receiving 86.7% (2016) of Chile's total cherry exports, but China alone represents 82%. We can therefore say that Chilean cherries depend on China.
From June this year, and analyzing the behavior during the winter and the planted hectares, I began to predict, in six important Cherry Seminars to which I was invited, what could be expected from this high-volume season.
In July I forecast 34 million boxes of export cherries, which would be 70% more than last season. This figure today seems very probable, and there are even some people talking about even higher volumes.
What is coming is a harvest of high volumes of fruit, smaller sizes due to excessively heavy fruit set, difficulties in finding labor from December and most likely problems with packing the fruit - with several days' worth of delays likely after Dec. 8.
Therefore, it can be expected that we will go from joy at seeing a beautiful flowering period and high fruit set on the trees, to the drama of harvesting and processing the fruit. And once it begins, we will only be able to pray that we get the returns to pay for the labor and packing operations.
There will be the paradox that the most profitable year is not the most profitable one. The oversupply will significantly affect prices, and there will be losses on small size fruit (with the L-size (22-24) being the standard for this year), quality problems on orchards with excessively heavy fruit set, delays in packing and low sales prices in export markets.
What to do now?
What remains to be done is to analyze the situation rationally, without tainting the analysis with expectations or wishes that won't be realized. Some ideas:
- Blocks with small fruit (predominantly below 24mm) should not be harvested, lowering the demand for labor and freeing it up to harvest fruit that is in good condition.
- Good returns will be for early fruit, harvested during November, as there will be no problems with oversupply or collapses in packing operations. There will then be opportunities for good prices on very late fruit, such as Sweet Heart (late December, January), which will arrive for Chinese New Year. Take care and prioritize this fruit over the other varieties.
- Supply fruit to more than one exporter - being too reliant on one entity that might see a collapse of its packing operations is not a good idea.
- Beware of anxiety over labor. Salary increases will be the tonic of this season, in which producers will be fighting for labor among themselves. Often the best business decision will be to lose a block of small-sized fruit than pay for the fruit to be harvested that is not going to generate good returns.
- Take the opportunity this season to see what is the per-hectare capacity of your human team, and with future plantations take into account their management capabilities, the availability of labor, infrastructure, and quality of life. Planting cherries is easy, the problems come with the harvests, which are always against the clock.
All fruit crops can be good business if you work well, and the cherry business is going to be more sincere this year, as in the past those who worked badly still earned money, and this does not happen in free market economics.
What we are going to see this year is the same thing that happened with kiwifruit, blueberries and all other fruits when they have their moment. Those who do things right will earn money and those who don't will lose money.