The Chilean fruit industry claims it is coming under mounting pressure following another decrease in the value of the US dollar – the currency mainly used by the fruit sector for trading.
The US dollar is now reportedly at its lowest level of the last three years, with the exchange rate against the Chilean peso at 462.9 pesos.
As a result, the peso has lost most of the gains it achieved following a US$12bn currency intervention programme by Chile’s Central Bank in January.
Experts predict that the exchange rate could fall as low as 450 pesos to the US dollar, according to reports in the Chilean media.
Antonio Walker, president of the Chilean Fresh Fruit Growers Federation, has expressed his anxiety at the situation; claiming that the current exchange rate is crippling the sector’s profitability.
“The situation is not sustainable given that the fall in the exchange rate has been met with a severe increase in labour, energy and fuel costs as well as both sea and land transport,” Mr Walker explained in a press release from the association.
Mr Walker said that even if export volume rises this year it will not garner an increase in prices in comparison to previous years, adding that he predicts negative results for the majority of Chile’s fruit export categories this year.
“Producers can’t tolerate another year of losses, so an important number of them will have to leave the business,” Mr Walker warned.
“The current level of losses in profitability and competitiveness is very difficult to recoup by decreasing costs and obviously it’s going to affect employment.”
According to Mr Walker, the dollar/salary ratio urgently needs to return to a level similar to the beginning of the 1990s when one dollar was capable of paying almost 30 per cent more than today in terms of working hours.
“This tells us that a dollar worth no less than 700 pesos will return the export business to profitability and that investment in money, time and work will garner suitable results,” he noted.
Mr Walker has urged Chile’s fruit exporters to negotiate and settle payments in the currency of their end markets.
“In other words, if you’re going to sell to Europe do it in euros and settle the payment in that currency,” he explained.
“That way, it will not hurt the producer who is normally the first to suffer when losses occur in the national fruit sector.”
