The balance between supply and demand remains the single most important thing in the international grape game and the intervention of natural disasters remains the biggest threat to its equilibrium.
But in truth, the devastating earthquakes that hit Concepción and Santiago in February and March only added to a tricky market. Fruit had been slow to start from the South American country, with the first white seedless grapes hitting Europe on 7 February. The preceding South African season was not what it could have been, as there were production problems coming out of the Orange River valley, while the Hex River valley produced 20 per cent less product than normal, which evened out issues with soft grapes in terms of price.
Prices from South Africa would normally take a dip late season but the uncertainty created by lower volumes emanating from Chile - compounded by the earthquakes - kept demand high.
Earlier in the season, growers had seen “record returns” prior to Christmas and in January, with one insider remarking: “The prices in South Africa were excellent during that period and, despite a very, very dull market in late January and early February, the growers ended the season very satisfied. Growers just will not accept poor returns these days and although quality in the season wasn’t all that, it could have been that returns were good.”
Another source added: “Gone are the days of the £1.99 retail. If it doesn’t break even for the grower, they are adamant that the retailer or the importer is going to take the hit.”
Turning back to Chile, Europe was never likely to receive huge volumes from the country, with poor prices last year causing exporters to pack fewer 4.5kg packs for the EU and the UK. US importers paid more money for product and the shorter transit time to North America made it a more attractive prospect. Likewise, the short journey to sell produce to Brazil, combined with that market’s lack of emphasis on attractive packaging, guided product to the South American country.
Volumes of white seedless grapes were reported as down 46 per cent year on year last week and while the Chileans packed enough to cover the retail sector, white grapes on the wholesale markets in the UK are selling at around 1000-1100p for 4.5kg, as opposed to £7.50-8.50 at retail.
And further turbulence is expected in the market, with the news that the US has rejected the Chileans’ request for an extension to its marketing order to the end of April, detailed on p14, due to the earthquakes.
With this news, packers are busy exporting white grape to the US, where it is still garnering good prices, and there could be knock-on problems with red grapes. Depending on how much is shipped to the US before the 10 April cut-off point, large quantities of Crimson previously unpacked will head to Europe.
One insider said: “It will definitely have an effect on the wholesale markets and I have been quoted some low prices already, although not in volumes. The Chileans might look to new markets for red, such as China, but they are very specific about the colouring of the fruit, so I doubt they would take huge volumes.
“Overall, it has been a nightmare with Chile - a lot of the producers weren’t hit but the infrastructure was and the ports were only operating at 60 per cent of their normal service. Boats have been coming in at different times due to the earthquake and the southern hemisphere season already started off badly, with Brazilian volumes down 30 per cent due to rain and other factors.”
Looking ahead, times look just as tricky. High prices are already being commanded for early-season Indian grapes and quality is high. But the small size of much of the fruit is likely to make wholesalers wary of purchasing the product. One source says: “The Indian grapes are of good quality and fruit size isn’t bad. I’ve seen some around 18-19mm, but generally wholesalers shy away from smaller grapes, so sales may be slow.”
Reports of low fertility rates on white seedless grape farms in Egypt have also concerned importers in the UK, with unusually high temperatures in November and December likely to affect overall quality. Despite this, the UK market is always short of white grape in May, so it is likely that, depending on the success of the Indian season, the UK will receive some Egyptian product via airfreight.
Grapes are currently in a challenging market, in which the boundaries of supply versus demand will doubtless be tested further in the forthcoming quarter.
CHILE LOOKS TO LONG TERM DESPITE RECENT EARTHQUAKE DRAMA
The Chilean grape industry has become a complex and lucrative operation and, despite being rocked by two recent earthquakes, the country remains one of the most important sources for the UK. Alex Lawson takes a look at the sector.
The once exponential growth of the Chilean fruit industry has slowed somewhat in the last 10 years as the sector has matured into one of the southern hemisphere’s leading fruit exporters.
Around the millennium, the fresh fruit export sector was registering growth of eight to 10 per cent a year, as the industry continued the rapid expansion it began in the mid-1980s. Although expansion has continued, figures for the last three years suggest a period of stabilisation, with exports ending up at between 2.3 million tonnes and 2.4mt each season. Within this, Chile is one of the world’s largest exporters of grapes worldwide, with more than 800,000t a year leaving the country, on average.
And the country has been working hard at expanding grape options in the global market. Chilean exporters’ association Asoex has been working with the Fruit Development Federation (FDF) to identify opportunities and look at the development of new varieties.
Chile has doubled its volume in the last 15 years and the industry is busy looking at ways to enhance its status with home-bred and produced varieties.
Christian Carvajal, Asoex marketing manager for Europe and Asia, tells FPJ: “We have always been very good at copying and all of the fresh fruit varieties that we grow so well in Chile are not Chilean. We only invest a small amount of our GDP in research and development and that is something that we are trying to rectify, in order to have Chilean fruit varieties in the market.”
The privately funded FDF was established 15 years ago and has been involved in more than 100 projects that span the entire industry, on topics ranging from climatic effects on crops to food safety issues.
FDF president Jaime Lavados adds: “Chile’s fruit industry is based on innovation and the introduction of technology. It is one of the most modern and rapidly advancing industries in the world.”
The northern regions of Chile, south of the Atacama desert, which is one of the most arid deserts in the world, offers the ideal climate to produce early grape varieties, as the fertile Central Valley is very similar in climatic characteristics to parts of Spain and southern France.
Continuing development work aims to enhance the performance and attributes of the non-indigenous varieties that make up the Chilean portfolio. It is said that there has never yet been a truly Chilean variety in the international market, but with such an array of climates and soils it is hoped that this is an anomaly that will be quickly remedied.
Links with the UK have become particularly strong and support from companies at home and abroad in the wake of the recent earthquakes in the country was widespread.
But this appears to have faded fast on the other side of the pond, where US officials have denied exporters a proposed extension to the marketing order for Chile. Exporters had hoped to extend the period from 10 April to 30 April as the earthquakes had delayed sendings, but the plans were rejected in order to protect California’s early table grape producers. Exporters are now rushing to get fruit through the San Antonio and Valparaíso ports in time.
One large Chilean exporter told FPJ the situation would mean there is every likelihood that more white grape will be sent to continental Europe. He said: “This should not have as much effect on the red seedless programme, as most of the late fruit will still go to the US, but some shippers may get a bit itchy about the US market, particularly if the fruit condition is not perfect. Some of that fruit may also get diverted to Europe, but not to the UK, where it is as likely to be rejected as in the US.”
But another UK importer said: “There will definitely be more grape hitting Europe due to this and some will make its way to the UK. We will doubtless see this affecting prices on the wholesale markets, with Crimson Seedless becoming more plentiful, as it won’t be heading to the US.”
The Chilean exporter added: “The grape harvest was obviously delayed by the earthquake, but volumes have not been significantly altered as the worst affected areas were not big grape-producing regions. Logistics are slowly returning to normal, but it has been a steady improvement rather than a complete recovery. There have been ships queuing up waiting to use the port and lack of capacity has been a real problem. The next few weeks will see the recovery continue, step by step, and there will be more grape on the water late in the season than the industry would initially have expected.”
There seems little doubt that the earthquakes will have a short-term impact on the sector, but players throughout the supply chain will be working hard to ensure the damage is not lasting.
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