The cost of production is rising and returns are falling for grape growers in the Chilean central valley, as they work out just how much it costs them to produce each bunch.

Producers are enduring their third successive year of “negative profitability”, Fedefruta growers’ federation manager Juan Carlos Sepúlveda lamented, and he warned that some producers in the IV to VI regions are considering switching crops. “The new measures brought in for the dollar are a step in the right direction but, so far, the results have not been what we hoped for,” said Sepúlveda. “They might have stopped the slide, but they have not produced a significant recovery.”

He points out that the cost of labour in Chile can account for up to 70 per cent of the total cost of production and, with the wages bill in pesos against returns in dollars, the figures are just not stacking up in the producer’s favour.

Production of cereal crops is considerably less expensive in terms of labour input, while profitability is much more positive: according to Fedefruta, one hectare under production of table grape runs up salaries for 12 people, compared to just one for the same area given over to wheat or corn crops. Other producers have already changed to production of walnuts.

According to Sepúlveda, with the measures announced by the Chilean government last month, the peso is expected to exchange at 500 to the dollar by the end of the year, up from peso450 last month, but that would only provide “maintenance” levels of income.

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