Citrus Semi-annual 2011

An Expert's View about Citrus Fruits in Argentina

Last updated: 17 Jul 2011

Fresh lemon estimated production for 2010/11 increased to 1.3 million MT, and fresh orange and tangerine production is cut to 580,000 MT and 280,000 MT, respectively, due to a drought which affected severely affected fruit blossom.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Required Report - public distribution Date: 6/30/2011 GAIN Report Number: Argentina Citrus Semi-annual 2011 Approved By: David Mergen Prepared By: Maria Julia Balbi Report Highlights: Fresh lemon estimated production for 2010/11 increased to 1.3 million MT, and fresh orange and tangerine production is cut to 580,000 MT and 280,000 MT, respectively, due to a drought which affected severely affected fruit blossom. Grapefruit production is forecast to increase marginally to 140,000 MT. Lemon exports are forecast to increase only marginally to 270,000 MT, despite larger production, as increased fruit supply is expected from competing countries. Orange and tangerine exports are estimated to decrease to 100,000 MT and 95,000 MT as a result of smaller production, and grapefruit exports are projected to increase slightly to 13,000 MT due to larger fruit supply. Executive Summary: For 2010/11, fresh lemon production is increased 50,000 MT to 1.3 million MT, as a result of favorable weather conditions in the main growing region during CY 2010. Fresh orange and tangerine production is projected to fall to 580,000 MT (from the current USDA estimate of 900,000 MT) and 280,000 MT (down from 400,000 MT), respectively, due to a drought which severely affected fruit blossom. Fresh grapefruit production is expected to increase marginally to 140,000 MT. Domestic consumption in 2010/11 is increased for both lemons and grapefruit to 60,000 MT, and it is decreased for oranges and tangerines to 413,000 MT and 120,000 MT, respectively, as a result of smaller production. Fresh lemon exports are expected to increase only marginally to 270,000 MT, despite larger production, as increased fruit supply is projected from competing countries in the Northern Hemisphere. Orange and tangerine exports are decreased to 100,000 MT (down 25,000 MT) and 95,000 MT (also down 25,000 MT), respectively, primarily due to smaller production. Grapefruit exports are forecast to increase slightly to 13,000 MT as a result of larger fruit supply. Commodities: Lemons, Fresh Oranges, Fresh Tangerines/Mandarins, Fresh Grapefruit, Fresh Production: Fresh lemon production for 2010/11 is increased as a result of favorable weather conditions in the main growing region during CY 2010. However, excess rain in February 2011 affected the fruit size which forced producers to delay harvest between two and three weeks. Fresh orange and tangerine production is decreased significantly due to a severe drought which affected fruit blossom in the main growing region. Fresh grapefruit production is expected to increase marginally; however, it is forecast to decrease gradually in the near future as area planted to grapefruit is being devoted to sugar cane (mainly fostered by the increase of ethanol production) and soybeans in the NOA (North West Argentina) region since the grapefruit business is becoming increasingly unprofitable. Lemon production in 2009/10 remained unchanged at 1.0 million MT, down 350,000 MT from the previous year, as a result of a drought and late frosts in September/October 2009. According to latest estimate revisions by the private sector, fresh sweet citrus production increased to 770,000 MT for oranges and 360,000 MT for tangerines, as heavy rains that caused severe floods in the NEA (North East Argentina) region were not as negative as previously expected. Grapefruit production decreased to 140,000 MT due to a gradual reduction of area planted to grapefruit. Main lemon varieties grown in Argentina are as follows: Genova and Eureka; main orange varieties: Naventina, Salustiana, Washington Navel, Navel Late, Valencia Seedless, and Valencia Late; main tangerine varieties: Clementina, Clemenvilla, Ellendale, Malvasio, Montenegrina, Murcott, Ortanique, Satsuma, Okutsu; main grapefruit varieties: Marsh and Duncan (Source: Federcitrus). Overall, the citrus sweet varieties that have been expanding faster are seedless varieties, such as Tango for oranges, and Clementines and Clemenules for tangerines. One of the main concerns affecting the citrus sector in Argentina is increased production costs (especially, inputs, labor, and energy) estimated by private sources between 40-50 percent higher (before harvest) for 2010/2011, as a result of a high inflation rate which, combined with the relatively stable value of the dollar, represents a significant loss of competitiveness for local exporters. (Harvesters received a 30 percent salary increase for the current season.) In addition, inland and ocean freight costs have also increased significantly. The Government of Argentina (GOA) has recently cut gas supplies to major industrial operations in the country to assure household gas supplies during winter. In the Province of Tucuman, gas supplies has been reduced by 30 percent but higher cuts are expected. The Governor of Tucuman Province has requested that the province be exempted from this measure as the lemon and sugar cane industries are seasonal operations between May and September every year. Area Planted Area planted to lemon is estimated to increase gradually to 44,000 hectares for 2010/11, and will continue to expand in the near future, especially in the Provinces of Salta and Jujuy, as in the Province of Tucuman lemon production competes with sugar cane production and, to a lesser extent, urban expansion and soybean production, which has grown in marginal areas. Area planted to orange and tangerine production is projected to remain stable, and area planted to grapefruit is forecast to decrease as grapefruit production competes with other more profitable crops, such as sugarcane and soybeans. According to private sources, the Argentine lemon sector is not expected to expand through land investment but through the incorporation of new genetic material, which would improve yields. Processing Fresh lemon for processing in 2010/11 is projected to increase to 973,000 MT, compared to previous USDA estimates, as a result of larger production and additional volumes of fruit which did not reach the size required by export markets. Many producers chose to harvest smaller-sized fruit, which were devoted for processing, leaving larger sizes in the plants to obtain fruit that will meet the needs of more demanding export markets. Fresh orange and tangerine for processing in 2010/11 is projected to fall sharply to 70,000 MT and 68,000 MT, respectively, primarily as a result of smaller fruit supply. Grapefruit for processing is expected to increase marginally to 69,000 MT due to larger production than previously expected. In 2009/10, lemon for processing increased slightly to 698,000 MT, compared to previous USDA official estimates, due to larger imports than expected. Orange for processing increased slightly to 84,000 MT, primarily, due to larger production. Tangerine for processing increased to 91,000 MT, as a result of larger production, and grapefruit for processing remained stable at 71,000 MT. Over 90 percent of the total lemon production in Argentina is processed by 7 plants, of which 5 are located in the Province of Tucuman, one in the Province of Jujuy, and another one in the Province of Salta. In addition, there are about 35 high-tech packing citrus plants which are approved for export by the Argentine sanitary authorities. Investment Investment in land devoted for lemon production is expected to continue expanding marginally, especially in the Provinces of Salta and Jujuy, as in the Province of Tucuman lemon production competes mainly with sugar cane production. In addition, two new packing and processing plants will become operational in Tucuman in the near future. Investment is due to the increasing profitability of lemon activity, the potential opening of significant export markets for fresh lemon, such as the U.S. and China, and the expansion of leading beverage companies in Asia. Investments in processing facilities and irrigation are also planned in the NEA region for ?sweet? citrus fruit. There is an on-going project to build a juice processing facility in the Province of Entre Rios, with a $2 million- contribution by the Provincial Government, whose main purpose is to supply the increasing international demand for concentrated juices. Consumption: Fresh lemon domestic consumption does not typically vary over time, unlike oranges and tangerines ? the ?sweet? categories ? which are often replaced by other types of fruit depending on the price. Consumption in 2010/11 is expected to increase slightly to 60,000 MT, compared to previous USDA official estimates. Consumption in 2009/10 remained stable at 45,000 MT, compared to previous USDA estimates, and decreased in comparison with the previous year, as a result of smaller production. In 2010/11, orange and tangerine consumption is projected to decrease substantially to 413,000 MT and 120,000 MT, respectively, due to smaller production. Orange consumption decreased to 530,000 MT in 2009/10, compared to previous USDA official estimates, as a result of larger exports, and tangerine consumption remained stable. Consumption for both citrus fruit decreased, compared to the previous year, as a result of reduced supply. Grapefruit consumption is estimated to remain stable in 2010/11, and it decreased in 2009/10, compared to USDA estimates, due to smaller production. Estimated annual per capita citrus consumption is as follows: lemon, 0.74 kg; orange, 10.15 kg; tangerine, 4.35; and grapefruit, 1.95 kg. Trade: Exports Fresh Lemon exports for 2010/11 are expected to increase only marginally, compared to the previous USDA estimates, despite larger production, as increased fruit supply is expected from competing countries in the Northern Hemisphere, such as Spain and Turkey. In addition, following the practice carried out in the past couple of years, relatively high volumes of fruit are estimated to be devoted for processing as a result of the decision taken by the industry to export only fresh lemons meeting higher quality standards, thus restricting the export supply and preventing a steep decrease of international prices. This market strategy is expected to continue. Fresh orange and tangerine exports are decreased due to smaller production and economic recession in some European countries which are important export markets, and fresh grapefruit exports are forecast to increase slightly as a result of larger fruit supply. Fresh lemon exports remained stable in 2009/10 at 264,000 MT, compared to previous USDA official estimates, and exceeded exports from the previous year as international markets recover from the global financial crisis. Fresh orange and tangerine exports increased to 157,000 MT (for oranges) and 119,000 MT (for tangerines) due larger production that previously expected and the recovery of export markets, and fresh grapefruit exports remained stable at 11,000 MT. Argentine fresh citrus are exported to over 80 international markets. The main export destinations in 2010, compared to 2009, were as follows: Fresh Citrus Fruit Destination Market Share % 2009 2010 Lemons EU 68 75 Russia 19.5 16 Oranges EU 62 55 Russia 13 18 Tangerines EU 43 36 Russia 34 37 Grapefruit EU 86 83 Russia 3 10 Source: FAS Buenos Aires, based on data from the Global Trade Atlas (GTIS) For 2010/11, no major export market diversification is expected for citrus fruit. Argentine phytosanitary authorities continue negotiations with China to reopen the market for Argentine fresh lemons. Trade was interrupted in 2005 when China established cold treatment for all citrus fruit, which damaged the fruit quality. The industry has been focusing on other export destinations pending negotiations with officials in China. Currently, the market is open to fresh ?sweet? citrus varieties. Moreover, there are on-going technical discussions with the U.S. to reopen the market for Argentine fresh citrus fruit. A scientific study is being carried out to certify that Citrus Variegated Chlorosis (CVC) cannot be transmitted through citrus seed. Argentine government officials have also requested from Russian authorities a reduction of the import tariff affecting apples, pears, and citrus fruit. Local producers have adjusted well to lower MRLs (maximum residue levels) that were introduced in Russia on October 31, 2008. The regulations are currently in effect, but have not had a major impact on exports. The current MRL levels are lower than those required by the EU, Japan, Canada, and the U.S., among other countries. MRLs continue to be an increasingly important issue at multilateral meetings among representatives from fruit export and import markets. In 2010, the EU was the largest market for Argentine fresh lemons (75 percent market share), oranges (55 percent), and grapefruit (83 percent); and the second largest market for fresh tangerines (36 percent). Russia was the second largest market for all citrus fruit, except tangerines, accounting for an average of 37 percent of total Argentine tangerine exports, 18 percent of oranges, 16 percent of lemons, and 10 percent of grapefruit. Imports Citrus imports are expected to remain negligible in 2010/11, and this trend is forecast to continue in counter season, as Argentina is a net citrus fruit exporting country. In 2010, total citrus imports totaled 9,327 MT, and were valued at $6.3 million. Imports came mainly from Chile and Italy (lemons), Mexico and Chile (oranges), and Chile and Israel (grapefruit). Policy: Import and Export Regulations Two of the leading citrus companies from NEA have recently decided to stop exports and suspend some of their employees as a result of extremely high costs, which continue to increase, and stable or lower international prices for ?sweet? citrus varieties. About seven months ago, the GOA promised that a subsidy would be granted to NEA citrus producers to recover from reduced exports in CY 2010. However, the financial support did not occur. The Governor of Entre Rios Province has recently promised a $70,000-subsidy primarily for producers to pay overdue salaries. On December 22, 2008, President Cristina Fernandez de Kirchner announced a package of stimulus measures for the Argentine agricultural sector. The measures affecting fruit and vegetables were published in the Official Bulletin, Decrees Nos. 38/2008 and 40/2008, on December 31, 2008. They established that the export tax for pears, apples, peaches, citrus fruit, grapes, blueberries, strawberries, onions, frozen potatoes, beans and pulses were reduced by 50 percent (i.e. fresh deciduous fruit and stone fruit currently pay a 5 percent export tax, while citrus fruit and vegetables pay 2.5 percent). The changes did not have a significant impact on overall fruit production. Export taxes for these products were already relatively low (5 percent to 10 percent). Part of Argentina?s 2.5 percent export tax on citrus is rebated depending on the size of the container. Export and Import Tariffs All Citrus Fruit (HTS codes: 080510, 080520, 080540, 080550) For countries outside MERCOSUR AREA % Import Tariff 10.00 Statistical Tax 0.50 Export Tax 2.50 Export Rebate for cases containing less than 16 kg. 5.00 Export Rebate for cases containing 16?20 kg. 4.05 Export Rebate for cases containing more than 20 kg. 2.70 For countries within MERCOSUR AREA Import Tariff 0.00 Statistical Tax 0.50 Export Tax 2.50 Export Rebate for cases containing less than 16 kg. 5.00 Export Rebate for cases containing 16?20 kg. 4.05 Export Rebate for cases containing more than 20 kg. 2.70 Source: FAS Buenos Aires based on data from Tarifar Phytosanitary Issues Argentina is currently free of Huanglongbing (HLB). In order to protect Argentine citrus production, the Ministry of Agriculture, Livestock, and Fisheries (MAGP, in Spanish) has implemented a National Program for HLB Prevention, composed by the following organizations and agencies: National Institute of Agricultural Technology (INTA, in Spanish), National Service of Agriculture and Food Health and Quality (SENASA, in Spanish), National Seed Institute (INASE, in Spanish), provincial governments, Experiment Station ?Obispo Colombres?, and entities from the private sector related to the citrus activity. Under the framework of the above program, over 6,500 samples from the Provinces of Tucuman, Salta, Jujuy, and Catamarca, were analyzed for HLB diagnosis. All samples were tested negative. In addition, over 75 percent of the area planted to citrus, which has been declared with risk potential for HLB, has been monitored; about 300 nurseries were inspected; and 10 border passes, whose location and traffic might represent a higher risk for HLB entry into the country, were reinforced without having found any presence of the bacteria, either in plant material or insects. Argentina has a National Traceability System, which allows local phytosanitary authorities, producers, and exporters to learn about the various treatments applied to the fruit, from the plant to the port of destination. This guarantees the importer that the product is healthy and safe. Marketing: Prices International (FOB) Prices for Fresh Citrus Fruit Overall, fresh citrus average FOB prices during 2009/10 were higher than the previous year, especially for lemons, with the exception of oranges. However, by the end of the marketing year, prices fell due to the delay in the arrival of fruit shipments to the main EU markets. The highest FOB price for lemons during CY 2010 was $978/MT (March); for oranges, $498/MT (June); for tangerines, $1,000/MT (January); and for grapefruit, $700/MT (March). FOB prices are estimated to decrease in 2010/11 as increased fruit supply is expected from Argentina?s primary competitors. L FOB Prices ($/MT) emon 2007 2008 2009 2010 January -- 583 713 -- February 482 1,022 604 -- March 477 870 778 978 April 473 1,016 589 620 May 469 1,074 556 671 June 464 1,076 602 742 July 469 976 633 724 August 466 758 657 783 September 483 710 642 698 October 367 694 566 700 November 318 844 -- 667 December 519 683 -- 700 Average 453 859 634 728 Source: FAS Buenos Aires based on GTIS trade data O OB Prices ($/MT) rang Fe 2007 2008 2009 2010 January -- -- -- -- -- -- -- -- February March -- -- -- -- April -- 251 194 155 May 372 534 440 483 June 429 552 494 498 July 435 549 478 471 August 436 520 485 457 September 394 472 455 422 October 397 409 384 381 November 236 -- 205 232 December -- -- -- -- Average 386 470 392 387 Source: FAS Buenos Aires based on GTIS trade data Tangerin FOB Prices ($/MT) e 2007 2008 2009 2010 January 909 196 333 1,000 February 741 741 1013 821 March 592 728 785 774 April 589 756 733 763 May 612 786 749 766 June 622 779 760 768 July 607 769 749 771 August 628 773 742 746 September 610 722 721 742 October 477 467 655 695 November -- 889 -- 100 December -- -- -- -- Average 639 691 724 722 Source: FAS Buenos Aires based on GTIS trade data G B Prices ($/MT) rapefru FOit 2007 2008 2009 2010 January 705 -- -- -- February 1,187 -- 1,200 -- March 489 167 598 700 April 468 651 546 546 May 439 587 571 521 June 430 594 533 July 451 590 584 478 August 460 587 572 582 September 472 412 513 667 October -- 161 -- -- November -- 684 -- -- December -- -- -- -- Average 567 493 640 566 Source: FAS Buenos Aires based on GTIS trade data Wholesale Prices for Fresh Citrus Fruit L ic Wholesale Prices ($/MT) em Domeston 2007 2008 2009 2010 2011 January 380 390 366 1,020 1,128 February 330 340 352 1,150 1,229 March 260 630 350 950 1,022 April 280 540 328 680 n/a May 230 298 258 490 n/a June 200 332 222 470 n/a July 170 387 221 460 n/a August 160 363 261 490 n/a September 190 308 357 560 n/a October 340 460 470 660 n/a November 430 447 742 675 n/a December 800 401 737 953 n/a Average 310 408 389 773 n/a Source: Buenos Aires Central Market O Domestic Wholesale Prices ($/MT) range 2007 2008 2009 2010 2011 January 230 210 217 280 324 February 350 310 229 280 356 March 220 300 276 340 386 April 270 350 310 340 n/a May 310 322 298 350 n/a June 260 283 301 320 n/a July 220 300 295 310 n/a August 190 331 299 300 n/a September 180 299 339 280 n/a October 190 372 350 293 n/a November 170 361 373 300 n/a December 190 259 382 313 n/a Average 200 308 306 309 n/a Source: Buenos Aires Central Market T Domestic Wholesale Prices ($/MT) angerine 2011 2006 2007 2008 2009 2010 January 250 180 n/a n/a 360 445 February n/a n/a n/a n/a 350 386 March 200 n/a 190 n/a 350 349 April 240 200 250 296 330 n/a May 230 190 288 305 330 n/a June 220 170 299 320 340 n/a July 200 130 341 332 330 n/a August 190 140 340 330 310 n/a September 210 190 293 345 290 n/a October 250 190 366 400 283 n/a November 280 170 439 389 295 n/a December n/a 160 n/a 442 398 n/a Average 210 140 312 351 301 n/a Source: Buenos Aires Central Market G Domestic Wholesale Prices ($/MT) rapefruit 2007 2008 2009 2010 2006 January 370 400 300 365 510 February 380 410 340 NA 550 March 340 310 410 NA 520 April 280 NA 390 403 490 May 340 NA 313 313 440 June 210 NA 296 301 400 July 200 200 332 306 390 August 300 190 311 288 370 September 270 210 281 336 350 October 310 180 299 340 343 November 330 170 372 371 440 December NA 230 452 377 595 Average 300 190 341 340 450 Source: Buenos Aires Central Market Domestic Retail Prices for Fresh Citrus Fruit Citrus Fruit $/kg Lemon 1.59 Orange (Navel) 1.65 Orange (Valencia) 1.65 Tangerine (Clementina) 1.87 Tangerine (Nova) 1.62 Grapefruit (Marsh) 1.80 Grapefruit (Ruby) 1.65 US$1 = AR$4.13 (June 9, 2011) Source: FAS Buenos Aires based on prices of supermarkets and other retail stores. Production, Supply and Demand Data Statistics: Lemons/Limes, Fresh A 2008/2009 2009/2010 2010/2011 rgentina Market Year Begin: Jan Market Year Begin: Jan Market Year Begin: Jan 2009 2010 2011 USDA New USDA New USDA New Official Post Official Post Official Post Area Planted 43,000 43,083 43,000 43,575 43,000 44,000 Area Harvested 42,000 42,000 42,000 42,000 42,000 43,000 Bearing Trees 13,000 13,000 13,000 13,000 13,000 13,000 Non-Bearing Trees 1,000 1,000 1,000 1,000 1,000 1,000 Total No. Of Trees 14,000 14,000 14,000 14,000 14,000 14,000 Production 1,350 1,350 1,000 1,000 1,250 1,300 Imports 5 5 3 7 3 3 Total Supply 1,355 1,355 1,003 1,007 1,253 1,303 Exports 250 250 264 264 260 270 Fresh Dom. Consumption 55 55 45 45 50 60 For Processing 1,050 1,050 694 698 943 973 Total Distribution 1,355 1,355 1,003 1,007 1,253 1,303 TS=TD 0 0 0 Comments Units of Measure: hectares, thousand trees, and thousand metric tons. AGR Number Comments To Post Oranges, Fresh Argentina 2008/2009 2009/2010 2010/2011 Market Year Begin: Jan Market Year Begin: Jan Market Year Begin: Jan 2009 2010 2011 USDA New USDA New USDA New Official Post Official Post Official Post Area Planted 48,000 46,775 48,000 48,229 48,000 48,300 Area Harvested 45,500 45,500 45,500 45,500 45,500 46,000 Bearing Trees 23,000 23,000 23,000 23,000 23,000 23,000 Non-Bearing Trees 2,000 2,000 2,000 2,000 2,000 2,000 Total No. Of Trees 25,000 25,000 25,000 25,000 25,000 25,000 Production 900 900 750 770 900 580 Imports 1 1 1 1 1 3 Total Supply 901 901 751 771 901 583 Exports 140 137 120 157 125 100 Fresh Dom. Consumption 570 570 550 530 570 413 For Processing 191 194 81 84 206 70 Total Distribution 901 901 751 771 901 583 TS=TD 0 0 0 Comments Units of Measure: hectares, thousand trees, and thousand metric tons. AGR Number Comments To Post Grapefruit, Fresh A 2008/2009 2009/2010 2010/2011 rgentina Market Year Begin: Jan Market Year Begin: Jan Market Year Begin: Jan 2009 2010 2011 USDA New USDA New USDA New Official Post Official Post Official Post Area Planted 7,500 7,396 5,000 7,685 5,000 7,500 Area Harvested 7,000 7,000 4,700 7,000 4,700 7,000 Bearing Trees 2,200 2,200 1,600 1,600 1,600 1,600 Non-Bearing Trees 90 90 70 70 70 70 Total No. Of Trees 2,290 2,290 1,670 1,670 1,670 1,670 Production 237 237 150 140 130 140 Imports 2 2 2 2 2 2 Total Supply 239 239 152 142 132 142 Exports 17 17 11 11 10 13 Fresh Dom. Consumption 90 90 70 60 60 60 For Processing 132 132 71 71 62 69 Total Distribution 239 239 152 142 132 142 TS=TD 0 0 0 Comments Units of Measure: hectares, thousand trees, and thousand metric tons. AGR Number Comments To Post Tangerines/Mandarins, Fresh A 2008/2009 2009/2010 2010/2011 rgentina Market Year Begin: Apr Market Year Begin: Apr Market Year Begin: Apr 2009 2010 2011 USDA New USDA New USDA New Official Post Official Post Official Post Area Planted 34,000 34,469 34,000 34,930 34,000 35,000 Area Harvested 32,000 32,000 32,000 33,000 32,000 33,000 Bearing Trees 18,000 18,000 18,000 18,000 18,000 18,000 Non-Bearing Trees 2,000 2,000 2,000 2,000 2,000 2,000 Total No. Of Trees 20,000 20,000 20,000 20,000 20,000 20,000 Production 400 400 290 360 400 280 Imports 0 0 0 0 0 3 Total Supply 400 400 290 360 400 283 Exports 113 113 117 119 120 95 Fresh Dom. Consumption 190 190 150 150 190 120 For Processing 97 97 23 91 90 68 Total Distribution 400 400 290 360 400 283 TS=TD 0 0 0 Comments Units of Measure: hectares, thousand trees, and thousand metric tons. AGR Number Comments To Post
Posted: 17 July 2011, last updated 17 July 2011

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