Lemon exports will remain at the same levels of MY 2015, and orange and tangerine exports are estimated to decrease slightly. Exports for all citrus types will remain below normal levels due to lack of competitiveness of local exporters.

Executive Summary:

Production of citrus fruit for CY 2017 is projected to decrease to 1.37 MMT for lemons, 650,000 MT for oranges, and 280,000 MT for tangerines, due to a late frost in September 2016 (for lemons), and excess rain, strong winds, and hail (for sweet citrus, i.e. oranges and tangerines). Production for the three fruits will be down from normal levels due to not only unfavorable weather conditions but also lack of profitability for local producers.

Citrus exports will remain relatively stable at 280,000 MT for lemons, 55,000 MT for oranges, and 45,000 MT for tangerines. Exports will remain below historic levels for the three fruits due to lack of competitiveness of Argentine exporters in international markets.

The U.S. Department of Agriculture’s (USDA) Animal and Plant Health Inspection Service (APHIS) is publishing a final rule to allow the importation of fresh lemon fruit from northwest Argentina into the continental United States. The rule has been sent to the Federal Register for publication on December 23, 2016, and will become effective 30 days after it is published.

CY 2017 lemon domestic consumption is forecast to remain unchanged at 70,000 MT, and orange and tangerine consumption is expected to decrease to 350,000 MT and 150,000 MT, respectively, as a result of a decrease in production.

Lemons

Fresh lemon production in MY 2016/2017 is forecast to decrease to 1.37 MMT, compared to MY 2015/2016, due to a frost which affected the main lemon growing region in early September 2016, during fruit set. The quality and sanitary condition of the fruit is expected to be very good.

Fresh lemon production in MY 2015/2016 is estimated to decrease from 1.5 MMT to 1.4 MMT, compared to official USDA estimates, due to excess rains towards the end of summer and autumn, which delayed the harvest about a month and marginally affected quality.

For MY 2014/2015, lemon production remained unchanged at 1.45 MMT, in line with official USDA estimates.

Plants recuperated well from the previous year’s winter frosts and a severe drought that affected the main lemon producing area. This recuperation still occurred in the face of excess rain during the summer of 2015, which delayed the harvest about a month, affected the fruit quality and reduced the fruit pack-out yield from about 45 percent to 30 percent.

The lemon sector has managed to cover production costs and remain competitive as a result of high international prices, especially during the beginning and mid marketing season with prices falling over in the season due to large fruit supplies in the Northern Hemisphere countries, and the work done by ALL LEMON in carrying out audits to select the best-quality fruit to supply export markets (See Marketing Section – Promotion).

The main lemon varieties grown in Argentina are Genova and Eureka.

Oranges and Tangerines

Fresh orange and tangerine production in MY 2016/2017 is forecast to decrease by 20 percent to 650,000 MT (for oranges), and by 280,000 MT for tangerines, compared to MY 2015/2016. This decrease was due to unfavorable weather conditions in 2016 including excess rain, strong winds, and hail which caused severe damage especially in the north west of the Province of Entre Rios.

For MY 2015/2016, fresh orange and tangerine production is estimated as unchanged at 800,000 MT (for oranges), and 350,000 MT (for tangerines), in line with official USDA estimates and the previous calendar year numbers. Production for both fruits was down from normal levels of 950,000 MT for oranges and 450,000 MT for tangerines as a result of severe floods in the main sweet citrus growing region of Argentina.

Orange and tangerine production for MY 2014/2015 remained unchanged at 800,000 MT and 350,000 MT. Production was down from normal levels as plants did not fully recuperate from the effects of the frost that affected the main sweet citrus growing region in June 2012.

The main orange varieties grown in Argentina are: Hamlin, Pineapple, Robertson, Navel (in NOA), and Navel, Salustiana, improved Valencia (Midnight, Delta Seedless) (in NEA). Main tangerine varieties are: Clementina, Clemenvilla, Ellendale, Malvasio, Montenegrina, Murcott, and Ortanique. Overall, the citrus sweet varieties that have been expanded the fastest are seedless varieties, such as Tango for oranges, and Clementines and Clemenules for tangerines.

One of the main issues affecting the citrus sector in Argentina continues to be increasing production costs (primarily, labor, inputs, energy, inland and ocean freight) as a result of a relatively uncompetitive peso and high inflation rates (between 20-38 percent during the past few years and estimated at about 40 percent for CY 2016) resulting in a significant loss of competitiveness for local exporters, especially in the sweet citrus sector.

As of December 2015, local citrus producers became more competitive in international markets as a result of the new economic measures taken by the new Macri Administration – a 2.5 percent export tax elimination and devaluation of the Argentine peso. However, throughout 2016, part of this competitiveness was lost to high inflation rates resulting in significant cost increases.

Area Planted

For 2015/2016, area planted to lemons is forecast to remain unchanged at 48,000 hectares, and no change is expected in area planted for 2016/2017. Replacement of old plants for new ones is estimated to increase the plant per hectare ratio and improve yields.

Lemon producers have invested in plant replacement to overcome the effects of frosts, and have only marginally invested in new land. Lemon production competes with sugar cane production and urban expansion in the Province of Tucuman. According to private sources, the Argentine lemon sector is not expected to expand significantly through area expansion but through the incorporation of new genetic material, which would improve yields.

For 2015/2016, area planted to oranges and tangerines is projected to increase by 1,000 hectares each, to 43,000 hectares for oranges, and to 32,000 hectares for tangerines, compared to official estimates. Area planted is forecast to remain unchanged for both fruits in 2016/2017.

Processing

Lemons

Fresh lemon for processing in MY 2016/2017 is forecast to decrease to 1.02 MMT, compared to the previous year, as a result of smaller production.

Fresh lemon for processing in MY 2015/2016 is estimated as decreasing from 1.2 MMT to 1.05 MMT from official estimates, following the production decrease and larger exports. Moreover, smaller volumes of fruit were devoted for processing due to relatively low prices paid for lemon by-products.

For MY 2014/2015, fresh lemon for processing remained unchanged at 1.195 MMT, in line with official USDA estimates, and also due to relatively high volume of fruit with quality defects as a result of excess rains.

Following the practice carried out in the past few years, relatively high volumes of fruit are being devoted for processing as a result of the decision made 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 working very well and is expected to continue.

Oranges and Tangerines

For MY 2016/2017, fresh orange and tangerine for processing are forecast to decrease by 10 percent and 20 percent, respectively, to 245,000 MT for oranges and 85,000 MT for tangerines, compared to the previous year. The decrease of both fruits for processing is due to smaller production.

For MY 2015/2016, orange and tangerine for processing are unchanged at 270,000 MT and 110,000 MT, respectively, consistent with official estimates.

Post’s estimates for orange for processing in MY 2014/2015 remained stable from official estimates at 278,000

MT (for oranges) and 97,000 MT (for tangerines).

Consumption:

Lemons

Fresh lemon domestic demand tends to be inelastic and consumption does not typically vary much over time, unlike oranges and tangerines, which are often substituted by other types of fruit depending on the price.

Fresh lemon domestic consumption for MY 2016/2017 and MY 2015/2016 is forecast to remain unchanged at 70,000 MT, in line with USDA official estimates and MY 2014/2015 estimate.

Oranges and Tangerines

Post forecasts that MY 2016/2017 orange and tangerine domestic consumption will decrease significantly from 474,000 MT to 350,000 MT (for oranges) and from 190,000 MT to 150,000 MT (for tangerines), following the decrease in production.

For MY 2015/2016, orange and tangerine domestic consumption is estimated to remain stable at 474,000 MT and 190,000 MT, respectively, from USDA estimates. Consumption is expected to be lower than usual for both fruit due to smaller production.

Orange and tangerine consumption for MY 2014/2015 remained unchanged at 450,000 MT and 200,000 MT, following official estimates.

Trade:Exports

Lemons

Fresh lemon exports in MY 2016/2017 are estimated at 280,000 MT and are expected to remain at the same level of the previous year. Exports will not increase if, as expected, production costs continue to grow and the fruit becomes less competitive in international markets (normal exports levels may vary between 270,000- 300,000 MT).

For MY 2015/2016, lemon exports are projected to increase from 230,000 MT to 280,000 MT, up by 20 percent from official estimates, as a result of high international prices.

Lemon exports for MY 2014/2015 remained stable at 185,000 MT, compared to official estimates. Exports were down from normal levels due to a delay in the harvest and large fruit volumes in the Northern Hemisphere.

Compared to other regional sectors in Argentina (which have decreased competitiveness), the fresh lemon export business is still attractive despite high costs. In addition, the ALL LEMON certification seal that has been

developed by the Argentine lemon sector (see Marketing Section/Promotion) regulates the volume of fresh lemons for export, based on quality, to avoid steep price decreases.

Argentina does not export fresh organic lemons, given that fruit undergoes a bleaching process which is not allowed under organic certification standards.

Oranges and Tangerines

Post estimates fresh orange and tangerine exports at 55,000 MT and 45,000 MT, respectively, slightly down from the previous year as a result of smaller production.

Orange and tangerine exports in MY 2015/2016 are estimated to remain unchanged at 60,000 MT and 50,000 MT, respectively, from official estimates. Exports for both fruit will be significantly lower from the historic levels of around 150,000 MT for oranges and 100,000 MT for tangerines. This is due to the lack of competitiveness of exporters in international markets.

For MY 2014/2015, orange and tangerine exports remained unchanged at 72,000 MT (for oranges) and 53,000 MT (for tangerines), in alignment with USDA estimates. Due to decreased competitiveness in the international citrus markets, it has become very difficult for local exporters to compete with other producing countries in the Southern Hemisphere, primarily South Africa. Exports for both citrus fruit have been decreasing in the past few years as a result of the difficult economic situation affecting citrus exporters.

Export Destinations

Argentine fresh citrus fruit are exported to about 60 markets. The main export destinations (market share by volume) in CY 2015 and January-September 2016 were as follows:

Fresh Citrus Fruit

Destination

Market Share

%

2015

Jan-Sep 2016

Lemons

EU

72

73

Russia

16

14

Oranges

EU

53

84

Russia

1

6

Paraguay

42

4

Tangerines

Russia

54

49

Philippines

12

16

Canada

8

9

EU

8

8

Source: FAS Buenos Aires, based on data from the Global Trade Atlas (GTIS)

For MY 2016/2017, a gradual expansion to Asian markets is expected for citrus fruit. Fresh lemon exports to non-traditional markets have been increasing in the past few years and there are positive expectations on the opening of the Chinese market. Although South Africa is a significant challenge for Argentine exporters since it can reach Asia and the Middle East with more competitive prices, Argentine lemon companies are still focusing on expanding exports to those non-traditional markets.

The U.S. Department of Agriculture’s (USDA) Animal and Plant Health Inspection Service (APHIS) is publishing a final rule to allow the importation of fresh lemon fruit from northwest Argentina into the continental United States. The rule has been sent to the Federal Register for publication on December 23, 2016, and will become effective 30 days after it is published.

APHIS and Argentina’s National Plant Protection Organization (SENASA) must now finalize and sign the operational work plan, which details the conditions Argentina must meet for every U.S.-bound lemon shipment. Additionally, SENASA will have to collect and APHIS will have to verify six months of fruit fly trapping data. APHIS will also have to verify that packinghouses have met the safeguarding requirements outlined in the operational work plan.

The approval of exports for MY 2016/2017 is not expected to have a major impact on total exports. Local contacts estimated that Argentina will export 20,000 MT to the United States in MY 2016/2017.

Argentine sweet citrus exporters are highly concerned about their decrease of competitiveness in the Russian market, especially for tangerines, as a consequence of the steep devaluation of the ruble during the past year.

During January-September 2016, Argentina increased its orange market share by 60 percent in the EU due to the difficulties of South Africa in exporting oranges to that market as a result of phytosanitary issues (Citrus Black Spot) and relatively high international prices. In 2015, Paraguay was the second largest market for oranges with 42 percent share. However, during January-September 2016, Russia became the second largest market with 6 percent share shifting Paraguay to the third place.

In 2015, the EU was the second largest market for tangerines with 8 percent share. During January-September 2016, the Philippines became the second largest market shifting the EU to the fourth place after Canada. This was due to the devaluation of the ruble, which forced Argentine exporters to re-orient their fruit to the Philippines and the recent opening of the Philippine market to Argentine fresh citrus fruit.

Imports

Citrus imports are expected to remain negligible in MY 2016/2017. This trend is forecast to continue in the future as Argentina is a net citrus fruit exporting country. Fruit import volumes will remain limited as local fruit production is sufficient to supply the domestic market.

During January-September 2016, 3,639 MT of oranges were imported into Argentina (86 percent from Spain, 5 percent from Uruguay, 5 percent from Mexico, and 4 percent from Chile) as a result of the decrease in CY 2016 production which increased domestic prices.

Source: usda
2016-12-30

Naval gazing, what lies ahead for the supply chain Nashville TN

As this blighted year nears its end, three maritime journalists were asked to assess the industry as it enters a critical period in history. Change is afoot and 2021 is likely to herald a new beginning for some, writes Nick Savvides, managing editor at Container News.

Read more ...

Naval gazing, what lies ahead for the supply chain Rockford IL

As this blighted year nears its end, three maritime journalists were asked to assess the industry as it enters a critical period in history. Change is afoot and 2021 is likely to herald a new beginning for some, writes Nick Savvides, managing editor at Container News.

Read more ...