Gustavo Piloni, founder of FAMA, warns that the current citrus crisis is worse than the one four decades ago: Argentina's largest sweet citrus exporter went from moving some 35,000 tonnes to around 10,000.
Gustavo Piloni, a producer from southern Corrientes and one of the founders of FAMA —Argentina's largest sweet citrus exporter—, maintains that the crisis the citrus industry is going through today is even more complicated than the one that, in the early 1980s, pushed a group of producers to create the company.
FAMA's origins go back to meetings held over crates in a warehouse, when producers from northeastern Entre Ríos and southern Corrientes discussed what to do with the fruit that would start coming out of the new plantations. "Coming from being a small producer, from the domestic market, with small domestic-market structures, to thinking about export logistics is really complex," Piloni recalled.
Four decades later, the company's infrastructure was sized for a different scale: FAMA went from moving between 34,000 and 35,000 tonnes of exports to currently working with around 10,000 tonnes. The decline mirrors the regional trend: the president of the citrus exporters of the NEA, Enrique Yelin, puts orange and mandarin shipments at 50,000 tonnes, compared with 170,000 in other times.
For Piloni, the setback is not because producers have stood still: varieties were added, technology was brought into the orchards, investments were made in packing and there was adaptation to buyers' sanitary requirements. The problem is that, while the local citrus industry was doing its homework, the world changed too.
Decades ago, fruit from the southern hemisphere found a window of about seven months to supply northern markets. With the emergence of new varieties and the growth of other producing countries, that advantage shrank to four or five months, with South Africa as the big competitor for local exporters.
In the European Union, Argentine mandarins face a 16% tariff, while competitors from the southern hemisphere arrive with trade preferences. "We compete with southern hemisphere countries, South Africa, Chile, Peru, which have free trade agreements," explained Piloni, who recalled that years ago Argentine citrus secured a privileged position in European supermarkets, today largely occupied by South Africa.
To the loss of commercial competitiveness is added the deterioration of logistics. The less Argentina exports, the less attractive it becomes for shipping lines, with the consequent loss of frequencies and connections. "Argentina has dropped off the commercial map," he asserted.
The impact is concrete: a ship that used to reach Rotterdam in about 20 days now normally takes close to 30, because of the port calls it keeps adding. For more distant destinations the problem can directly close markets: reaching Vladivostok, at the far eastern end of Russia, took between 48 and 52 days and now the transit time can approach 90, a crucial detail for fresh fruit.
Piloni also does not separate the loss of competitiveness from domestic problems: costs, difficulties in investing and a shrunken domestic market. A new plantation needs seven or eight years to reach a commercial harvest capable of starting to amortize the investment. "It is very difficult to bring technology into the crop and technology into packing," he stated.
At the same time, he acknowledged that correcting the economic imbalances could not happen without costs. "We all understand that this transition from a country of unpredictability, of living on borrowed money with high inflation rates, was not sustainable. And the transition is not free," he said. The challenge, he posed, is to withstand that transition without destroying productive structures that are difficult to rebuild: "There is no way we are going to let it die. The issue is being able to hold on until eventually we can have somewhat clearer rules of the game."
Despite the diagnosis, Piloni has not abandoned the export obsession that began on top of some crates more than 40 years ago. FAMA's partners are moving forward on an agreement with the State of Israel to incorporate new citrus varieties developed there; one of them, which came out of a cross between grapefruit and mandarin, has been followed by the company for more than a decade. "Unfortunately we keep betting. This country at some point has to turn around," the producer from Corrientes said in closing.
