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Peruvian fruit exporters are increasingly focusing their attention on China, often at the expense of Europe

Sun Fruits Exports S.A. produces avocados, table grapes and citrus fruits in the Ica department of Peru. It also arranges the export of its products from the field to the most demanding international markets, with an increasing focus on the Chinese market and on crops with a higher profitability and commercial stability, namely table grapes and mandarins.

Sun Fruits was founded in 2008 through the business partnership of two table grape producing families, the Camino and Nicolini families, neither of which had a packing warehouse. Thus, they had to deliver their productions to another company for packing, although only at times when the packaging company's lines were not taken with the grapes from their own lands. To become independent and to improve the quality of their products, the two families decided to build a warehouse together, both for the packing of their own productions and to be able to provide services to other agricultural companies in the region.

Striving to provide permanent employment
After four years of working exclusively with table grapes, Sun Fruits ventured also into the cultivation of winter fruits, particularly avocados and citrus fruits. "With the aim of providing permanent employment opportunities to our warehouse workers, we started to cultivate avocados, mandarins, grapefruits, tangelos and even onions, in addition to table grapes," says Manuel Augusto Olaechea, Agricultural Operations Manager of this Ica-based company. We offer multiple services to other agricultural companies, not only packaging, but also cold storage and even the marketing of fruits and vegetables.

Although Sun Fruits' own avocado production currently amounts to about 6,000 tons, the acreage, which stands at about 250 hectares, is gradually decreasing. "Almost everyone in the Ica department is replacing avocados with table grapes, mandarins or blueberries. The reasons are low prices at origin, the shortage of good quality water and the greater profitability of other fruit crops," says Manuel Augusto.

Low prices at origin for avocados
"At the moment, large-sized avocados are sold for an FOB value of around 1.50-2.00 €/kg, which translates to price at origin of approximately 1.00 €/kg. The smaller sizes, however, barely reach 0.50 €/kg. Although the European market easily absorbs 500 containers per week, at times of maximum avocado production, when Peru is shipping 1,000 containers per week, the oversupply causes prices to fall."

Moreover, unlike table grapes or citrus, the Ica department, located about 250 km southeast of Lima, competes with Piura, in the north of the country, since avocados can be kept for longer on the tree and there is no need to harvest them urgently once ripe. "We can postpone the harvest, waiting for prices to rise. In fact, it is necessary to speculate, since a price at origin of 0.60 €/kg won't cover the costs made, which can reach 0.70-0.80 €/kg, depending on the size and productivity of the farms. And you also need to add 0.33 €/kg for packaging," says Manuel Augusto.

Shortage of quality water
In its avocado plantations, Sun Fruits uses an average of 14,000 m3 of water per hectare for irrigation, 50% more than the 9,000 m3 used in table grape production. "The issue is not so much the need for large volumes of water, but the need for water with very low salinity. However, the salt content of the aquifer from which we draw water is on the rise, not because of proximity to the sea, since we are 400 meters above sea level, but because of the increasingly lower amount of water in the aquifer, which is resulting in a higher salt concentration."

Other crops deliver higher profitability
The third factor leading fruit growers in Ica to prefer table grape cultivation over avocados is its higher profitability. "The average profitability of table grapes is comparable to that of a spectacular year with avocados, which is only a hypothetical situation, as it is difficult to have an avocado season with both a price at origin of 2 €/kg and an average production of 30 tons per hectare."

Manuel Augusto says that modern table grape varieties, such as the Autumn Crisp or Sweet Globe, become productive just 16 months after the planting. "In August, we will start removing avocados from several plots, and in September we'll begin planting table grapes, which are already expected to deliver about 2,000 boxes per hectare by February 2026. Although the initial investment for a table grape orchard is higher than that of an avocado field, its early production makes it worthwhile. Moreover, banks are more inclined to grant loans for table grape operations than for avocados."

The Chinese market is focused on quality
Regarding destination markets, China demands increasingly larger volumes from South America. "The products have to reach the Chinese market with the right quality, without the presence of any pests or diseases," says Manuel Augusto. "A point in favor of the Asian market is that Chinese companies pay well and often in advance. For these reasons, Peruvian exporters are no longer only working with the European market in mind. And if the average consumption in China, which currently stands at 200 grams per person per year (five times less than in Europe) were to double to reach 400 grams, exports to Europe could stop and shift towards China."

Betting on Tango mandarins
In addition to avocados and table grapes, every year Sun Fruits cultivates about 6,000 tons of easy peelers of the Murcott, Tango, Oronules and Orograndes varieties on 100 hectares, and another 60 hectares will come into production in the coming years. "One of the advantages of citrus cultivation, in addition to its higher profitability compared to avocado production, is its lower sensitivity to salinity in the water. We produce five varieties, although given the large volumes from other producing countries, like Morocco, South Africa and the United States, there is increasingly less room in the market for the early varieties Oronules and Orogrande, so we have decided to replace them with Tango mandarins."

Regarding mandarins, Sun Fruits is focused on the Chinese market. "In 2022, we shipped two million kilos of Tango and Nadorcott mandarins to China, which were even green in color, since these two varieties do not lend themselves to degreening. The mandarins, which were of excellent taste quality despite their green color, were very well accepted and paid for in China. In Europe, on the other hand, consumers only want orange-colored mandarins. We were the only ones in Peru to export them to China, but last year, other exporters, attracted by the good performance of our shipments in 2022, began to ship large volumes to the Asian giant, which also received colored fruit from other countries, like South Africa, which arrived earlier due to the El Niño phenomenon. The Chinese market works like an auction, so prices fell. This is the only problem with China: it is necessary to be well informed about the volumes being sent, as prices are governed by the quantities that arrive, and we are not the only suppliers," says Manuel Augusto.

Blueberry requires a lot of labor
Blueberries are another of Peru's flagship products that are not grown by Sun Fruits. "Although we have conducted some tests with this fruit, its market concerns me quite a bit. Around the year 2010, when blueberry cultivation began in Peru, the price at origin was 15 $/kg, while the average of recent years is around 5 $/kg. However, blueberries are not part of the basic basket of consumers. If prices rise too much, consumption will immediately fall. In addition, the blueberry harvest requires a lot of labor, increasingly scarce in the Ica department."

Also in the cultivation of table grapes, according to Manuel Augusto, there is a moment when the availability of labor is crucial. "During the thinning, we count the fruits, one by one, and only leave between 60 and 80 berries per cluster. Otherwise, the grapes would be too small, which would mean they could not be exported to the United States or Europe. This is precisely the type of work that pays very well, better than pruning or harvesting. Moreover, we try to pay a salary depending on the productivity of each worker, also in the packaging warehouse. In fact, we are paying the minimum wage to almost no one. Everyone makes an effort and earns a salary above this threshold."

There is a need to open new markets
One of the biggest obstacles for Peruvian fruit producers and exporters, according to Manuel Augusto, is the focus of the National Agrarian Health Service of Peru (Senasa) on plant health control, to the detriment of promoting Peruvian horticultural products abroad. "In my opinion, Senasa could make a bigger effort to open new markets for various types of fruits and vegetables from Peru. However, the biggest problem for the sector is the lack of price control. If we do not have enough water, we can take measures to reduce the need for irrigation or even carry out infrastructure projects to bring water, but we can never control the price in the international market. Market uncertainty is our day-to-day, but by acting wisely, great opportunities can certainly be seized," concludes Manuel Augusto.

For more information:
Manuel Augusto Oleachea (Agricultural Operations Manager)
Sun Fruits Exports S.A.
Caserío Limón s/n – San Juan Bautista, Peru
Tel.: +51 936 798 931
[email protected]

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