Opinion

Argentina Faces Massive Peach Production Decrease

Canned or Jarred Peach
Chile
Prices of fresh peaches in Argentina are rising due to cold weather conditions in late 2019 that brought a decrease of yield in 2020. The government of the biggest peach producing province is seeking to alleviate the losses in the canned peach industry.

49% Expected Decrease in Peach Production

Argentinian weather anomalies in late 2019 have brought a decline in the harvest of peaches. Peach harvest in Argentina starts in December and lasts until February. While approximately 127K tons were harvested from December 2018 to February 2019, only 64K tons will be collected in the 2019/2020 season.

Reason for the Decline

This is a direct result of a frost that hit Argentina’s biggest peach producing regions, Mendoza and Rio Negro, in September 2019. Higher altitude regions such as the Uco Valley, located in Mendoza, and southern regions such as Rio Negro are especially susceptible to frosts which can negatively impact yield or quality of products. With more than 1K fruit producers and 6K ha orchards, the Mendoza province, located in the mid-western region, is the biggest peach producing region in the country. The Uco Valley located within the province is very well known for its canned peaches and the country's peach canning industry relies heavily on its products. The second-biggest producer is Rio Negro, which also suffered from extremely cold weather. The frost was almost at -10°C in this region, which has severely affected the yield, as more than 14 hours of extreme cold can largely decrease the yield of peaches.

Price and Quantity Outlook for 2020

It is noted that prices for fresh peaches have recently been on the rise due to the production decline. Interestingly, the prices of peaches meant for the processing industry, however, still remain low, at approximately USD 0.16 per kg. This is because Argentina has to compete with other processed peach exporting countries that are able to offer lower prices due to a lack of export taxes. Thus with the decrease in yield, the processing industry has to deal with high costs per product as well as a decrease in overall profits. In light of the situation, Mendoza’s provincial government has announced that it will finance the production of canned peaches. Buyers of MERCOSUR countries such as Uruguay, Paraguay, and Brazil are the main importer of processed peaches from Argentina and are expected to be affected by the decrease in yield this year.

Sources

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