Overview of Chilean cherry exports: 90% of all shipments go to China

Chilean cherry exports on the rise

Chilean cherry production has been growing dramatically over the past five seasons. According to the most recent USDA report, in the 2020/21 year, Chilean farmers managed to collect a bumper cherry crop, totaling 386,000 tons, a 51% leap year on year and 333% surge compared to the 2016/17 season. This was possible to achieve thanks to constantly increasing orchard areas. The cherry plantations have expanded from 27,798 ha in 2016/17 to an estimated 44,000 ha in 2021/22. Such rapid industry growth helped Chile boost exports of cherries, which reached record 352,400 tons in 2020/21. This is 54% more than in the previous season.

The forecast for the upcoming 2021/22 season also looks optimistic for the sector. However, the pace of the increase in production and exports will be slower than in the previous years, despite bigger orchard areas. Chilean farmers are now trying to increase the cherry size, which is very crucial for the end-user, the Chinese buyer. To achieve it, growers must cut some flowers off during blossoming, thus, sacrificing the quantity aspect.

COVID causes global logistics issues

Although Chile’s cherry shipments increased in the 2020/21 season, some local exporters faced logistics issues caused by COVID repercussions. Port congestions in the key country ports created shipment delays, which started to be noticeable at the end of January-February 2021 when Chilean cherries export was in full swing.

Another issue was container availability in Chilean ports. Very often empty containers were sent back straight to Asia, without a chance for exporters to load their cargo. According to S&P Global Platts, containerized exports from the West Coast of South America to North Asia decreased to 444,000 container units in the first seven months of 2021, which is 13% less than in the same period last year.

However, the solution to this issue was the introduction of so-called “Cherry Express” delivery by some logistics operators, including such giants as MSC and Hapag-Lloyd. These global shipping companies offered fast connections between main Chile’s port, Valparaiso, and Hong Kong. This enables Chilean cherry to reach the destination within 21-23 days. To foster the express delivery of the perishable fruit, MSC added additional two vessels in mid-December 2020. The introduction of this service helped to secure flowless cherry delivery to China.

Air transportation, which accounts for 10% of the total Chilean cargo shipments, has also been affected by the pandemic. Fewer regular and charter flights due to limitations created by COVID resulted in higher air freight rates.

China buys it all

China accounts for more than 90% of all Chilean cherry exports. In 2020/21 year, China imported 336,000 tons of this sweet fruit, 43% more than in the previous season. Counter-seasonality to the Northern Hemisphere creates big advantages for Chile since cherry supplies are limited, and prices also remain high. Chilean production season does not overlap with that of the USA or Turkey. This makes this South American country an absolute leader in cherry exports to China. The chart below shows the strongest demand during the Lunar New Year. Before festive celebrations begin, prices for imported cherry in China start to decrease at a high pace, as more and more Chilean shipments arrive in the country and saturate the market.

This year, apart from record-high imports, additional pressure on prices was asserted by unconfirmed news about COVID traces on Chilean cherries. This information shocked the end consumer and froze sales of imported cherries for a few days. To stimulate the market, some wholesales started to lower prices to $1.5/kg. However, the situation was quickly solved with the help of efforts of an effective promotional campaign from the Chilean side.

Sources:

China: Cherry import season was "challenging for everyone"
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