Here’s the latest update on last week´s cheery, bilingual posts on Chile-China cherry trade. It reads like a textbook case study in supply and demand, as well as a cautionary tale about the risks inherent in agriculture, exports, perishables, and trends in general.
From today’s El Mercurio: (translation and emphasis mine)
Oversupply of domestic exports to China cherries causes 50% drop in prices
Friday, January 27, 2012
Economy and Business
Miguel Concha M.
The rush for the fruit to land in China before the New Year holiday caused a collapse of the ports and sales systems of the Asian country. The price of Chilean cherries in China dropped by 50% in the past few days.
As explains Manuel Jose Alcaino, president of Decofrut, from January 23 fruit values were reduced from an average of U.S. $ 30 FOB per carton to U.S. $ 15 FOB.
The reason for the drastic fall is in response to an oversupply of cherries during the week before the Chinese New Year celebration, when by tradition many give gifts of fruit.
“We tried to get almost all the fruit to arrive before the celebration, which begins on January 23 and lasts for about a week. This stretched the country’s logistics system, making it collapse and causing a strong demand overload in a week, “said Alcaino.
The specialist added that a large proportion of the Chilean cherry sales in the Asian giant occur around Chinese New Year. In 2012 that date was earlier than in previous years, based on the location of the moon, so Chilean companies increased their efforts to make the cherries arrive in time for the celebration.
This resulted in three boats filled with about 700 containers, which together totaled about 14,000 tons of fruit.
“There were blocks and blocks of fruit trucks trying to enter the city through the port of Guangzhou. In addition, the market itself was also a mess because the volumes had exceeded sales opportunities in the city,” says Decofrut president.
The problem faced by exporters in the world’s second largest economy is not small, when you consider that is the main market for cherries. In fact, Asia accounts for about 60% of total shipments of the fruit.
Moreover, in recent years, exports of Chilean cherries to China had experienced a real boom: growth of 91%. Prices hit more than U.S. $ 40 FOB per box.
According to data from the Fruit Exporters Association (Asoex) in the 2010-2011 season a total of 7211 tons of cherries arrived in China , versus 3772 tons in 2009-2010.
Alcaino adds that part of the reason for the haste why this large amount was sent, was in response to the high expectations they had for exporters this year, based on the strong growth in previous years.
I'm Leslie and I connect entrepreneurs in Chile, China, California, and beyond — especially through translation, training, and trade. More about me.
