U.S. ports should receive normal shipments of Chilean fruit until the second week of March, but after that, the effects the earthquake could severely cut access to the off-season fruit.
The Chilean fresh fruit industry is beginning to measure the losses from the massive earthquake that hit the central and southern regions of the country’s fruit belt.
According to a March 3 report from the Santiago-based Chilean Exporters Association (ASOEX), while there was “important” damage to growing areas, packing sheds and cold storage facilities, the produce industry should bounce back relatively quickly.
“In general, there seems to be a consensus amongst the industry’s exporters and growers that the critical issues will be resolved within the next five working days, returning to relative normality,” the report said.
Table grapes, apples, pears and blueberries were the produce commodities most affected, according to the report.
As of March 3, Chile’s main port, Valparaiso, was operating at 90% capacity, according to ASOEX. The port of Coquimbo was at full capacity the port of San Antonio at 60% capacity. All five inspection sites for U.S.-bound fruit were up and running.
On March 3, Juan Pablo Vicuna, president of Santiago-based Dole Chile, reported transportation problems, with ports operating at just 50% capacity and transit from packing houses to ports taking as much as twice as long as normal.
And while grape supplies will not be significantly interrupted, they will be substantially lighter over the coming weeks, Vicuna said.
“We think that the earthquake will eat a big chunk of the usual Chilean grape peak,” he said.
Peter Kopke, president of William H. Kopke Jr. Inc., Lake Success, N.Y., said March 1 that his contacts in Chile say it is too early to determine the damage caused by the earthquake.
Fruit on the water will arrive in the U.S. for the next 10 days or so. After that, the picture is not clear, he said.
“If I was guessing, I would guess it would take them at least 10 days to resume some normal operations,” he said.
Cold storages have broken down, vineyards have suffered damaged and other infrastructure has been damaged. What’s more, it is not known what effect the disaster will have on the availability of workers.
The association said short-term supplies should not be affected.
“Although it’s too early to measure the likely mid-/long-term impact of the earthquake on fruit supplies for export, initial reports are encouraging," ASOEX chairman Ronald Bown said in a news release. “A number of the key packing facilities escaped with minimal damage and where roads and bridges are impassible, alternate routes are available.”
The association plans to post updates on its Web site, www.chileanfreshfruit.com.
“Because Chile has moved to the peak of the harvest season, a substantial volume of fruit is on the water headed for international ports,” Bown said in the release. “We do not anticipate major disruption in fruit supplies.”
Restoring supply chain logistics will be a challenge, Kopke said.
“There is going to be fruit, but it is a question of how much,” he said.
Kopke said that supply and demand will likely push the price of Chilean fruit higher.
Chilean grape volumes will be light and prices higher in the second half of March, and North American retailers could pull promotions planned for those weeks, said Mark Greenberg, senior vice president of procurement for Fisher Capespan Inc., St. Laurent, Quebec.
"It will be a real challenge to load significant volumes this week," Greenberg said March 1.
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Apples litter the ground in a Chilean orchard after the quake. |
In April, however, things should begin to return to some version of normalcy, he said.
"It's bad, but fruit growers will get themselves operational relatively quickly."
Greenberg said that in addition to grapes, late-season Chilean plum volumes will be very light.
In anticipation of delays in the Chilean grape deal, exporters and importers plan to push for an extension of the U.S. Department of Agriculture deadline for bringing product into the U.S., said Omar Abu-Ghazaleh, import manager for Pacific Trellis Fruit LLC, Reedley, Calif.
The current deadline is April 10, after which Chilean product must meet mandatory quality guidelines to be allowed in.
While he stressed it was too early to gauge the full extent of the damage, Abu-Ghazaleh said on March 1 that damage to grape vines, warehouses and piers at the Port of Valparaiso appeared to be minor.
The epicenter of the 8.8 magnitude earthquake, one of the biggest in recorded history, was 70 miles off the coast of the southern city of Concepcion and about 270 miles from Santiago, the association release said.
Reports of damage to roads, packing sheds, cold storage facilities and other infrastructure were being evaluated, the news release said. Reports on the status of the Port of Valparaiso varied.
The association said the port is “working to almost full capacity.” One vessel left the port Feb. 28 and other vessel was being loaded March 1. The port of San Antonio is under evaluation and the port of Coquimbo is working normally.
The berths that represent 90% of the port’s capacity, berths 1-3, were not damaged, according to a report from Delano, Calif.-based Pandol Bros.Inc.'s Santiago office, said John Pandol, director of special projects.
The report also said the road from Santiago to Valparaiso was not damaged.
Major road damage and collapsed bridges and overpasses were reported in other parts of the country, according to the Pandol report.
Another source said damage to infrastructure, including to the Port of Valparaiso, is severe.
“The port of Valparaiso, every time they look at it, it looks worse,” said Steve Davis, general manager of Sermaco Inc., Philadelphia. “It doesn’t look good.”
Sermaco is a data research company that analyzes fresh produce exports from Chile.
Even if the port remains operational, the roads are an issue, he said. The southern part of Chile, where apples are grown, appears particularly hard hit.
“One of my inspectors lives in the southern part of Chile, closer to the epicenter,” he said. “He said the roads are gone,” Davis said. “I asked, ‘What do you mean, they’re gone — they’re cracked?’
“‘No, they fell in the earth,’” he said.
While electricity was lost in much of the country, grapes in cold storage likely weren’t damaged, Pandol said.
The earthquake has or would likely delay picking for two to four days, Pandol said. That could affect volumes of U.S. arrivals in the second half of March, he said.
Pandol and Abu-Ghazaleh said the apple and kiwifruit industries in southern Chile would likely be more affected by the earthquake than the grape industry.
Cincinatti-based Chiquita Brands International Inc., which imports light volumes of grapes, apples, kiwifruit and avocados from Chile, reported no major field damage and expected no major effects on supplies, said Andrew Ciafardini, the company's assistant spokesman.
(Markets Editor Andy Nelson contributed to this article)