The international market for pears and apples is changing. The decrease in the consumption of fruit in Europe and the veto decreed by Putin on the West are changing the economies of large blocks and market flows.
Russia is a prime example of this. On Tuesday, the Russian government devalued the ruble by 5.4%, which has accumulated a depreciation of 52% since early August, when the trade war with the EU and its allies began. This scenario is generating widespread losses in the Russian economy and its effects are starting to be felt in the fruit sector.
Importers of Argentine fruits are unable to meet their commitments because of the deterioration suffered by the local currency in recent times. “They close their agreements with the exporters in dollars and receive rubles for their sales. It is not difficult to understand the crisis they are experiencing,” confided one of the market participants when asked about the issue.
This week a ship with 43 containers of more than 700 tons of apples and pears from the Rio Negro Valley and Neuquén was rejected in Vladivostok, a port city located in the Russian Far East Pacific. Argentina’s Chamber of Integrated Fruit Growers (CAFI) confirmed that the importer failed to pay the freight and port services and therefore the fruit had been rejected.
“The problems that lie ahead with Russia are very complex for the Valley,” said Marcelo Loyarte, manager of CAFI. The official said that the ruble’s devaluation “is hitting the regional fruit producing sector as the dollar is anchored at 8.5 pesos here and internal costs are growing.”
The high expectations about the Russian market are evaporating as the harvest in the southern hemisphere approaches and Putin’s economic problems deepen. Part of these problems are due to the drop in international oil prices. Russia, one of the largest exporters of oil in the world, depends on oil sales. Hence, the 35% fall in the price of a barrel of oil will significantly affect the country. The acceleration of the devaluation of the ruble looks to mitigate the negative effects of this economic scenario.
The Rio Negro Valley exports an average of 90,000 tons of pears and apples to this market per year. Exporters are very concerned as Argentina’s exportable supply loses competitiveness in a market that has already devalued its currency by more than 50% in just a couple of months. They wonder if Russian imports this season will ratify the historical purchase volumes and if prices will be good enough to cover the costs in the Argentine market.