Dollar's decline hinders some Brazilian exports
Dollar's decline hinders some Brazilian exports
For the past decade, Brazil has made a concerted effort to increase its exports, with the United States set as one of its prime targets.
And while the decline in the value of the U.S. dollar and the United States' restrictive import requirements often hamper Brazilian exporters, great inroads have been made into cultivating the U.S. market.
One of the success stories is the fruit sector, but the Brazilian government has a multi-pronged attack partnering with many different industries to increase exports. And individual exporters have also taken up the call scoring a number of successes, including the remarkable achievement of exporting tons of yams to New York City on a regular basis.
Mauricio Borges, director of ApexBrasil, which is the Brazilian government's trade and investment promotion agency, recently met with The Produce News in Brazil and discussed that South American country's agricultural export plan.
He said that the program was started in 1998 and is similar to the U.S. government's trade promotion program, as ApexBrasil partners with private industry on a 50-50 basis. Apex works with many different industries concentrating on helping small and medium-sized companies.
Mr. Borges said that Apex initially targeted the United States and Europe, but it has since branched out and identified 20 countries where it believes it has an opportunity to increase exports of Brazilian products. This included countries with diverse demographics, such as Vietnam.
Apex offers promotional dollars and technical assistance as these various industries try to overcome both tariff and non-tariff trade barriers. One of its more recent efforts involved the acai berry, which has been called a "super food" by nutritionists all over the world. And Mr. Borges believes that Brazil has an opportunity to increase its exports of movies, music, engineering technology, bottled water (the world's largest water supply) and jewelry. And of course, lots and lots of fruit.
One of the more successful efforts is something Mr. Borges called "Project Brazilian Fruit." When it was launched in 1998, it consisted of four fresh fruit varieties, but it now encompasses more than 20 fresh and processed fruits.
Brazil has a great fruit story to tell, as it is the top-producing country for oranges and papayas; ranks second in bananas; third in pineapples; and is a substantial producer of limes, apples, tangerines and grapes. It is also the world's second-leading producer of processed orange juice.
Since 1998, the country's fresh fruit exports have increased in value more than five times, from $120 million to $642 million. Processed fruit has an even better story to tell, as it accounted for a trade surplus of $12.5 billion for Brazil in 2007. Even with this significant growth, Mr. Borges said that Brazil has the potential to double fruit exports within one year.
For the fruit project, Apex works with the Brazilian Fruit Institute, a private, non-profit organization founded in 1990 by growers and shippers, which goes by the acronym IBRAF. Currently it has about 100 members who pay dues and collectively promote their crops.
For the United States, the best fresh fruit opportunities appear to be mangos and grapes. Papayas, guavas and figs also are exported to the United States. Brazil cannot yet ship fresh citrus to the United States, but it is working with U.S. government agencies to create some type of shipping protocol. Mangos and papayas must be treated before being shipped to the United States, which tends to limit their volume. Along with grapes, they all have relatively short windows of opportunity because of competing product from Central America and Mexico.
Valeska Oliveira, director of IBRAF, said that Brazilian fruit growers have promoted their crops in the United States by attending or exhibiting at the Produce Marketing Association convention several times over the past decade. IBRAF typically promotes at a handful of international shows each year. This year, partly because of the dollar's decline, it exhibited at other shows such as Fruit Logistica in Berlin, Germany, and is scheduled for participation in a trade show this fall in Dubai.
While there are still quite a few exporters willing to cultivate the U.S. marketplace, other Brazilian firms have concentrated on Europe, where the restrictions are less stringent. For example, Brazilian mangos can be shipped to the United States only after completing a hot-water treatment that lasts for 75-90 minutes. A Brazilian packer then must subject the heated mangos to a 30-minute waiting period before they can be exposed to cold temperatures to get the core of the fruit down to a less damaging level. The fruit is then held for 12 hours at 22 degrees C before it is packed to allow any problems to surface.
Of course, this procedure can compromise the flavor and texture of the fruit. No such procedure needs to be followed for shipments to Europe, which means the cost is less and the quality of the fruit is better.
And to top it off, the strength of the euro results in a higher return. It is a challenge at times to ship to the United States. But Guilherme Dantas, who is involved in U.S. sales of fruit for Copa Fruit (formerly FruitForte) in Petrolina, Brazil, said that the United States is an important part of the firm's export program. In fact, he will spend three months in Philadelphia working with U.S. customers and checking the arrival of each load of mangos and grapes.
Mr. Dantas said that it is the declining value of the U.S. dollar rather than the hot water treatment that has Brazilian exporters more concerned. Last year, one U.S. dollar was worth three Brazilian reais; this year that same dollar is worth only about 1.7 reais.
What that means is that if the market is $10 for a carton of fruit, a Brazilian exporter will receive only 17 reais this year compared to the 30 he would have received last year.
But Mr. Dantas indicated that Copa Fruit is in business for the long run and is choosing to continue to service its U.S. customers even if it is not that profitable in the short run.
He noted, however, that the grape market is stronger and typically more profitable than mangos. The United Kingdom is "the best market in the world for Brazilian grapes," but everybody cannot sell all their production there or the market would quickly collapse.
Hence, Copa Fruit concentrates on other markets, such as the United States. He said that the best varieties for sale into the U.S. market in the fall marketing period are Crimson, Festival and Thompson - all seedless varieties.
During a recent tour of Brazil for agriculture journalists, numerous exporters showed off their thoroughly modern and technologically advanced mango and grape harvesting, packing and shipping operations. The exporters said that they will continue to service the U.S. market and hope that the dollar regains some of its strength. But most indicated that further erosion would deeply cut into exports.
One such exporter is Indaia Exotic, located in Valinhos in the state of Sao Paulo, north of Brazil's most populated city of the same name. Export Manager Claudio Celso Plovesan said that the 25-year-old company participates almost exclusively in the export market, selling very little domestically. The company has many fruit items such as mangos, limes, persimmons, figs and guavas. It exports many of these items to Canada and Europe, with smaller volumes going to the United States, which restricts the importation of some fruits.
But Indaia is also doing a remarkable job of exporting some root crops to the United States, including ginger (it had a great year last year because of phytosanitary problems experienced by Chinese producers) and yams.
Indaia Exotic exports one container a week of a specialty yam to a company located in Queens, NY, which then sells the product to its customers, most of which serve local communities of transplants from India.
"They do an amazing amount of business," said Mr. Plovesan of his Queens customer. In fact, he was leaving for the United States a couple of days later to greet his latest air shipment of very high-priced yams.
He said that skyrocketing transportation costs to ship from Brazil to the United States results far exceed the cost of the product itself on a regular basis. Often, the product comes by ship, but this particular load was coming by air at a cost of about $41 per carton in freight.
"I want to meet this load because I can't afford to lose even one carton," he said.
Brazil to the United States may not be the most direct route for any product, especially yams, but the success of that one particular shipper with that one particular product is a good illustration of the increasingly global nature of the fresh produce industry.
And while the decline in the value of the U.S. dollar and the United States' restrictive import requirements often hamper Brazilian exporters, great inroads have been made into cultivating the U.S. market.
One of the success stories is the fruit sector, but the Brazilian government has a multi-pronged attack partnering with many different industries to increase exports. And individual exporters have also taken up the call scoring a number of successes, including the remarkable achievement of exporting tons of yams to New York City on a regular basis.
Mauricio Borges, director of ApexBrasil, which is the Brazilian government's trade and investment promotion agency, recently met with The Produce News in Brazil and discussed that South American country's agricultural export plan.
He said that the program was started in 1998 and is similar to the U.S. government's trade promotion program, as ApexBrasil partners with private industry on a 50-50 basis. Apex works with many different industries concentrating on helping small and medium-sized companies.
Mr. Borges said that Apex initially targeted the United States and Europe, but it has since branched out and identified 20 countries where it believes it has an opportunity to increase exports of Brazilian products. This included countries with diverse demographics, such as Vietnam.
Apex offers promotional dollars and technical assistance as these various industries try to overcome both tariff and non-tariff trade barriers. One of its more recent efforts involved the acai berry, which has been called a "super food" by nutritionists all over the world. And Mr. Borges believes that Brazil has an opportunity to increase its exports of movies, music, engineering technology, bottled water (the world's largest water supply) and jewelry. And of course, lots and lots of fruit.
One of the more successful efforts is something Mr. Borges called "Project Brazilian Fruit." When it was launched in 1998, it consisted of four fresh fruit varieties, but it now encompasses more than 20 fresh and processed fruits.
Brazil has a great fruit story to tell, as it is the top-producing country for oranges and papayas; ranks second in bananas; third in pineapples; and is a substantial producer of limes, apples, tangerines and grapes. It is also the world's second-leading producer of processed orange juice.
Since 1998, the country's fresh fruit exports have increased in value more than five times, from $120 million to $642 million. Processed fruit has an even better story to tell, as it accounted for a trade surplus of $12.5 billion for Brazil in 2007. Even with this significant growth, Mr. Borges said that Brazil has the potential to double fruit exports within one year.
For the fruit project, Apex works with the Brazilian Fruit Institute, a private, non-profit organization founded in 1990 by growers and shippers, which goes by the acronym IBRAF. Currently it has about 100 members who pay dues and collectively promote their crops.
For the United States, the best fresh fruit opportunities appear to be mangos and grapes. Papayas, guavas and figs also are exported to the United States. Brazil cannot yet ship fresh citrus to the United States, but it is working with U.S. government agencies to create some type of shipping protocol. Mangos and papayas must be treated before being shipped to the United States, which tends to limit their volume. Along with grapes, they all have relatively short windows of opportunity because of competing product from Central America and Mexico.
Valeska Oliveira, director of IBRAF, said that Brazilian fruit growers have promoted their crops in the United States by attending or exhibiting at the Produce Marketing Association convention several times over the past decade. IBRAF typically promotes at a handful of international shows each year. This year, partly because of the dollar's decline, it exhibited at other shows such as Fruit Logistica in Berlin, Germany, and is scheduled for participation in a trade show this fall in Dubai.
While there are still quite a few exporters willing to cultivate the U.S. marketplace, other Brazilian firms have concentrated on Europe, where the restrictions are less stringent. For example, Brazilian mangos can be shipped to the United States only after completing a hot-water treatment that lasts for 75-90 minutes. A Brazilian packer then must subject the heated mangos to a 30-minute waiting period before they can be exposed to cold temperatures to get the core of the fruit down to a less damaging level. The fruit is then held for 12 hours at 22 degrees C before it is packed to allow any problems to surface.
Of course, this procedure can compromise the flavor and texture of the fruit. No such procedure needs to be followed for shipments to Europe, which means the cost is less and the quality of the fruit is better.
And to top it off, the strength of the euro results in a higher return. It is a challenge at times to ship to the United States. But Guilherme Dantas, who is involved in U.S. sales of fruit for Copa Fruit (formerly FruitForte) in Petrolina, Brazil, said that the United States is an important part of the firm's export program. In fact, he will spend three months in Philadelphia working with U.S. customers and checking the arrival of each load of mangos and grapes.
Mr. Dantas said that it is the declining value of the U.S. dollar rather than the hot water treatment that has Brazilian exporters more concerned. Last year, one U.S. dollar was worth three Brazilian reais; this year that same dollar is worth only about 1.7 reais.
What that means is that if the market is $10 for a carton of fruit, a Brazilian exporter will receive only 17 reais this year compared to the 30 he would have received last year.
But Mr. Dantas indicated that Copa Fruit is in business for the long run and is choosing to continue to service its U.S. customers even if it is not that profitable in the short run.
He noted, however, that the grape market is stronger and typically more profitable than mangos. The United Kingdom is "the best market in the world for Brazilian grapes," but everybody cannot sell all their production there or the market would quickly collapse.
Hence, Copa Fruit concentrates on other markets, such as the United States. He said that the best varieties for sale into the U.S. market in the fall marketing period are Crimson, Festival and Thompson - all seedless varieties.
During a recent tour of Brazil for agriculture journalists, numerous exporters showed off their thoroughly modern and technologically advanced mango and grape harvesting, packing and shipping operations. The exporters said that they will continue to service the U.S. market and hope that the dollar regains some of its strength. But most indicated that further erosion would deeply cut into exports.
One such exporter is Indaia Exotic, located in Valinhos in the state of Sao Paulo, north of Brazil's most populated city of the same name. Export Manager Claudio Celso Plovesan said that the 25-year-old company participates almost exclusively in the export market, selling very little domestically. The company has many fruit items such as mangos, limes, persimmons, figs and guavas. It exports many of these items to Canada and Europe, with smaller volumes going to the United States, which restricts the importation of some fruits.
But Indaia is also doing a remarkable job of exporting some root crops to the United States, including ginger (it had a great year last year because of phytosanitary problems experienced by Chinese producers) and yams.
Indaia Exotic exports one container a week of a specialty yam to a company located in Queens, NY, which then sells the product to its customers, most of which serve local communities of transplants from India.
"They do an amazing amount of business," said Mr. Plovesan of his Queens customer. In fact, he was leaving for the United States a couple of days later to greet his latest air shipment of very high-priced yams.
He said that skyrocketing transportation costs to ship from Brazil to the United States results far exceed the cost of the product itself on a regular basis. Often, the product comes by ship, but this particular load was coming by air at a cost of about $41 per carton in freight.
"I want to meet this load because I can't afford to lose even one carton," he said.
Brazil to the United States may not be the most direct route for any product, especially yams, but the success of that one particular shipper with that one particular product is a good illustration of the increasingly global nature of the fresh produce industry.
