Voluntary Report - public distribution

**Date:** 11/20/2006

**GAIN Report Number:** AR6041

**Argentina**

**Blueberries**

**Voluntary**

**2006**

**Approved by:**

![](media/image1.wmf)Bob Hoff

U.S. Embassy

**Prepared by:**

David Gallagher

**Report Highlights:**

Argentine blueberry production has grown remarkably since the first
cultivation in 1996. Production has grown by over 70% per year over the
last five years. Total output in 2005 was 3,000 tons. Exports were 2,700
tons, valued at US\$25 million. Growth is predicted to continue at an
advanced rate for the next five years and production in 2006 should
reach 4,500 tons. Exports for 2006 are forecast at 4,000 tons.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Buenos Aires \[AR1\]

\[AR\]

Table of Contents

[Executive Summary 3](#executive-summary)

[Production 3](#production)

[Domestic Consumption 4](#domestic-consumption)

[Trade 4](#trade)

[Factors Affecting Industry Structure
6](#factors-affecting-industry-structure)

[Import and Export Regulations 8](#import-and-export-regulations)

# Executive Summary

Argentine blueberry production has taken advantage of its
counter-seasonal harvest and an abundance of demand during the Northern
Hemisphere's winter to grow into a US\$25 million export industry. In
2005, Argentina harvested 3,000 tons of blueberries, at a growth rate of
75 percent, and exported 2,700 tons. Production in the short-term is
forecast to continue growing through at least 2011, when all 3,400
hectares planted today should be bearing their maximum potential.
International prices should decline steadily during this period,
reaching equilibrium between Northern Hemisphere demand and world supply
between 2008 and 2010. Factors that may contribute to further growth
would be development of the domestic market and procurement of more
controlled atmosphere containers, which would allow for cheaper maritime
shipment during times of lower prices.

# Production

Argentine blueberry production has grown remarkably in the last five
years, from 320 tons in 2001 to 1,700 and 3,000 tons respectively in
2004 and 2005. This growth in production has been fueled by a strong
demand which has led to a boom in hectares planted, from 400 in 2001 to
2,500 in 2005. According to industry sources, for the 2006 season
Argentina has 3400 planted hectares, 40 percent of which will bear
fruit. In 2005, Argentina exported over US\$25 million in blueberries
and is predicted to export US\$40 million in 2006. While blueberries are
recent to Argentine agriculture, in Argentina today, blueberry
production is very sophisticated, using domestically propagated plants,
drip-irrigation, anti-hail and anti-wind measures, and modern packing
facilities. Growers are staying abreast of changes in technology via
attendance of international seminars and through the sharing of
information.

+--------------+-----------+-----------+------------+----------------+
| ###### Tab   |           |           |            |                |
| le 1. Argent |           |           |            |                |
| ine Blueberr |           |           |            |                |
| y Production |           |           |            |                |
+--------------+-----------+-----------+------------+----------------+
| **Year**     | **H       | **Change  | **Tons**   | **Change (%)** |
|              | ectares** | (%)**     |            |                |
+--------------+-----------+-----------+------------+----------------+
| **2006       | 3,400     | 36        | 4,500      | 67             |
| (Forecast)** |           |           |            |                |
+--------------+-----------+-----------+------------+----------------+
| **2005**     | 2,500     | 56        | 3,000      | 75             |
+--------------+-----------+-----------+------------+----------------+
| **2004**     | 1,600     | 45        | 1,700      | 98             |
+--------------+-----------+-----------+------------+----------------+
| **2003**     | 1,100     | 57        | 860        | 47             |
+--------------+-----------+-----------+------------+----------------+
| **2002**     | 700       | 75        | 580        | 83             |
+--------------+-----------+-----------+------------+----------------+
| **2001**     | 400       | \-        | 320        | 59             |
+--------------+-----------+-----------+------------+----------------+

Source: Secretariat of Agriculture, Livestock, Fisheries and Foods
(SAGPyA)

The conditions in the valleys of Argentina are ideal for cultivation and
very similar to those in the United States; acidic, well-drained soil
and irrigation water ranging from neutral to slightly acidic. The first
Argentine blueberry farms were planted in the Entre Rios and Buenos
Aires provinces ten years ago; today each has 1,500 planted hectares.
The Entre Rios province has a sub-tropical climate and sandy soils, and
Buenos Aires has a temperate climate with heavy soils. Recently, the
province of Tucuman has been planted heavily, owing to its tropical
climate and the possibility of harvesting blueberries in late September
and early October when world demand is much greater than supply. An
estimated 400 hectares are planted in Tucuman, with another 600 to be
planted in the next two years. Expectations are that blueberry planting
in Argentina will slow to 800 hectares this coming year, and 400 the
next, until arriving at a final total of approximately 5,000 hectares.
At present, the 3,400 hectares planted are bearing an average of 1.5
tons each, with an average potential of seven tons per hectare, and the
possibility of yields as high as 10 to 13 tons per hectare in Tucuman
and Buenos Aires.

# Domestic Consumption

The domestic market for blueberry consumption in Argentina is growing
rapidly, but is currently very limited. Berries available in Argentina
come from the small portion of the harvest (about 10 percent of total
production) that is considered unsuitable for export. This fraction is
made up of small or imperfect berries, which are either sold fresh or
used for industrial products such as jams, jellies, candies, and juice.
However, it is not widely known that locally sold blueberries are an
inferior product, so substandard fruit quality is not a variable in
determining limited domestic demand. What does constrain demand is the
relative newness of blueberries to Argentina, which are not indigenous
and are considered to be a novelty. Additionally, a general Argentine
impression of blueberries as bitter compared to other fruits and a lack
of public awareness of the health benefits of blueberries have also
hindered growth of the domestic market. Blueberries are a great source
of antioxidants, protect against macular degeneration, and reduce the
effects of oxidative stress on the brain. Industry sources indicate the
presence of at least one independent group that aims to increase public
awareness through a public information campaign, but this group is not
well funded. To date there has still been no widespread effort to market
blueberries in Argentina and they overwhelmingly remain an export crop.
The most promising progress has been in blueberry juice, which is either
consumed alone or in cocktails. However, only 300 liters are produced
monthly and all other industrial production has been likewise limited.

## 

# Trade

Blueberries are a very profitable export crop for Argentina, with 90
percent of production shipped abroad, valued at over US\$25 million in
2005. The U.S. imports two-thirds of total volume and value, having
imported 1,892 tons, worth US\$19 million, in 2005. Most remaining
exports go to the European Union, Switzerland, and Japan, with the
United Kingdom importing 5,207 tons, the Netherlands 2,045 tons and
Japan 522 tons.

+--------------+--------------+-----------------+---------------------+
| ######       |              |                 |                     |
| Table 2. Arg |              |                 |                     |
| entine Blueb |              |                 |                     |
| erry Exports |              |                 |                     |
+--------------+--------------+-----------------+---------------------+
| **Year**     | **Tons**     | **US\$          | **US\$ per          |
|              |              | million**       | Kilogram**          |
+--------------+--------------+-----------------+---------------------+
| **2006       | 4,000        | 40.0            | 10.0                |
| (Forecast)** |              |                 |                     |
+--------------+--------------+-----------------+---------------------+
| **2005**     | 2,699        | 28.3            | 10.5                |
+--------------+--------------+-----------------+---------------------+
| **2004**     | 1,547        | 16.2            | 10.4                |
+--------------+--------------+-----------------+---------------------+
| **2003**     | 783          | 7.0             | 9.0                 |
+--------------+--------------+-----------------+---------------------+
| **2002**     | 533          | 5.8             | 10.8                |
+--------------+--------------+-----------------+---------------------+
| **2001**     | 291          | 3.8             | 13.1                |
+--------------+--------------+-----------------+---------------------+

Source: National Institute of Statistics and Censuses (INDEC)

+-----+------+------+-------+-------+-------+--------+------+--------+
| #   |      |      |       |       |       |        |      |        |
| ### |      |      |       |       |       |        |      |        |
| ##  |      |      |       |       |       |        |      |        |
| Tab |      |      |       |       |       |        |      |        |
| le  |      |      |       |       |       |        |      |        |
| 3.  |      |      |       |       |       |        |      |        |
| Arg |      |      |       |       |       |        |      |        |
| ent |      |      |       |       |       |        |      |        |
| ine |      |      |       |       |       |        |      |        |
|  Bl |      |      |       |       |       |        |      |        |
| ueb |      |      |       |       |       |        |      |        |
| err |      |      |       |       |       |        |      |        |
| y E |      |      |       |       |       |        |      |        |
| xpo |      |      |       |       |       |        |      |        |
| rts |      |      |       |       |       |        |      |        |
|  by |      |      |       |       |       |        |      |        |
|  De |      |      |       |       |       |        |      |        |
| sti |      |      |       |       |       |        |      |        |
| nat |      |      |       |       |       |        |      |        |
| ion |      |      |       |       |       |        |      |        |
+-----+------+------+-------+-------+-------+--------+------+--------+
| #   | **Un |      | **Can |       | **E.  |        | *    |        |
|  Ye | ited |      | ada** |       | U.    |        | *Jap |        |
| ar  | Stat |      |       |       | and   |        | an** |        |
| {#y | es** |      |       |       | Swi   |        |      |        |
| ear |      |      |       |       | tzerl |        |      |        |
| -1} |      |      |       |       | and** |        |      |        |
+-----+------+------+-------+-------+-------+--------+------+--------+
|     | **To | **%  | #     | **%   | **T   | **% Of | **To | **% Of |
|     | ns** | Of   |  Tons | Of    | ons** | T      | ns** | T      |
|     |      | Tot  |       | To    |       | otal** |      | otal** |
|     |      | al** |       | tal** |       |        |      |        |
+-----+------+------+-------+-------+-------+--------+------+--------+
| **  | 1    | 68   | 13.8  | .5    | 820   | 30     | 32.4 | 1.2    |
| 200 | ,853 |      |       |       |       |        |      |        |
| 5** |      |      |       |       |       |        |      |        |
+-----+------+------+-------+-------+-------+--------+------+--------+
| **  | 1    | 67   | 16.7  | 1.1   | 479   | 31     | 21.5 | 1.4    |
| 200 | ,048 |      |       |       |       |        |      |        |
| 4** |      |      |       |       |       |        |      |        |
+-----+------+------+-------+-------+-------+--------+------+--------+
| **  | 535  | 68   | 14.4  | 1.9   | 236   | 30     | 3.7  | .5     |
| 200 |      |      |       |       |       |        |      |        |
| 3** |      |      |       |       |       |        |      |        |
+-----+------+------+-------+-------+-------+--------+------+--------+
| **  | 392  | 73   | .225  | .1    | 140   | 26     | .507 | .1     |
| 200 |      |      |       |       |       |        |      |        |
| 2** |      |      |       |       |       |        |      |        |
+-----+------+------+-------+-------+-------+--------+------+--------+
| **  | 217  | 74   | 2.3   | .8    | 71    | 25     | .016 | .005   |
| 200 |      |      |       |       |       |        |      |        |
| 1** |      |      |       |       |       |        |      |        |
+-----+------+------+-------+-------+-------+--------+------+--------+

Source: INDEC

Ninety-eight percent of world blueberry production occurs between early
May and November, mostly in the United States and Canada. Argentina,
Chile, South Africa and New Zealand have taken advantage of their
Southern Hemisphere counter-seasonal growing periods to deliver
blueberries during the Northern Hemisphere's winter, when demand is much
greater than supply. A growing public awareness of the health benefits
of blueberries in North America, Europe, and Japan has caused this
demand to grow by as much as 30 percent per year, with an average growth
of around 5 percent. The United Kingdom market has been a particular
source of growing demand, more than doubling each of the last two years.
As such, despite a boom in Southern Hemisphere blueberry production,
demand is still much larger than supply during the months of October,
November, March and April.

  ------------- -------- ----------- ------------ ----------- ----------- ------------- ------------
  Table 4.                                                                              
  Argentine                                                                             
  Blueberry                                                                             
  Exports to                                                                            
  the E.U. and                                                                          
  Switzerland                                                                           
  by Country                                                                            
  (Tons)                                                                                

  **Year**      **UK**   **Neth.**   **France**   **Italy**   **Spain**   **Germany**   **Switz.**

  **2005**      461      219         55           50          24          9.2           0.7

  **2004**      206      128         48           33          24          36            3.3

  **2003**      82       90          30           10          12          6.9           3.8

  **2002**      55       17          18           27          15          6.3           1.7

  **2001**      35       10          7            2           5           8.6           2.3
  ------------- -------- ----------- ------------ ----------- ----------- ------------- ------------

Source: INDEC

In Latin America, Chile has been exporting blueberries since 1988, ten
years before the first Argentine exports were made. Chilean production
has been growing at 17 percent per year and is larger than Argentina's
by a factor of six, at 15,147 tons last year. Although the geographical
proximity of Argentina and Chile to the U.S. market would indicate that
they are close competitors, in reality their harvest periods complement
each other, and many Chilean blueberry growers have planted in Argentina
to take advantage of its earlier harvest. A large majority (97 percent)
of Argentine blueberries are harvested between September and December,
while 81 percent of Chilean blueberries are harvested between December
and January. Only in December are the two in competition. However, the
harvesting of Argentine blueberries will be concentrated more in October
by 2011, when recent plantations in Tucuman, which are harvested in late
September and October, mature to reach their maximum potential yield. At
present, the very earliest harvest of Argentine blueberries in September
is a full three weeks before berries are harvested in Chile, allowing
early exporters to command prices as high as US\$32 per kilogram (kg),
as opposed to a return of US\$5 per kg in December. By harvesting
earlier and taking advantage of limited demand during the U.S.
Thanksgiving season, Argentina should be able to avoid the problem of
low prices which Chile has suffered due to high production in January
and February; Chilean exporters have received prices as low as US\$1 per
kg, equivalent to those during the peak of the Northern Hemisphere's
harvest.

Domestic experts have confided that they would recommend to potential
planters against further blueberry planting in Argentina, as production
in the Southern Hemisphere will grow so much in the next few years that
equilibrium between world supply and demand should be reached between
2008 and 2010. In 2005 and 2006, several joint seminars were conducted
between Chile and Argentina to foster a spirit of cooperation, and to
ensure that overproduction does not glut the Northern Hemisphere's
market.

![](media/image2.wmf)

Source: FAS based on private industry contacts

![](media/image3.wmf)

Source: FAS based on private industry contacts

The USDA's Animal and Plant Health Inspection Service (APHIS) has
determined that Argentine blueberry plantations north of Patagonia are
hosts for the Mediterranean fruit fly. As such, blueberry producers
wishing to export to the U.S. are required to treat their blueberries by
either fumigation with methyl bromide or by cold treatment (maintaining
the fruit at 35 degrees Fahrenheit for a period of 15 to 17 days). Since
getting blueberries quickly to market in order to receive the best price
and to offer the best fruit quality is very important, 90 percent of
exports are treated with methyl bromide and sent by airplane. Shipment
by air has been successful to date, but contains a degree of risk, as
exporters are required to search for available space on passenger and
cargo airplanes returning to the Northern Hemisphere. In the near
future, Argentina blueberry production may outgrow this supply of
available space and alternative modes of transportation may need to be
explored. One viable option is maritime shipment. Today, 10 percent of
blueberry exports are shipped by sea during times of low prices, mostly
to the Netherlands. Further exports by sea are being looked into as a
future possibility as prices drop due to increased supply, but the short
shelf-life of fresh blueberries and a shortage of controlled atmosphere
containers may limit the usage of this option.

# Factors Affecting Industry Structure

Argentine production by 2011 could possibly reach as high as 24,000 tons
if the 3,400 hectares planted today yielded an average of seven tons
each. It is estimated that 800 hectares will be planted in 2006 and 400
more in 2007. After 2007 total planted area could stabilize at 5,000
hectares, bearing a potential annual harvest of 35,000 tons. If indeed
such volumes were reached, Argentina would likely face bottlenecks with
shortages in chambers for rapid chilling and available airplane space.
These bottlenecks could be avoided by developing the domestic market and
utilizing more maritime transportation. The option of treating
blueberries for fruit flies by cold storage while in transit also makes
shipping by sea a viable and cheap option during times of low prices,
but more controlled atmosphere containers will need to be acquired
before increased maritime transportation becomes a possibility.

Blueberry production tends to be atomized, with many producers owning
small farms of five to twenty-five hectares. Blueberry exportation,
though, is concentrated, due to the need to locate available airplane
space at a moment's notice, and the logistical concerns of transporting
large quantities of highly perishable blueberries. At present there are
16 blueberry exporters in Argentina; the leading three are responsible
for 60 percent of exports, and the top six are responsible for 80
percent. Only 10 percent of producers are exporters, but many are aware
that expanding into exportation on their own would greatly increase
their net profits, especially as FOB prices drop below US\$10 per kg in
the future.

Entry into the blueberry industry is expensive, with an average cost of
US\$40,000 per hectare for initial planting, and an estimated US\$10,000
per year for upkeep and harvesting. Additionally, most regions report
that plants do not bear suitable fruit or returns until the third year.
However, the opportunity for large profits rewards those who are willing
to take the risk. The average yield per hectare can vary from five to
thirteen tons, and at an average price of US\$10.50 per kg FOB,
producers selling under consignment show annual net margins of around
US\$30,000 per hectare. Blueberry plantations typically become
profitable between their fourth and fifth years. Plants are estimated to
be harvestable for an average of 20 years; thus, opportunities abound
for large long-term returns. Some of the initial enthusiasm for
blueberries as a "retirement" crop has waned as prices slowly decline,
but efficient producers in the industry continue to show high profits.
There has been a definite learning curve among producers; some have even
stated plans to replant those hectares first planted, as they have had
much greater success with subsequently planted hectares after gaining
experience.

While some blueberry farms maintain close ties with American
universities that have done research on blueberry plant propagation,
plants themselves are no longer imported from the U.S. due to
phytosanitary restrictions. The Argentine National Service of
Agricultural Food Safety and Quality (SENASA) has quarantined all
blueberry plant imports due to fungus. As a result, in Argentina today,
blueberry propagation has become self-reliant and very sophisticated.
Ten nurseries are involved and they utilize the most recent technology.
Most varieties propagated are Southern Highbrush, and the most common of
these are Misty, O'Neal, Revielle y Blue Cuinex. Misty, in particular,
has received much praise from local farmers for its early harvest, high
tolerance of cold temperatures, and its large and sweet blueberries.
Argentina continues to research and improve upon its varieties in order
to develop plants with a guaranteed quality level. Researchers aim to
earn Argentina an international reputation for the quality of its
blueberries and also strive to improve its ability to harvest in
October.

# Import and Export Regulations

+----------------------------------------------------------+-----------+
| ###### Table 5. Export and Import Regulations            |           |
+----------------------------------------------------------+-----------+
| For countries outside MERCOSUR area                      |           |
+----------------------------------------------------------+-----------+
| Import Tariff                                            | 10.00     |
+----------------------------------------------------------+-----------+
| Statistical Tax                                          | 0.50      |
+----------------------------------------------------------+-----------+
| Export Tax                                               | 10.00     |
+----------------------------------------------------------+-----------+
| Rebate for cases containing 2.5 Kg. or less              | 6.00      |
+----------------------------------------------------------+-----------+
| Rebate for cases containing 2.5 -- 20 Kg.                | 4.05      |
+----------------------------------------------------------+-----------+
| Rebate for cases containing more than 20 Kg.             | 2.70      |
+----------------------------------------------------------+-----------+
| For countries within MERCOSUR area                       |           |
+----------------------------------------------------------+-----------+
| Import Tariff                                            | 0.00      |
+----------------------------------------------------------+-----------+
| Export Tax                                               | 10.00     |
+----------------------------------------------------------+-----------+
| Rebate for cases containing 2.5 Kg. or less              | 6.00      |
+----------------------------------------------------------+-----------+
| Rebate for cases containing 2.5 -- 20 Kg.                | 4.05      |
+----------------------------------------------------------+-----------+
| Rebate for cases containing more than 20 Kg.             | 2.70      |
+----------------------------------------------------------+-----------+

Source: www.tarifar.com