Required Report - public distribution

**Date:** 10/5/2006

**GAIN Report Number:** CI6029

CI6029

**Chile**

**Canned Deciduous Fruit**

**Annual**

**2006**

**Approved by:**

![](media/image1.wmf)Joseph Lopez, Agricultural Attaché

Office of Agricultural Affairs

**Prepared by:**

Luis Hennicke, Agricultural Specialist

**Report Highlights:**

**Although it is early to predict next year's production, Chile's canned
peach production and exports in MY2006 are expected to increase due to
good weather conditions during the growing season.**

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Annual Report

Santiago \[CI1\]

\[CI\]

Table of Contents

[Executive Summary 3](#executive-summary)

[Production 3](#production)

[Consumption 4](#consumption)

[Trade 4](#trade)

[Stocks 5](#stocks)

[Policy 5](#policy)

[PSD Table 6](#psd-table)

[Export Trade Matrix 7](#export-trade-matrix)

# Executive Summary

The initial forecast for Chilean canned peach production and exports for
MY2006 (Jan-Dec 2006) shows an increase in production when compared to
last year, excellent weather conditions during the whole growing season
are expected to increase total output of peaches for canning.

# Production

Although it is still early for a good prediction, production forecasts
for MY2006 (Jan-Dec 2007) indicate a higher output than last year. As a
result of excellent weather and good temperatures during May-August a
higher than last year production is expected. Additionally, a larger
production is expected as a result of new plantings coming into
production.

As a result of good prices and a strong export demand, canned peach
production figures for MY2005 (Jan-Dec 2006) were revised upwards. A
larger percentage of fruit than previously predicted will be destined
for canning.

Peach production in Chile normally is delivered fresh to canneries
without any pre‑selection. A certain percentage of the fruit is rejected
immediately before being processed and destined mainly for pulp
production. The difference between the figure for production and
deliveries includes canning rejects, which are either processed as juice
or pulp, or totally discarded as waste. The pulp is used for a variety
of products, including jams and confectionary products and also
exported.

New planting figures published by the Ministry of Agriculture show that
total planted area to peach varieties expanded to over 7,200 hectares.
Approximately 2,500 hectares are planted north of Santiago in Region V
(San Felipe‑Los Andes). In the Santiago Metropolitan Region there are
1,422 hectares. The remainder is mostly planted south of Santiago in
Region VI (Rancagua). Some replanting with improved varieties also
continues to take place, which will result in a production expansion
during the next few years. Over 27 different peach varieties for canning
are planted in Chile. The most popular varieties that account for 75
percent of total planted area are Pomona, Andros, Fortuna and Phillip's
Cling. Other varieties like Doctor Davies, Everts and Loadel do not
exceed 6 percent each.

Peaches are canned only during the principal harvest season, which runs
from December through April. Some canneries, but not all, can process
other types of fruit (pears) or vegetables. Almost all canneries also
produce pulp and some produce juice.

Prices offered to farmers for peaches for canning fell again in 2005,
reflecting a large supply of fruit for canning.

  ------------ --------------------------- ------------------------------
  **Farm                                   
  Prices for                               
  Peaches for                              
  Canning                                  
  Purposes**                               

  Year         Chilean Pesos per MT        U.S. Dollars per MT

  2001         80,000                      143.00

  2002         85,000                      128.21

  2003         120,000                     174.17

  2004         150,000                     246.00

  2005         85,000                      146.00

  2006         95,000                      170.00

                                           

  Note:                                    
  Chile's 2005                             
  inflation                                
  rate was 3.7                             
  percent, up                              
  from 2.4                                 
  percent in                               
  2004.                                    
  ------------ --------------------------- ------------------------------

# Consumption

There are no official statistics on canned peach consumption, production
and ending stocks. These figures are derived from the only known data,
i.e., the export figures and limited information supplied by the canning
industry. As a result, consumption figures may vary from report to
report. In general, however, demand for canned peaches in Chile is
considered to be relatively stagnant. This is partly the result of
increased competition from alternative products, particularly ice cream
and yogurt. Small profit margins do not permit canneries to advertise
their products in the domestic market, because the potential advertising
benefits are not justified by the high cost.

# Trade

Due to strong demand for Chile's canned peaches mainly from Mexico,
total exports in MY2004 (Jan-Dec 2005) were larger than our previous
estimates. Although, exports during the first half of MY2005 (Jan-Jul,
2006) increased close to 40 percent when compared to the same period
last year, these are expected to have increased less than 10 percent
during the whole year. Exporters reportedly delivered their production
earlier this year as a result of the strong demand in the world market.
Industry sources indicated that a significant shortfall in world
production explains the increased demand for Chilean canned peaches. A
little over 90 percent of Chile's canned peaches are exported to Latin
American countries. Mexico has become by far the largest market for
Chilean canned peaches. The industry expects to keep their share of
exports to Latin American in the coming years, as a Mexican company
called La Costena bought 50 percent of Corpora, Chile's largest canned
peach producer, at the end of CY 2003 and they have particularly good
ties to Chile's principal export market. Additionally, Mexico has a high
import duty (23%) for Greek canned peaches, Chile's largest potential
competitor in that market.

Chile normally imports small amounts of canned peaches, which are mainly
destined to the Governments School Lunch programs. As a result of the
availability of low priced Argentinean product and a strong export
demand for Chilean canned peaches, imports increased significantly in
MY2004 (Jan-Dec 2005). Industry sources do not expect further increases
in imports in the coming years.

After several years of almost no canned peaches export to the United
States, deliveries began again in 2004. Exports of specialty products
like fruit cups, which mainly contain canned peaches (diced), have been
increasing. A shortfall in US production is expected to help sustain
continued exports to the United States.

Please note that the export figures in the trade matrix for 2006 only
cover January through July.

# Stocks

There are no official stock figures available. Normally, the canning
industry hesitates to specify stock size out of fear that large stocks
may reflect poor sales and management, or adversely affect future
prices.

# Policy

Chile has no production supports or subsidies for canned peaches.

<table style="width:100%;">
<colgroup>
<col style="width: 22%" />
<col style="width: 7%" />
<col style="width: 9%" />
<col style="width: 9%" />
<col style="width: 7%" />
<col style="width: 9%" />
<col style="width: 9%" />
<col style="width: 7%" />
<col style="width: 9%" />
<col style="width: 9%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="10"><h2 id="psd-table">PSD Table</h2></td>
</tr>
<tr class="even">
<td>Country</td>
<td colspan="9">Chile</td>
</tr>
<tr class="odd">
<td>Commodity</td>
<td colspan="6">Peaches, Canned</td>
<td colspan="3">(MT)(MT, Net Weight)</td>
</tr>
<tr class="even">
<td></td>
<td>2004</td>
<td>Revised</td>
<td></td>
<td>2005</td>
<td>Estimate</td>
<td></td>
<td>2006</td>
<td>Forecast</td>
<td></td>
</tr>
<tr class="odd">
<td></td>
<td>USDA<br />
Official</td>
<td>Post<br />
Estimate</td>
<td>Post<br />
Estimate<br />
New</td>
<td>USDA<br />
Official</td>
<td>Post<br />
Estimate</td>
<td>Post<br />
Estimate<br />
New</td>
<td>USDA<br />
Official</td>
<td>Post<br />
Estimate</td>
<td>Post<br />
Estimate<br />
New</td>
</tr>
<tr class="even">
<td>Market Year Begin</td>
<td></td>
<td>01/2005</td>
<td>01/2005</td>
<td></td>
<td>01/2006</td>
<td>01/2006</td>
<td></td>
<td>01/2007</td>
<td>01/2007</td>
</tr>
<tr class="odd">
<td>Deliv. To Processors</td>
<td>82000</td>
<td>82000</td>
<td>85000</td>
<td>79000</td>
<td>79000</td>
<td>93000</td>
<td>0</td>
<td>0</td>
<td>100000</td>
</tr>
<tr class="even">
<td>Beginning Stocks</td>
<td>1511</td>
<td>1511</td>
<td>1511</td>
<td>1911</td>
<td>1911</td>
<td>1179</td>
<td>1811</td>
<td>1811</td>
<td>804</td>
</tr>
<tr class="odd">
<td>Production</td>
<td>66200</td>
<td>66200</td>
<td>70000</td>
<td>64000</td>
<td>64000</td>
<td>75100</td>
<td>0</td>
<td>0</td>
<td>81600</td>
</tr>
<tr class="even">
<td>Imports</td>
<td>500</td>
<td>500</td>
<td>877</td>
<td>500</td>
<td>500</td>
<td>1125</td>
<td>0</td>
<td>0</td>
<td>500</td>
</tr>
<tr class="odd">
<td>Total Supply</td>
<td>68211</td>
<td>68211</td>
<td>72388</td>
<td>66411</td>
<td>66411</td>
<td>77404</td>
<td>1811</td>
<td>1811</td>
<td>82904</td>
</tr>
<tr class="even">
<td>Exports</td>
<td>53500</td>
<td>53500</td>
<td>59609</td>
<td>52000</td>
<td>52000</td>
<td>64900</td>
<td>0</td>
<td>0</td>
<td>70000</td>
</tr>
<tr class="odd">
<td>Domestic Consumption</td>
<td>12800</td>
<td>12800</td>
<td>11600</td>
<td>12600</td>
<td>12600</td>
<td>11700</td>
<td>0</td>
<td>0</td>
<td>11700</td>
</tr>
<tr class="even">
<td>Ending Stocks</td>
<td>1911</td>
<td>1911</td>
<td>1179</td>
<td>1811</td>
<td>1811</td>
<td>804</td>
<td>0</td>
<td>0</td>
<td>1204</td>
</tr>
<tr class="odd">
<td>Total Distribution</td>
<td>68211</td>
<td>68211</td>
<td>72388</td>
<td>66411</td>
<td>66411</td>
<td>77404</td>
<td>0</td>
<td>0</td>
<td>82904</td>
</tr>
</tbody>
</table>

+-------------------+-------------+---------------------+-------------+
| ## Ex             |             |                     |             |
| port Trade Matrix |             |                     |             |
+-------------------+-------------+---------------------+-------------+
| Country           | Chile       |                     |             |
+-------------------+-------------+---------------------+-------------+
| Commodity         | Peaches,    |                     |             |
|                   | Canned      |                     |             |
+-------------------+-------------+---------------------+-------------+
| Time Period       | Jan-Dec     | Units:              | M.T.        |
+-------------------+-------------+---------------------+-------------+
| Exports for:      | 2005        |                     | 2006        |
+-------------------+-------------+---------------------+-------------+
| U.S.              | 2347        | U.S.                | 3990        |
+-------------------+-------------+---------------------+-------------+
| Others            |             | Others              |             |
+-------------------+-------------+---------------------+-------------+
| Mexico            | 29433       | Mexico              | 15224       |
+-------------------+-------------+---------------------+-------------+
| Peru              | 8096        | Peru                | 2947        |
+-------------------+-------------+---------------------+-------------+
| Ecuador           | 5177        | Colombia            | 2279        |
+-------------------+-------------+---------------------+-------------+
| Colombia          | 5097        | Venezuela           | 1758        |
+-------------------+-------------+---------------------+-------------+
| Venezuela         | 2634        | Ecuador             | 1728        |
+-------------------+-------------+---------------------+-------------+
| Philippines       | 1405        | Thailand            | 1106        |
+-------------------+-------------+---------------------+-------------+
| Thailand          | 1204        | Germany             | 697         |
+-------------------+-------------+---------------------+-------------+
| Guatemala         | 799         | Netherlands         | 471         |
+-------------------+-------------+---------------------+-------------+
| Bolivia           | 785         | Guatemala           | 440         |
+-------------------+-------------+---------------------+-------------+
| Belgium           | 734         | El Salvador         | 419         |
+-------------------+-------------+---------------------+-------------+
| Total for Others  | 55364       |                     | 27069       |
+-------------------+-------------+---------------------+-------------+
| Others not Listed | 1898        |                     | 1362        |
+-------------------+-------------+---------------------+-------------+
| Grand Total       | 59609       |                     | 32421       |
+-------------------+-------------+---------------------+-------------+
|                   |             |                     |             |
+-------------------+-------------+---------------------+-------------+
| **Note**: Trade   |             |                     |             |
| data for CY2006   |             |                     |             |
| covers January    |             |                     |             |
| through July      |             |                     |             |
| only.             |             |                     |             |
+-------------------+-------------+---------------------+-------------+
|                   |             |                     |             |
+-------------------+-------------+---------------------+-------------+