As we gather the best and brightest from across the globe to address the industry — whether in the pages of PRODUCE BUSINESS magazine, online in our portals such at FreshFruitPortal.com, ChinaFruitPortal.com, Poratalfruticola.com, or at out events, such as The New York Produce Show and Conference, Global Trade Symposium, Ideation Fresh Foodservice Forum, Foundational Excellence Program, Global Cherry Summit and so many more – one is reminded of Winston Churchill’s immortal words (excerted below):
“Never … was so much owed by so many to so few.”
It is indeed rare to find people in our industry who, exactly, are knowledgeable and can convey that knowledge. Who, exactly is serious, and who really knows things that are not common knowledge?
Sometimes these are very hard questions to answer and sometimes they are very easy.
Oscar Salgado is one of the easy ones. He must have a special passport showing he lives in the land of Boeing or Airbus, for he is surely on a plane heading to some corner of the grape world more often than he is in his home.
We are honored he is willing to share his expertise at this year’s Global Grape Summit. We asked Matthew Ogg, Contributing Editor of sister publications PRODUCE BUSINESS and FreshFruitPortal.com to get some sense of Oscar’s thought process as we head into the event:
Oscar Salgado
Table Grape Expert
SanLucar
(Spain)
Q: At the Global Grape Summit you’ll be speaking about what to expect in the coming decade for the table grape industry. One of the issues will be about new growing regions emerging … What will be the implications of these changes?
A: Our business today has been reshaped by two key factors — one is the production of table grapes in tropical areas, because in those areas you can manage the crop according to your trading window or when you want to sell the grape.
Perhaps the only restriction we have is the rain; we don’t have a lot of table grape varieties that are resistant to rain and can travel after rain so they don’t split or decay.
Those tropical areas are producing in a period of time when we used to have some shortage of table grapes, so that’s one of the driving forces that is putting the whole distribution and availability of grapes in a new level.
And when we talk about those areas, it’s the north of Peru – the Piura area; Chiclayo, the Olmos Project; and also it’s Brazil in the Petrolina area. Both areas in Peru are around 10-6° south of the equator, and in that area you can harvest as early as August and until early January depending on the rain. In the case of Brazil, with certain varieties you are harvesting 52 weeks in order to supply the local market. Brazil has a huge internal market, and the export decision is an exchange-rate decision, which in our business is also an important factor.
The second driving force is the new varieties — 20 years ago, we didn’t have much variety, and everything was concentrated in four or five seedless varieties plus Red Globe. In the tropical areas, one of the problems with the standard varieties is the fertility; you don’t have enough fruit in the trees because of the lack of sunlight so you don’t get enough radiation to get good fertility.
Now, with the new varieties, the fertility in general is higher. They are so fertile that any reduction in sunlight will not affect the total yield. On top of this, some of them have a big berry size, high yield and are more farm-friendly.
You have countries like India that are in the Northern Hemisphere but they harvest in winter, which is a very mild and dry tropical winter. In summer, you have the monsoons in May, June and July, but from January onward until mid-April, you are able to harvest table grapes. Today India is ruling the market, giving South Africa a hard time; also, we are not exporting any white seedless from Chile into Europe, except a little bit into the U.K.
It’s all about how you see the competition. How can you cooperate? How you can compete and where are the competitive advantages in this environment? Because in this environment, the established industries are the ones that will suffer the most because sometimes they are slow to change.
This is what happened actually in Chile. It did not change rapidly enough into the new varieties, and today Chile is a little bit behind if you compare with Peru. Of course, South Africa made a big change because maybe 20 years ago South Africa was a 70-percent seeded-oriented country, and today it is 90 percent seedless.
Q: In the case of Chile, though, that also has to do with a more restrictive phytosanitary regime.
A: That’s when you talk about industry. All the stakeholders are setting a strategy … I’m not saying Chile should compromise their phyto situation, but you cannot be that strict and understand if the country is not moving forward, there will be nothing to protect.
Look at what happened with Argentina. A few years ago, they were playing a role in the European market, and today Argentina does not exist in terms of export — just a little bit in San Juan and that’s it.
Q: It’s interesting as well that you mentioned Peru and Brazil, in particular, seeing as Brazil used to have a more prominent role than it does today in export markets, and in a way it was displaced by Peru coming on the scene. Is that fair to say?
A: That’s one of the factors, but the other is California, because Brazil used to export from the Petrolina area just 1-1.2 million cartons into the American market, and because Americans introduced varieties faster than anyone else as most of the breeding programs are in the United States.
Another factor is the farms in California are larger with consolidated growers, and the improvement in the post-harvest techniques and the fact consumers and supermarkets prefer local. Today, the availability of table grapes from the States is well into December, and a bit of red seedless until early January, so you cannot compete with the local fruit.
This is why Peru was forced to move later and later towards arrivals in late December-January in the American market, jumping into the Chilean window.
The business is being reshaped. You used to say you are in an early area, so you need to have early varieites. Well, in my country [Chile] today, early areas are planting mid-to-late season varieties.
Q: Peru and India are standouts of new regions that are changing the nature of the table grape industry. But what are some other countries where we could see more projects coming on-line?
A: You will see some projects in Ecuador as well. We as a company have a project in Ecuador targeting a specific way to supply some flavor varieties. You have projects in Tunisia, which can supply Russia, because Europe harvests a little bit earlier than Spain and Italy, but Tunisia can supply Russia while the Italian and Spanish cannot legally cross to Russia. There is a project in Algeria with more than 500 hectares of table grapes; that project is targeting the African market; middle class African countries also are growing.
What happens in poor countries when people leave poverty and enter the middle class? They start eating less rice and more desserts and snacks, and fruit enters into that league. This is why consumption of fruit has been buoyed not by First World countries but Asia where the consumption is growing.
Q: Growing in a country like Ecuador is amazing, but it’s right next to Piura, so it makes sense if the technical expertise is there.
A: That’s another thing. The first export of table grapes from South Africa was maybe from 1985, and since that time to today, they’ve built the South African industry, but Peru was only in the business less than 15-20 years, and Egypt was in 20 years.
The learning curve is faster for the newcomers; before there was a technological barrier that you don’t have today.
Q: So established industries like Chile and South Africa can’t fight these trends; they just have to find a way to benefit from them?
A: Absolutely. Maybe you will need to leave some markets. It is a summary that we talked about in 2007 in our industry, and no one paid attention to that. We might need to leave some markets, or we might need to stop farming in some areas; that happened in parts of the States and Chile as well.
Consolidation is a good example of that. In the United States, there are about 450 growers, and maybe 25 years ago it was around 1,200 growers. The same happened in Mexico. You have bigger growers, and in Mexico, they are exploring different areas. A few years ago, they went to Guaymas which is an earlier area, they went to Ciudad Obregon — it’s not that early, but they are producing the peak of the harvest earlier than Sonora. That will compete with the late Chilean grapes.
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It is fascinating that Chile may be its own worst enemy with rigid phytosanitary standards delaying the adoption of new varieties, thus protecting an industry that may not exist due to the delay in adopting new varieties.
He sets the scene in such a way that a priority in varietal development should be grapes that can ship well after rain.
Then there is a revolution in the industry, where tropical grapes can be set to be harvested at almost any time, thus eliminating any high price shoulder seasons.
We found this comment most intriguing:
It’s all about how you see the competition. How can you cooperate? How you can compete and where are the competitive advantages in this environment? Because in this environment, the established industries are the ones that will suffer the most because sometimes they are slow to change.
Especially in light of the El Ciruelo acquisition in Brazil, which we mentioned here.
Growers traditionally thing themselves as growers. But , maybe, their biggest assets are not the land, the plants and the packing houses. Maybe their biggest asset is their relationships with customers.
So the challenge is to sustain and deepen those relationships. If the source of production shifts, the shipper will need to shift with it to sustain its relationship. It is really a redefinition for most companies.
Instead of thinking of themselves as a farm in Chile, the challenge is to reimagine themselves as a supplier to Walmart and think about what actions – acquisitions, mergers, joint ventures, etc. – sustain that business.
If you are giving a presentation on new production areas around the world, these are the kinds of issues you want to think about.
So join us at the Global Grape Summit. Listen to Oscar and begin thinking about where the future lies.
You can check out the Global Grape Summit website here
The London Produce Show and Conference website here.
You can register right here.
And, if you have any questions reach out to us here.
We look forward to seeing you in London
