Compañía Frutera del Norte S.A (CFN) chief executive officer Isaac Bon, will be stepping down as chief executive officer of the Chilean business after 12 years in the job. He told www.freshfruitportal.com he decided last November it was time to leave.

The changing fruit landscape and a somewhat more stressful environment in recent years played less of a role in his decision than the idea it was the right moment for new talent.

"I also thought it was time for someone else to lead the company," he said

However, Bon will continue to be an active player in the industry as a grower partner of Chilean exporter CFN. In the last year, he has also been active advising the industry outside Chile.

A lifetime commitment

Bon has spent 46 years in the industry and as former Frutexport general manager he has experienced and learnt to live with changes within the industry.

He points out the Chilean government innovation agency, Corfo's national fruit development plan was born out of a desire to make the most of country's excellent climate for growing fruit, as well as a social climate for an industry which required a large labor force.

"In this period, 1964-1966, the copper industry was paying only 50-70 cents per pound and was not a big employer whereas agriculture was. This iniatitive was not only about economics and profitability but about the social environment of the different zones that had a fruit growing culture.

"There were entrepreneurs who made large investments in refrigerators and specialized machinery for apple and stonefruit processes and travelled extensively in California," explains Bon.

"There was great development that started from the private sector. Banks dared to finance projects in fruit and farming communities where they saw stable yet temporary work."

The first developments in the industry were concentrated in pome fruit, stonefruit and grapes and over the years expanded into other categories with the rise of raspberries and blueberries and eventually avocados, lemons, cherries, clementines and other citrus fruits.

"Given that pomegranates are the latest variety to be developed, then in practice Chile has a complete fruit industry producing almost everything."

At the moment the industry is producing more than 250 million cases annually thanks to the joint efforts of producers, workers, exporters and related institutions to gain free trade and phytosanitary agreements.

Bon says the Chilean Association of Fruit Exporters (ASOEX), industry union Fedefruta, government export agency ProChile, the Chilean Agriculture and Livestock Services (SAG) and the country's universities have been instrumental in developing the industry.

Complex industry times

Bon believes the most difficult issue for the fruit industry has been the exchange rate and strengthening peso.

"I think we are not able to plan with the current exchange rate because labor costs have gone up, inputs have risen and today it is no longer a matter of labor costs but a matter of availability which has become the issue over the last five years."

He says its "critical" the industry accept foreign labor through orderly immigration where contractors comply with the law, rather than encouraging more Chileans to enter the industry.

Despite the global situation with Europe in a recession, a restricted U.S. economy over the last five years and a difficult exchange rate, Chile has managed to sell its fruit profitably and quickly thanks to a dramatic change in consumer habits.

Competition versus Synergy

Peru's strong development in grape production can only be a good thing for Chile because it will prompt innovation and efficiency, according to Bon.

"Peru competes with us and hurts us?" asks Bon.

"I never thought, even 10 years ago when I began to produce grapes in Peru's Ica area that we would complement each other. On the contrary, I thought the standard of producers and entrepreneurs in the Peruvian fruit industry would be very difficult competition."

One way for Chile to combat this competition is with new varietities that will allow a change for the world's largest table grape exporter and offer a return.

"If Peru produces Crimson and Red Globe well, we have to leave Flame and return to Thompson and good black and red varieties."

He said the biggest challenge was Asia where five or six years ago Chile sent nine million cases compared to 20 million today.

"As exporters and producers we have to develop because there is no room for second best. Here we have to fine-tune as the Peruvians have a great advantage. All the grapes they have exported to China are well produced in color, size and selection. And as we enter the market and monitor the costs this translates into a lower price.

"Peru's entry in China hurts us because they have very good prices in January, which continue into the second week of February.

"I think we have to arrange the fruit on the vine. The color of Red Globes, which are the grapes that go to China, are very specific, and even if the is not as red as the Peruvians' but it is a well-formed cluster then I think we will be able to compete. Occasionally, they may achieve US$2 more but for us with this US$2 less it is still profitable for us."

Industry future

Bon describes the dynamics of the industry as ideal.

"Chile is a fruit country and we will continue to be so and I think we should look to our competitors to improve ourselves."

He notes that the country should strengthen brands, improve conditions, quality and harness technology in all post harvest aspects.

"Russia is increasingly asking for better quality. In Asia there is no place for second best and that will happen in most markets," he says, adding tolerance over certain pesticides is minimal.

He is concerned about the north of Chile which he advices must change from the early red grape varieties such as Flame.

"California will continue to hold on to stocks harvested between July and October and extend their sales until January with red varieties. As I see it, I think the III (Atacama) and IV (Coquimbo) regions have to move away from early varieties."

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