A new country looks set to join the ranks of the three world processed blueberry superpowers, as the combination of falling prices and rising production costs strongly influence global industry's dynamics.

At present, the U.S., Canada and Chile collectively produce around 95% of the world's processed blueberries.

Despite Peru, Mexico and Argentina all having growing blueberry industries, Chilean blueberry grower and exporter Comfrut told www.freshfruitportal.com there would be extremely little focus from Peru and Mexico on the processed business, but Argentina would soon witness a monumental development of the sector.

He said this would be because Peru and Argentina shared a very similar commercial window for their fresh exports, but global blueberries prices falling and Peru's lower production costs meant it would soon start becoming more economical for many in the Argentine industry to switch from fresh to frozen.

"In the future Argentina simply won't be able to compete very well with Peru. I believe lots of Argentina fresh blueberry orchards will be transformed into land for processed production," Comfrut production manager Mario Garces said.

"It costs somewhere around US$3 to produce a kilo of fresh blueberries in Argentina, while it's roughly US$2 in both Mexico and Peru.

"So what would this mean if prices were to fall to US$3 a kilo? Peru would still be earning US$1 a kilo, while Argentina would be breaking even. So Argentine fresh producers can either stop their business, or industrialize - move over to frozen and harvest their crops with machines to lower costs."

The situation is different in Mexico, where producers enjoy close proximity to the huge U.S. consumer market and are able to grow their fruit in the Southern Hemisphere season with the use of tunnels.

Garces said Mexico's counter-seasonal crop and low production costs mean it would likely never have any need to become a significant player in the processed industry.

On top of this, he said Argentina's orchards generally were much larger and flatter compared to Mexico's, meaning they were better suited to mechanized harvesting.

"So I don't think Mexico will be an important participant in the processed blueberry global industry. Peru I believe in the long-term it could do it, but Argentina in the medium-term will have a substantial processed sector," Garces said.

While he predicts a strong processed future for Argentina, its industry output of 4,000 metric tons (MT) annually is currently dwarfed by Chile's 30,000MT.

Chile's growing frozen sector

Chile's total blueberry production has been growing rapidly at around 20% annually for the last few years - except for the 2013/14 season which saw severe frosts - in order to keep up with soaring global demand.

According to Garces, in 2005 Chile's total blueberry production was some 5,000MT, of which only 500MT were processed.

Nowadays, frozen production constitutes around 30% of the country's output, as many companies find the fresh sector margins are no longer attractive enough to continue operations.

"I think Chile is going to increase its frozen sector, because it's a country that is developing and growing, and with it labor costs are growing too. So companies will get to the point where it's no longer good for them," he said.

"But Chile is going to be able to address its problems of increasing labor costs with machines without a problem," he said.

Garces' company Comfrut is one of the companies that saw the benefit of the change, and this season ended its fresh blueberry operations to focus more attention on the processed sector. Its fresh business was sold and now goes under the name Core-Frut.

The Comfrut representative did argue, however, that it was beneficial on the whole for a nation's blueberry industry to be well-balanced between the fresh and processed sectors.

"When you have an industry that is unbalanced, there are often when you will only have one type of production, and certain times of the year when the global market is saturated," Garces said.

"If you haven't developed an alternative market you have an excess of fruit, and you have to throw it away. And that means losses. When you leave a fruit on a plant it overmatures and it is impossible to harvest fresh because you don't know what is mature and what isn't.

"Developing an alternative market allows to you use that excess production and have some balance in your business."

Traceability

Along with developing the frozen sector to achieve a more balanced blueberry industry, an important aspect for the country will also be ensuring that as the sector progresses, traceability practices improve at the same time.

Graces said traceability was often harder to achieve in Chile than the U.S., as major blueberry processing companies in the Andean country generally bought their fruit from a large number of growers.

"U.S. companies can say 100% of the fruit comes from one of two big producers - and here it's 20 or 30. But if I can have traceability for all the 20 or 30 producers, then it will effectively the same as having just a couple of growers," he said.

"It can be done - there are companies who have spent a lot of time and money establishing a good traceability system. Now if you want to buy a bag of our fruit in a shop, it will tell you who produced it and other things like what chemicals were used on it."

A larger grower base has also traditionally meant blueberry uniformity has been harder to achieve, and while Garces said those problems still remained in the fresh sector, technological advances in Chilean processing plants have brought significant changes.

"Nowadays all the big companies have automatic and calibrated selection lines, where the machine takes out the smaller ones, the greener ones, et cetera - so it effectively works out the same as in the U.S. where it often all comes from the same producer.

"My product can definitely be competitive against U.S, product, despite the fact it's come from lots of producers."

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