Despite an array of challenges facing the Argentine citrus sector this season, San Miguel is relatively optimistic that factors such as fruit quality and cheaper shipping rates will help keep the campaign afloat.

A spokesperson for the multinational citrus grower-shipper said the sector was currently experiencing complex challenges outside of its control. 

"The Argentine citrus industry has complicated structural characteristics like the exchange rate, export duties and labor costs. This will translate into a loss in competitiveness for all industries in the Argentine export sector," Alejandro Moralejo told www.freshfruitportal.com.

"But the Northeast - which is where the majority of lemons and some early Valencias are located - has some strengths, such as the balance between the industrial processing sector and the fresh sector, and the fact that lemons are a product with an inelastic demand, where the supply generates the price."

Moralejo said other factors such as the counterseasonal relationship between the Northern Hemisphere and South Africa - which he said was really starting to grow its lemon production - would affect Argentina's competitiveness.

"South Africa can compete with Argentine fruit in terms of price, but not in terms of quality," he claimed.

"The quality of Argentine lemon still has a strong differential against South African lemon in its shape, its taste and its percentage of juice.

He added Argentine citrus could benefit from the lower shipping costs that have come as a result of falling global oil prices, given the long distances the fruit must often travel to reach key markets such as the EU.

With regards to production volumes, Moralejo said Argentina was expecting regular levels for its oranges and mandarins, with some easy peeler varieties seeing high production this year.

For lemons, the San Miguel representative highlighted how last year Argentina saw a drop in its production of almost 60% due to frosts in 2013 and droughts in 2014.

All Lemon - the group that ensures quality standards for Argentina's lemon exports - last week said production would be up to 20% lower than regular levels.

"Normal volumes in Argentina are 1.3-1.4 million metric tons (MT) of fruit, mainly lemons, and this year we will be around about one million MT if everything goes well," Moralejo said.

"This means that the volumes of our fresh fruit exports will be fine - we will have enough to export - but there will be some competition for the fruit between the fresh and processed sectors."

Although San Miguel is based in Argentina, the company also sources fruit from Uruguay and South Africa.

The entity's lemon campaign will therefore run from around week 11 or 12 through week 33 or 34, and the first Okitsu Satsumas have already started being loaded in the northern province of Misiones.

'Question mark' over euro

In terms of markets this year, Moralejo said around 60% of fruit would be destined for the EU - both the northern areas and the Mediterranean, while 20% would be destined for Russia, the Ukraine, and other Russian-speaking countries.

Around 10% will be shipped to the Middle East, with 5% to the Far East, and a minor percentage to the U.S. and Canada.

On the subject of Russia and its devaluing currency, Moralejo believes Argentina could still supply strong volumes to the market - thanks partly to the recent participation of new supermarket importers - and pointed out the value of the euro also had a 'question mark over it.'

"[The euro's value] means that Spanish citrus growers would have had a difficult season. We understand that lemons and oranges have their space in the European summer, but we'll have to see what the prices are like and what we can supply," Moralejo said.

"On the other hand, we will have challenges in terms of South Africa's phytosanitary issues, Argentina's structural problems with its costs, and Uruguay's high dollar inflation.

"Not exceeding the minimum residue levels required by Europe also continues to be a focus point for us."

Moralejo added San Miguel this season was hoping to promote new and traditional varieties in South Africa, as well as increase export volumes from Uruguay to the U.S.

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