Argentina's canning season began, but no prices for raw materials and finished products were set. This is due to the uncertainties caused by Argentina's recent abolition of foreign exchange controls, which have had an impact on the industry.

 

Peaches are beginning to be harvested in some producing areas, and Alberto Carletti, vice president of the Federation of Productive Economics (FEM) in Mendoza, points out that the peach canning industry still needs to agree on basic prices and payment terms. He also said that the basic price of canned peaches could be referred to as $0.31 per kilogram.

 

Alberto Barro, a canned peach grower in Villa Seca Tunuyan, told Argentina's Los Angeles newspaper that local producers refused to buy their peaches at the price of $0.32 per kilogram for Chilean canned peaches and $0.27 per kilogram for peach jam.

 

He feared that growers might overlook the profitability of exporters due to exchange rate depreciation when foreign markets opened to Argentine products, as happened in the postnatal quarter of the 2001 peso depreciation.

 

Argentina's change in its monetary policy has a direct impact on the country's Peso currency devaluation, which will make its products more competitive and help restore export markets.

 

Ral Giordano, chairman of the Cafim, commented: "Export policy now makes it possible for us to re-enter the lost market" and said that 25-30% of the country's total canned peach production in 2002-2003 was for export rather than the current 10-20%.

 

Growers and producers are still at an impasse in raw material prices, and due to macroeconomic changes, producers have not released final product prices.

 

Mr. Zodanu added: "Usually we sign price agreements with foreign buyers before harvest, but we can't do that this year because we don't know what the policy will be, whether the currency will suddenly depreciate or gradually depreciate." He explained that the purchase of empty cans was the main expenditure facing the industry before harvesting during the production season, and they still had to figure out the actual costs incurred. He also said that although the plant would not process at full capacity, it was not expected to leave peaches.

 

The Argentine Institute for Rural Development (IDR) predicts that the fruit harvest in Mendoza is about 15989 tons of canned peaches, 8282 tons of processed apricots, 126708 tons of processed plums and 61847 tons of processed pears. Some manufacturers expect to deliver more to their factories.

 

In fact, after IDR forecast, crops suffered hail disaster. Excessive rainfall had an impact on the quality and quantity of peach jars and jams. The size and quality of peaches were lower than ideal. Wet weather increases fungal outbreaks such as smallpox, viruses and brown rot that affects trees.

 

Roberto Merry, a Yougu peach grower, said: "More than half of the peaches are not suitable for canned peaches, but only for pulp."

 

Manufacturers have decided to cut peach cans production by 30% to 85 million cans, instead of the 120 million expected at the beginning of the season. Argentine peach cans producers say direct production costs have increased by 35%, they are seriously underfunded, lack state credit support at very high interest rates, and can't get enough empty cans to sustain production because of unprofitable past production seasons and no reinvestment.