MercoPress. South Atlantic News Agency

Mid sized Chilean farms going broke because of rising costs and cheap US dollar

Economy Minister Juan Andrés Fontaine met this week with SNA president Luis Mayol.

The Chilean Federation of Fruit Producers (Fedefruta) will join with the Association of Exporters (Asoex) and nearly 50 other exportation and agricultural associations across Chile to present proposals to, and demand aid from, the government next Friday, May 20. They will convene in Requínoa, in Chile’s Bernardo O’Higgins Region.

“This is an important opportunity for the agricultural sector to make the rest of the country aware of this complex situation facing thousands of small to mid-sized producers and exporters,” Antonio Walker, president of Fedefruta, told La Tercera.

“With an exchange rate of 460 Chilean pesos to the U.S. dollar, we’re facing the worst affordability crisis of the last 25 years.”

The meeting is not only to demand aid, but also to provide a forum for the groups to propose the steps they feel need to be taken.

The exporters have threatened to strike if the government does not take sufficient action. They say their production costs must be paid with high-valued pesos, while their income is received in low-valued U.S. dollars.

According to El Mercurio, the National Society of Agriculture (SNA) has confirmed that competitiveness in fruit production has plummeted 19.9% in the past 16 months. In that time, the SNA says, costs have risen 5.2% and the dollar has fallen 13.2%.

The exchange rate has fallen another 32 pesos after reaching the year’s highest rate of 499 pesos on Jan. 10.

The rate fell to 460 pesos on April 29, the lowest figure since May 2008.

Economy Minister Juan Andrés Fontaine met this week with SNA president Luis Mayol.

Mayol expressed concern that all export groups share about the consistently low valued US dollar and what initiatives the government is willing to implement to improve competitiveness in agricultural production and compensate for high production costs.

Cooperation with the banking sector was a main area of focus in the meeting for the economy minister.

“I am calling upon the banks to look at the true situation of the agricultural sector,” Fontaine told El Mercurio. “There are ways to increase productivity and exports to Asian economies.”

Fontaine said a more in-depth plan will be made public next week.

By Zach Simon - The Santiago Times