This article is taken from our IEG Vu platform dated 12/05/20.

Juan Manzur, Governor of Argentina's north-western Tucumán province, met with representatives of Argentina's regional citrus growers' and industry association Asociación Citrícola del Noroeste Argentino (ACNOA) to discuss emerging problems and financing options for the local citrus processing industry.

The meeting was also attended by Santiago Cafiero, Chief of the Cabinet of Ministers under Argentina's President Alberto Fernández, and by Luis Basterra, Argentina's Agriculture Minister.

"The meeting was proposed by the governor because he considers the citrus industry of strategic importance for the regional economy in terms of labour and foreign currency revenues," said ACNOA president Pablo Padilla.

One of the principal topics was how to secure sufficient resources to set up a so-called counter-cyclical fund for the strategically important citrus industry, said Padilla, owner of Padilla Citrus. He added that it is still unclear how will "global consumption of [citrus] derivatives react to the recession that the pandemic is producing", so there is a need to set up a specific financing line for the counter-cyclical fund with funding from the state.

As a global leader in lemon production with some 1.6 million tonnes, including 300,000 tonnes that are exported, Argentina earns more than USD800 million from this segment. With 14 lemon processing and exporting industries situated in Tucumán, Salta and Jujuy, the industry directly employs more than 50,000 rural workers.

ACNOA assembles important citrus growers, packers and industrial processors from Argentina's north-western provinces (Catamarca, Jujuy, Salta and Tucumán), including among others Ledesma from Jujuy, La Moraleja from Salta, and Citrícola San Miguel, Citrusvil, Citromax and Trapani from Tucumán.

Analysis

Neil Murray writes: Argentina's lemon industry is primarily destined for processing, unlike other countries that put the fresh market first.

While it has been suffering for a couple of years from over-production and very low prices for lemon juice (presently at about USD1,800 per tonne fob Buenos Aires for 400gpl juice), along with the wine industry it is one of Argentina's sectors that can compete effectively in world markets.

IEG Vu sources in the country appear to approve of Manzur, formerly the country's Health Minister. One commented: "He knows that he needs to keep the lemon industry working. It is the largest private employer in Tucuman with 35,000 direct employees, and a couple of hundred thousand indirect employees."

Processors tell IEG Vu that they are expecting smaller juice production from the present harvest, partly in order to balance the market, partly from the loss of staff and yield resulting from social distancing and other Covid-19 related issues and partly because of much stronger global demand for fresh fruit.

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This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.