Storm clouds and changes loom for the lemon industry in Argentina
Storm clouds loom and the lemon industry in Argentina continues to face headwinds, with overproduction negatively impacting prices and driving up stocks. The lemon sector in the country has contracted from a total export value of $739 million USD in 2016 to $451 million USD in 2023. At the same time, difficult weather conditions, rising costs and political uncertainty in the country have also led to a reduction in profitability for producers. To combat the issue of overproduction, producers in the northwestern provinces of Tucuman, Salta and Jujuy have begun to abandon lemon groves and even rip out trees. The northwest is the most productive lemon producing region of the country, with over 95% of Argentina's lemon grown there.
The issue of low prices is especially relevant to Argentina producers, who are subject to a U.S. Department of Commerce (DOC) ruling that sets floor prices (known as the "normal value") for imports of lemon juice concentrate. When these prices were set in 2016, they were below the average market price for Argentine exporters, but overproduction and the subsequent fall in prices has flipped this situation. Now, exporters subject to the agreement are forced to sell juice to the U.S. at prices as much as double the market price. In 2023, the normal value for Argentine imports of 400 GPL juice was $2,680/MT, while the average price for all lemon juice concentrate exports to the rest of the world was $1,523/MT. Of course, this renders Argentine juice less competitive than that from competitors in Turkey, Spain and South Africa and has led to discontent among producers. Several major producers left the DOC agreement in 2023, and we anticipate that more will leave in 2024. The agreement requires that signatories represent 85% of total production in Argentina, and the departure of one or two additional large signatories could mean that this requirement is no longer met and the agreement would be nullified; a major upheaval to keep an eye on.
At Del Sur, we've looked for ways to adapt to the continuing challenges in the lemon space. To that end, we have recently developed co-packing and private label manufacturing capabilities that allow us to offer our customers juices produced to their specifications and bottled for retail. Our factory can produce lemon juice packaged for retail according to our customers’ specifications, allowing for configuration of:
Packaging, including PET and glass packaging in variety of shapes and sizes
Juice formulas, including ingredients and proportions
All customization of juice formulas and packaging is done per our customers’ specifications. Juices are produced from juice concentrate and final, retail formulations typically include preservatives (sodium metabisulfite and sodium benzoate) and essential oil for aroma. If you are interested in retail packaged juice, please reach out to the Del Sur team!
