In light of the global oversupply
of lemons, an international trade battle is brewing in which Argentina and the
United States figure as key players. The issue came to boiling point this year
when the United States Department of Agriculture (USDA) announced that it would
allow the importation of grapefruits, oranges, and lemons from Argentina, muddying the water for competitor nations.

As the
world’s leading producer of lemons, Argentina had a lot at stake in the prolonged
struggle to get a serious foothold in the United States market. Other Latin American
lemon exporting nations with hopes of expanding their sales to the US, including
Brazil, Mexico, and Peru, are now uncertain about the future of their lemon exports.
Fearing strong foreign competition, California lemon producers, through their senator Barbara Boxer, managed to
attach a rider to the USDA 2001 appropriations bill which would at least temporarily
block the entry of Argentinean lemons. Growers justify Boxer’s lemon ban on
their concerns about the introduction of citrus diseases from Argentina. As
the senator’s spokesman David Sandretti puts it, “We have no problem competing,
but until we get an independent peer-reviewed study, we don’t feel as though
we should put our growers at risk.”

Citrus diseases that have
hampered Argentinean exports in the past include the citrus canker, sweet orange
scab, and citrus black spot. Argentinean authorities stress that the citrus
canker has been eliminated in fruit growing regions and that they have means
of ensuring that the other two diseases pose no threat to other nations. The
quality of Argentinean lemon exports was recently underscored when an agreement
was reached to increase lemon exports to Japan.

During the first week of
November, Argentina’s vice-chancellor Horacio Chighizola announced the forthcoming
removal of the remaining tax barriers that block the exportation of lemons from
Northwest Argentina to Japan. He stated that, as of March 2001, lemon producers
would be in a position to substantially increase sales to Japan. At present,
the region sells 90,000 tonnes of lemons per annum to Japan, but that level
could easily reach 130,000 tonnes. Japan is a prized market for exporters because
lemons sell there for US$40 per case, as opposed to approximately US$22 in the
United States. On 12 November a team of Japanese technicians arrived in Argentina
to confirm that lemons there pose no threat to fruit crops in their homeland.

A year ago, when international
lemon prices were at a 20-year low, many Latin American producers decided that
they were better off supplying domestic demand than exporting. In the case of
Peru, 50% of the 100,000 tonnes of lemons produced each year are sold on the
domestic market. The remainder is primarily processed and sold abroad in the
form of lemon oils and dried peelings. The most important foreign markets for
Peruvian lemon oil are the EU and the US.

Fabian Hidalgo, president
of the lemon processing and exporting company Agromar Industrial S.A., projects
that export sales will increase, but not in the short term. One factor that
limits exports at present is that domestic lemon prices are substantially higher
than those paid by export processors. Therefore, processing plants can only
hope to receive surplus fruit. At present, the Agromar processing plant is operating
at 40% of capacity. Output this year will be in the range of 2,000 tonnes of
dehydrated peelings and 500 barrels of distilled lemon oil. A leading source
of raw material is the company’s 700 hectares of lemon orchards.

Of the other Latin American
lemon exporting nations, Mexico is best positioned to reach the US and Canadian
markets. Veracruz is the state that produces the bulk of the nation’s lemons,
yet the majority of fruit from that region is transported into Central Mexico
for domestic consumption. Mexico has yet to develop a strong lemon processing
industry and lemon derivatives represent only a small fraction of agricultural
sales to the US.

To a degree, the fate of
Latin America’s lemon sales to the massive US market hinges on the stance Congress
takes on the Boxer lemon ban. In a half-serious vein US trade experts have warned
that the ban’s protectionist stance on lemon imports could “sour”
relations with Latin America. In fact, the thinly disguised protectionism of
Senator Boxer’s lemon amendment could erase the results of years of well-intentioned
negotiations between agricultural authorities and generally discourage lemon
production in Latin America.

By Steve Lewis

The chart below shows total lemon and lime production in metric tonnes per annum
for Latin America and the Caribbean.

1995 2,937,220
1996 3,168,677
1997 3,448,501
1998 3,410,292
1999 3,458,031
2000 3,636,367(e)

Statistical Source:
Note: (e) estimate

The chart below shows total area (in hectares) of lemons and limes harvested
for Latin America and the Caribbean.

1995 230,628
1996 238,900
1997 252,560
1998 260,287
1999 263,894
2000 280,169(e)

Statistical Source: FAO
Note: (e) estimate

The chart below shows total area (in hectares) of lemons and limes harvested
in Peru.

1995 21,674
1996 22,471
1997 23,094
1998 24,466
1999 23,436
2000 29,000(e)

Statistical Source: FAO
Note: (e) estimate

The chart below shows total lemon and lime production in metric tonnes per annum
for Argentina.

1995 755,604
1996 800,654
1997 969,763
1998 1,020,980
1999 1,050,000
2000 1,050,000(e)

Statistical Source: FAO
Note: (e) estimate

By Steve Lewis