Chile's avocado export volumes could take a tumble this season, as factors including attractive domestic prices and serious production issues conspire to alter market dynamics.

A representative of major producer Cabilfrut said the ongoing drought was at the center of why the country may well only ship half the amount of fruit it did last campaign, or potentially just over a third.

"The drought is drastically affecting avocados, mainly in the V (Valparaiso) region where about 75% of national production is located," company president Juan Pablo Cerda said.

"Four or five years ago Chile was producing some 300,000 metric tons (MT). Now in the 2014-15 season, in the best case scenario we will only reach about 150,000MT."

Cerda explained the lower amount available meant the domestic market had 'very attractive prices' for growers this season, and posed strong competition against international markets.

"Last year Chile produced in the region of 250,000MT of avocados, of which around 130,000 or 140,000MT were shipped abroad," Cerda said, emphasizing national production figures were hard to calculate exactly.

"This year, with the production likely reaching somewhere around 140,000MT, and with Chile consuming no less than 90,000MT of that, it could be that only 50,000MT is left for export.

"We're hoping that by the end of the season, so at the end of March, hopefully it will turn out not to be a 50% drop, but it definitely could be. That's the reality that explains the good prices in Chile."

Cerda did warn, however, that although the Chilean market was strong this yearit was vital not to lose too much focus abroad.

"People need to keep exporting strong volumes because it's important for the country to keep its place as a major supplier to international markets," he said.

"If we don't supply these markets then they will start looking elsewhere for their avocados, but one day when Chile recuperates its full production - and it definitely will - it will be essential to export a lot of it.

"So that's the situation. It's very complicated with foreign markets."

Irrigation projects

Cerda said there have been numerous planned projects in order to cope with the drought, including one in the V region which could see the construction of four large reservoirs.

However, the Cabilfrut president said this project had come under question recently as many people were starting to believe the current seven-year drought might be more of a long-term trend rather than part of the typical drought cycle.

"Historically drought cycles were on average four or five years, not seven like the one now. So there's a part of the political system saying that this is a very clear indicator of climate change, and that it's not just a cycle. We agree with that," he said.

"There are discussions about how it may well not be five or seven years, but it could in fact be more like 50 or 100.

"So the reservoir projects have been postponed because if we look at the IV (Coquimbo) region where there are four large reservoirs, they've all dried up. Is this really the best solution if it would require hundreds of millions of dollars and in the end we might not even be able to fill the reservoirs?"

Another potential solution is the construction of a colossal 'irrigation highway' transporting water from the south of the country up to the north.

"Chile has a huge amount of water, but around 80 or 90% of it is lost into the ocean. This water is mainly in the south of the country, in glaciers and in Patagonia where it rains all the time," Cerda said.

"It's a big project, but socially and economically it pays off in the sense that this source of water is guaranteed for many many years.

"We hope it won't be, but it could be that we're affected by climate change for hundreds of years to come, and this would guarantee a source of water. And it's not just for the central regions, but for the extreme north too - the desert areas and the Atacama."

Cerda said the water could be used for human consumption, to improve the productivity of existing farmland, and to create farmland from areas that weren't being used at all today because of their aridity.

"So in summary, it's a nice project with big words and today there is nothing concrete on it, but in the medium and long-term the country can make the investments. We're about 15 years behind where we should be. We've had the finance and economic stability to do it for a while, but for whatever reasons, political and such, we just didn't invest," he said.

"Peru made the investment, and they constructed canals and other ways of bringing water from the mountains or the rainforest to farmland. There are some places which a few years ago were basically desert, and now they have been transformed and have a strong production for crops like grapes and avocados.

"So Chile needs stop dwelling on the past and work out what our next step is."

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