Chile frost hits fruit and wine, emergency declared

SANTIAGO (Reuters) - Chile has declared a state of emergency after a late frost caused an estimated $1 billion worth of damage to fruit crops, potentially hitting wine production and impacting trade from one of South America’s top fruit exporters.

The affected central region is the main fruit and wine producing area in Chile, the world’s No.7 wine producer. It includes vineyards owned by prominent local wine labels Concha y Toro CHT.SN and Valle San Pedro SPD.SN.

Among the wine varieties, the early grapes such as Chardonnay and Pinot Noir have been hardest hit. Chile is best known for its Carmenere grape variety, as well as Cabernet Sauvignon and Merlot. Wine-making is an important part of the country’s manufacturing sector.

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“These frosts are the worst that agriculture has faced in 84 years, impacting the area from Coquimbo to Bio Bio,” the national agricultural society said.

Fruit and wine are some of Chile’s largest industries after copper. Fruit exports were worth $4.3 billion in 2012 and wine exports were valued at $1.8 billion, according to government figures. Agriculture Minister Luis Mayol said 30 percent of the fruit that Chile exports has been affected and pledged aid for farmers.

He said the government will give its estimate on the cost to industry in the next two weeks.

Fruit trade association Fedefruta has given an early estimate of up to $1 billion of damage from the extensive cold snap in late September.

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It estimates the frost damaged between 35 percent and 61 percent of stone fruit crops, 57 percent of almonds, 48 percent of kiwi crops and 20 percent of table grapes.

However, Fedefruta said most crops had not yet reached full flower and it was not yet possible to give an exact damage forecast.

Locally-listed producer Fruticola Viconto VIC.SN said in a statement that recent low temperatures, especially last weekend, had hit about 45 percent of its production of peaches, cherries and other fruit.

Vegetables such as lettuce and squash had also been affected but there was still time for them to recover, agriculture minister Mayol said.

“That type of crop recovers quicker and has already been replanted,” he said, adding that there would likely be a delay of 15 to 20 days in their harvesting.

Farmers warned that jobs would be at risk and that prices of produce would rise as a result of the frost damage.

That could impact on inflation currently around 2.2 percent, unemployment, and provide a further brake on Chile’s economy, which has slowed this year as investment cooled.

“The good news is that there exists a strong commitment from the government authorities, the bank and the unions to help the affected producers,” said Patricio Crespo, head of the national agriculture society, which held an emergency meeting with the government and creditors on Wednesday. (Reporting by Rosalba O’Brien and Anthony Esposito; Editing by Krista Hughes and Andrew Hay)