It’s official: mate really is recession-proof.
Yerba mate, Argentina’s famous green bitter tea, is one of the few goods to have defied the economic downturn, its producers confirmed yesterday, registering record consumption and exports levels last year.
In 2018, consumption expanded by 269 million kilogrammes, with 43 million kilos exported, according to data from the National Institute for Yerba Mate (INYM).
And in an interesting detail, one of the main reasons for the increase in exports is surprisingly, Syria, which is the biggest foreign importer of yerba in the world.
In total, the Middle Eastern countries of Syria and Lebanon represent 75 percent of Argentina’s yerba mate exports, data showed. The second-largest destination for sales is Chile, though its presence is also growing in the United States and Europe.
“The rise in exports was a surprise because we were averaging 30 million kilos and we jumped unexpectantly to 43 kilos,” INYM President Alberto Rey explained to radio station FM Vos this week.
Last year, though consumption only expanded by 0.7 percent, exports soared 38 percent in comparison to 2017. This represented a return of US$90 million in 2018, with the average price per ton fixed at US$2,100.
Producers are expecting further growth in the coming year too. Over the next five years, the market for yerba is expected to register a 4.6-percent growth in revenue, according to Yerba Mate Market research report, with the global market predicted to be worth US$1.7 billion by 2024, up from the anticipated US$1.3 billion it will generate in 2019.
The main yerba mate export companies to have have benefitted from the rebound in Syria’s market are Kabour, la Cachuera, and Piporé. All three firms are based in the provinces of Misiones and Corrientes, where the majority of Yerba mate is produced. An estimated 90% of the product sold on the domestic market originates from this region.
However, the outlook is not all rosy, with costs of production increasing. “Profitability is declining due to the necessity of producing more to compensate for the expenses and also there is a difficulty in getting financing,” Rey warned.
One particular problem is the time it takes to adjust for an increase in demand, he added. A yerba mate plant takes a yearand-a-half to grow naturally. Producers are trying to compensate by accelerating the growth process, which in turn increases costs, Gerardo Vallejos, the director of Santo Pipó’s Yerba Mate cooperative, explained to Infobae.
Currently, prices for the yerba mate are 8.4 pesos per kilogramme of yerba mate leaves, and 31.90 pesos per kilo of chopped up yerba mate mix. But the industry’s players are currently negotiating a price hike with their next meeting to be held on February 28.
Yerba mate producers are requesting a US$0.50 (19.5 pesos) hike per load of leaves, which would allow them to purchase further equipment and supplies to improve quality, reports in the El Litoral newspaper suggest. Others, such as the Association of Misiones Agriculture producers and the Agrarian Federation of Argentina want the price per kilo of yerba mate leaves to be set at 15-16 pesos.
Labour tensions are also coming to the fore. Producers have recently trailed the idea of holdinga massive protest that would shut down the market, if they do not obtain a price that is over 13.50 pesos per kilo of leaves.
“We are thinking of holding a strike in the province like you’ve never seen before, with all the unions together, President of the Agriculture and Social Party (PayS) Hector Barbaro said to El Litoral.
He complained that there are only a few players that are in charge of setting yerba mate prices.
Another issue is the payment chain in the domestic market, since there is a 30-day wait between when yerba mate is collected, and the payment for the product, which forces companies to take out bank loans that are at considerably high-interest rates to tide them over.
In spite of the challenges, Yerba mate producers are optimistic about the future. “We aren’t alone as we have to compete with Brazil and Paraguay, but we are going to consolidate the markets we’ve won and get a foothold in the others,” Rey, INYM’s president, said this week.