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Chile's central valley is one of the world's most bountiful, blessed with rich soils and plentiful sunshine. Early in its history, Chile's agricultural sector was transformed by a wheat boom in the 1800s. Then those wheat markets dried up, sending the country into a prolonged period of economic and social turmoil. Over time, Chile recovered to become one of the world's top exporters of apples, planned blueberries, kiwifruits, plums and of course, cherries. In today's video, Chile's Agricultural Journey from Wheat to Cherries. I've done a video before about Chile, but said little about its geography. So let us do the tourist's intro. Chile is the world's 37th or so largest country, so about the same size as Zambia or Morocco. Its neighbor to the north is Peru, which I've made a video about before. To the east we have Argentina, and to the northeast, Bolivia. The country has a funny shape. It's long, 4,300 km, not counting the Antarctic territories, and narrow 180 km on average. This long, narrow shape partly explains why the geography is so diverse. Few countries exhibit a wider range of terrain. Such a varied geography also contributes to a highly varied climate. On the whole, the country's northern regions get relatively little rain, less than 50 millimeters per year, though this is partly skewed by the world's driest desert, the Atacama Desert, which goes years without rain. But the nearby Altiplano Plateau gets a bit more. These northern regions also host reserves of nitrates, copper, gold, silver and other raw materials. Chile's south is chillier and rainier, with over 3 meters of rain and snowfall per year. And for this reason, the region has lakes and old growth forests, something like the coastal forests of Oregon or Washington. And then way, way down south, near Antarctica, the landscape is full of fjords and islets. It looks like Norway, which is kinda cool. In between the desert, like north and temperate south, there's the valley region that is Chile's agricultural heartland. The valley is about 700 miles long and 20 to 100 miles wide. The climate is Mediterranean, with dry warm summers and cold rainy winters. Most of the rain falls between May and September. Southern Hemisphere Chile sits at a subduction point for the Nazca and South American tectonic plates, making it an active volcanic region. Volcanoes belch ash, which are then carried to the soils on flat terraces and gentle grass rolling hills. These soils vary in quality depending on their location, but on the whole are good for agriculture, rich in nutrients and with good permeability. Meaning that water can flow through them without getting waterlogged. But since rain is scarce during the dry months, productive year round, agriculture requires irrigation. Fortunately, the Chilean Central Valley also has a number of rivers cutting through it from the east to the west. A good geographical comparison would be California's own Central Valley, another agricultural breadbasket with rich topsoil, sunny Mediterranean weather, and accessible water from the nearby mountains. For the first 40 years after Chile's independence in 1810, the country had no significant agricultural industry to speak of. When the Spaniards arrived at Chile, they were not interested in cultivating the fertile land, but rather mining gold and silver using indigenous slave labor. Whatever agriculture existed was for feeding the Spaniards and the slave workers just barely. Chile's gold mines depleted by the 1500s, but not before half of the indigenous population died from cruel working conditions, illness, and malnutrition. Then, to encourage settlement, the Spanish granted tracts of land to officials and soldiers. These soon evolved into hacienda, big estates owned by the wealthy. The central Valley is covered by these, with few small or even medium sized farms. These hacienda estates were so massive that owners only used a small fraction for agriculture. The rest was basically left as is. Without irrigation. That land was covered with only wild bushes and grasses. Some wheat was cultivated near towns and roads, but most of the land was made into pasture for cattle. The cattle would then be slaughtered for skins and meat to be sold to merchants in nearby Peru or elsewhere. In addition to land, we have to talk about labor. After the conquest, the Spaniards practiced a system called encomienda, or entrusting. It is where an indigenous community is entrusted to a Spaniard who can use them as forced labor. Encomienda was cruel, and that cruelty led to a violent uprising in 1712 in an island archipelago off mainland Chile. Eventually, the system was banned in 1791, but by then it had long turned unviable. For reasons that remain unclear today, most scholars attribute it to population decline in indigenous communities from disease and assimilation. But the estate owners still needed some way to get labor. So they invited free men of mestizo or Spanish descent to settle on the estate with their families in return for 240 or so days of unpaid labor to milk the cows, harvest grain, or round up the cattle. Today, these workers are referred to as the inquilinos, which, roughly translated means labor tenants. Most estates housed about 15 to 35 inquilinos, each, with some having as many as 150. I should add that arrangements were informal and varied from estate to estate. For example, some inquilinos received small wages for extra work. Others volunteered in the household. It varied. The core thing was that they worked in exchange for a plot on the estate. Some families often stay on the estate for generations, becoming deeply rooted to it through heritage and tradition. Their labor is augmented with that of landless peons, meaning day laborers. Peons when wander about providing labor to whoever paid the best wages. Lacking any ties to the land, the the landlords trusted peons far less than they did their inquilinos, and so had waned for decades. While some wheat was of course grown, agricultural activities remained cattle centric. There were simply no markets for large scale agriculture of wheat or anything else. Domestically or abroad. Domestically, most of Chile's population lived in rural communities. Almost everyone produced their own food for subsistence and so didn't buy their wheat in the commercial market. And exports wise. Chile's location on the Pacific coast, as well as its lack of maritime or rail transport, meant that there were few agricultural markets outside of their immediate neighbor, Peru. But it was not like the Peruvians ever took that much wheat. At their peak, wheat Exports totaled about 13.5 million kg per year, which back in the day can be fulfilled by a mere 15,000 hectares of land. There were other difficulties. I just mentioned the lack of good transport options. But financing was a problem too. Before Chile's first banks opened in the 1850s, aspiring farmers had to pay annual interest rates of up to 70%. In 1847, Chile exported just $356,376 worth of wheat. That changed with the rise of two major wheat export markets in California and Australia. It started with California's gold rush in 1848. The allure of gold brought a massive influx of people into San Francisco, exploding the population far faster than California's inland agricultural farms can provide food for them. And then in Australia, farmers struggled early on to be productive in the face of what can only be described as difficult conditions. Moreover, transport networks were insufficient to bring what was grown over to the cities. For the first time, Chile's location gave it an advantage. Starting in 1848, Chile sold large amounts of wheat into these two major markets. This wheat boom transformed Chile's agricultural economy and society. The hacienda started clearing out more land and planting wheat on it. Between 1850 and 1875, the amount of land dedicated to cereals increased from 130,000 to to 400,000 hectares. Growing and harvesting the wheat had always been one of the things the inquilino had to do. But the size of the wheat boom quickly outgrew their capacities. So the landlords started bringing in seasonal labor, mostly peons from the rural areas. But there were often labor shortages due to Chile's other big boom nitrates. Famously, chile once monopolized the world's own only major source of saltpeter, a critical ingredient for making fertilizers and certain weapons. The nitrate's boom pulled workers out of the fields, forcing the estate owners to bring in mechanization. Starting in the late 1860s, Chilean farmers imported reapers, threshers and steam engines at the same rate of other industrializing countries around the world. It's interesting to consider what might have happened had it lasted. The first phase of Chile's wheat boom did not last long. By 1855, California had become self sufficient in wheat. Then in 1859, Australia did the same too. But the Chilean wheat shipments then shifted to England and sales continued for a short while. Chile's wheat boom finally busted in the late 1870s and 1880s. Global grain prices crashed from 64.5 shillings for 480 pounds in 1867 to just 26.1 shillings for the same in 1880. Such a drastic decline was due to new wheat supply coming online in the vast American prairies. And Russia, plus new and expanding forms of transportation created a more globalized grain market. It made wheat exports out of both California and Chile economically unviable. In California, farmers responded by shrinking their farms and growing higher value items like fruits, which require more labor, capital and specialized techniques. Think about an apple in the grocery store and consider how much extra effort it takes to grow millions of the same apple as compared to wheat. And to make all them apples beautiful too. Chile had the resources to follow California's transition to. And fruit production in Chile did rise. In the early 1900s, production of table grapes increased sevenfold, peaches and apples threefold. But the overall proportion of fruits and other so called intensive crops remained small. In 1925, the proportion of Chilean agricultural output dedicated to fruit had only grown to 13.7%. To compare, California's share in 1929 neared 80%. Chile's weak boom busting had a profound effect on Chilean agriculture and society as a whole. Such effects were exacerbated by the collapse of Chile's nitrates industry. That was brought on by the invention of the Haber Bosch process and others like it, which could economically pull nitrogen out of the air to produce ammonium. After World War I, cheap German nitrates exports kicked off the end of the Chilean nitrates industry. For Chile, it was a double whammy. The government lost Lucrative export tax revenues worth millions, and many nitrates miners lost their jobs. I covered this in the aforementioned prior video on Chile. The wheat boom had already weakened the old social links between landlords and their workers. Fewer inquilinos were settled starting in the 1860s. Then, in the 1870s, a new type of worker emerged, called inquilino peons, with fewer estate settlement rights than full inquilinos and a wage. By the early 1900s, the wage part enlarged until that was all there was. Moreover, There was a second wave of mechanization and modernization in the 1890s. This only further alienated the inquilinos, relegating them to piecemeal labor work done in exchange for a wage. These laborers did not own any land. The old inquilino system that once gave them a home no longer existed. These workers had nothing to offer but their own labor for irregular jobs, excepting low wages paid in cash. In other words, they had become proletariats. The expansion of a proletariat class in Chile had lasting political impact on the country. Political parties and unions in the cities, aware of the peasants profoundly unfavorable situations, campaigned for their votes. In 1964, President Eduardo Frey came into power, promising land reform. Chile's agricultural sector badly needed it. Between 28 to 57% of the fertile land in the Central Valley was simply not being used because it was locked up in big, incompetently run estates. So the land reform would expropriate the largest and most inefficient estates for eventual redistribution to workers. This was paired with a rural unionization drive that grew membership from 2,000 to over 140,000. In response, the big Chilean landlords avoided expropriation by splitting their estate holdings amongst their own family members. And to make themselves look and be more efficient, they fired their workers. 100,000 peasants had been promised land, but just 21,000 received it. After a few years, frustrated by this lack of progress, in 1870, a new socialist president named Salvador Allende took office and vastly accelerated the land reform process. His government targeted every estate larger than 80 hectares, regardless of their efficiency, and taking twice as many lots in two years as the Frey administration did in six. However, Allende's socialist agenda triggered deficits equal to a quarter of gdp, rampant money printing, and high inflation. Chile's agricultural sector locked up from the expropriations and militant labor strikes. The number of strikes surged from 693 in 1967 to 1,758 in 1971. In December 1970, 1,5000 plus mostly affluent women marched in the streets banging empty pots in frustration over the regime's inability to prevent rationing and shortened food lines. Other marches took place around the country, worsening the already unstable political environment. Then, in 1973, General Augusto Pinochet and the military overthrew Allende, instituting a brutal dictatorship that would rule Chile for the next 17 years. Economically, the military undertook what has been called a counter reform, a partial reversal of the policies in the prior years regarding land reform. This meant returning about a third of the appropriated land to their former owners. Another 40% was given to individual peasants as private plots. By 1979, 48,000 thousand families had benefitted. The regime didn't do this out of the goodness of their tiny little hearts. They were rewarding those who didn't partake in the Allende reform, tying people to the land to keep them away from the cities where they can potentially cause trouble. In a further attempt to encourage economic growth through agricultural entrepreneurship, the dictatorship focused on exports, leading them to fund the expansions of large fruit plantations. As mentioned earlier, fruit cultivation is laborious. 30 to 40% of the variable cost in fruit production is just labor, as compared to 6% with wheat production. Large fruit plantations cannot operate without a large pool of cheap workers. The military dictatorship's counter reform helped in this too. They dismantled the socialist regime's collective farms, and this, plus a 1979 labor reform law, weakened unions, limited collective bargaining and restricted workers rights to strike on the side of demand. Chile's fruit export industry benefited from the rise of one stop shop supermarkets in the United States and elsewhere starting in the 1970s. The size and scale of these supermarkets, global supply chains, created huge centralized demand centers that Chilean fruit exporters can easily sell into the supermarkets, then distribute the fruit across America using modern transport and refrigeration technologies. The fruit industry as we know it cannot exist without them. One example of such are table grapes. The idea of table grapes as a natural, healthy snack is generally said to originate from marketing campaigns run by the California Table Grape Commission in the early 1970s. The campaign worked, but grapes are seasonal and now consumers expect fresh grapes in the produce section all year round. Chile being in the Southern hemisphere was the solution. Importing seeds and patents from the United States to provide a second source for year round grapey goodness. These export and market oriented reforms were driven forth by orthodox economists trained at the University of Chicago under Milton Friedman. To open as many markets as possible to Chile's agricultural exporters, the government liberalized the country's trade policies cutting tariffs from 105% to 35% and eliminating foreign investment limits. While this benefited exporters, and we can trace the start of Chile's fruit export boom to this, it hurt growers of so called traditional foods by fully exposing them to cheap imports from abroad. Many of these domestic farmers were wheat and mill farmers in Chile's south. The 48,000 who received Parcellas by December 1979, over a third had sold their lands after failing to compete. For them, this felt like a betrayal, because they had been some of the military regime's staunchest supporters. These free trade policies created average annual GDP growth rates of 7% from 1976 to 1980. But after a major economic crisis in 1982, where GDP fell 14% and unemployment skyrocketed to 34%, the government took a more gradualist approach. They brought back protections like import tariffs and price bans for domestic growers of these traditional crops, plus technical assistance programs and a marketing board to tamp down market volatility of these particular goods. While these have calmed tensions, they have also somewhat created a bifurcated agricultural situation in Chile. One tier of big globally competitive agri food corporations. The next tier, small farms of traditional foods reliant on protections. In 1989, Chile returned to democracy, and the fruit business has continued to grow in the years since. All the way back in 1962, Chile exported about 36,017 tons of fruit. By 1988, that had grown 26 times over, to 972,325 tons. In 2024, Chile exported between 2 and 3 million tons of fresh and processed fruit. Today, Chile's top exports are by far its inorganic goods. Copper, lithium and other mined goods. So that's nearly 60%. However, agricultural and forestry goods are in second place. And within those, the top exports are those delicious fruits. Cherries, table grapes and blueberries. Grapes have a larger share if you also include the fruitful Chilean wine sector, which I have not mentioned in this video. But now the Chilean fruit sector faces a new, very persistent threat. A drought. A megadrought to be exact. One that began in 2010 and has now lasted for over a decade. Tree ring records indicate that this megadrought is perhaps the worst in 700 years. Scientists are unsure whether it is climate change related. Agriculture is one of the largest consumers of water. With Chile's fruit exports still in demand, growers are tapping rivers and bodies until they are dry and and pumping aquifers at rates higher than what is sustainable. Despite some rains in 2024 the drought remains in effect. Assuming that this is the new normal, new practices and policies will need to be implemented to adjust to this worsening water scarcity. And the fruits industry will have to do their part too. Alright everyone, that's it for tonight. Thanks for watching. Subscribe to the channel, sign up for the Patreon and I'll see you guys next time.