MENDOZA, ARGENTINA -- In the deeply furroughed vineyards that blanket Argentina's wine-growing region, the talk these days is often about the past -- a richer, happier time before the grape glut began.
But in neighboring Chile, just over the snow-capped Andes to the west, farmers speak with excitement about a new grape-led prosperity evident in booming grape sales, rising land values and higher farm incomes.
Why is there such a contrast between these two countries with similar grape-growing traditions? If both have ideal soil and sun conditions for cultivating grapes, why has Chile managed to give new life to its farmers while Argentina continues to grieve over falling demand, excess production and economic hard times?
The answers go beyond grapes. The strength or weakness of private initiative in each country and varying degrees of stability of government policies have played important parts.
In fact, this tale of two countries reveals much about the internal forces that can drive or retard Latin American economies today. It shows that despite the burdens of large foreign debts and depressed prices for traditional exports common to all South American nations, some countries manage where others fail.
The roots of the story stretch back a century to a time when an influx of Spanish and Italian immigrants gave new impetus to grape-growing and wine-making in both Chile and Argentina. Most of the final product was consumed locally, quenching strong national thirsts for wine. At the peak of consumption in the early 1970s, the average Argentine was drinking 92 liters of wine a year, the average Chilean somewhat less.
But as beer, soft drinks, fruit juices, and low-alcohol beverages grew in popularity, sales of wine plummeted. Argentine grape growers hoped better days would return, while their less sanguine counterparts in Chile started scouting for new opportunities.
They found one in the United States. California grapes are available only from April to November. The U.S. market is up for grabs during the northern hemisphere's winter, which happens to coincide with summer in the southern hemisphere.
So Chileans moved to fill the gap. Focusing on table grapes instead of wine-making types, they began cultivating the Thompson Seedless and other varieties popular in America. Their brands now fill U.S. supermarkets from December to April.
The grape boom is merely the leading edge of a general surge in Chile of fresh fruits, including apples, pears, peaches, raspberries, prunes, melons and kiwis. Fresh-fruit exports shot up more than 9 percent last year to top $500 million. Grapes accounted for a little more than half the total.
About 75 percent of the grapes grown in Chile go to the United States. One out of every four grapes eaten in America is Chilean.
"Given what was happening to wine, we had no alternative other than to focus on table grapes," explained Arnaldo Bozzola, coowner of an 200-acre farm in Pudahuel near Santiago. "And because Chileans don't eat many grapes, we had to think about exporting them."
At 46, Bozzola considers himself part of a new entrepreneurial breed. "We've become a business that has changed the image of farming," he said. "In my father's time, fruit farming was considered unprofitable and of marginal worth. Today, it is flourishing and has allowed a large number of smaller farmers to profit."
Many Chilean growers credit the free-market policies of Gen. Augusto Pinochet, whose military regime has ruled since 1973, for facilitating the development of an export-oriented, fresh-fruit sector. Pinochet's devotion to economic liberalism, including the elimination of price controls, maintenance of competitive foreign exchange rates and the opening of doors to foreign firms, has stimulated business investment. So has the government's suppression of labor unions and political protest. Special investment credits and tax breaks have given farming in particular an added boost.
"Whenever people in other countries ask me for advice on how to do what we've done, I recommend three things," said Raimundo Correa, vice president of the association of Chilean fruit producers, Fedefruta. "First, guarantee private property; second, guarantee free trade; and third, be sure the government does nothing else to interfere with private enterprise."
In targeting the United States, Chilean growers moved methodically. They studied U.S. laws, health codes, markets and prices. They invited U.S. grape experts from California to instruct them in growing, packing and shipping techniques. They planted seedless varieties common in the United States, and lately have taken the world lead in testing some new types.
Back in the 1920s, long before Chile had gotten the idea, Argentina was a major exporter of table grapes to the United States and England. But the trade died out. Today, 95 percent of the grapes grown here go into wine production. Only about 3,300 tons of table grapes were exported from Argentina in 1987 compared to 288,000 tons from Chile.
"Grape growers here are conservative by nature. They don't like change," said Alberto Suarez Anzorena, vice president of Trapiche wines, a leading exporter of fine wines.
In addition, a succession of military and civilian governments have offered little help. To the contrary, their frequent policy shifts and ineffectual efforts to defeat stagflation have undercut business investment. Overvaluation of the local currency in the late 1970s made importing more economical than exporting. New bouts of high inflation in recent years and the state's continued deep involvement in major economic sectors have further undercut investor confidence.
"The main problem is, there hasn't been a simple, stable policy favoring exports," said Hugo Martinez, a regional coordinator for the national agronomy institute, INTA.
For years, in fact, Argentina taxed its agricultural exports, using the revenues to cover the deficits generated by inefficient state industries. Only recently, under the civilian government of President Raul Alfonsin, have those taxes been reduced or eliminated.
Belatedly, Argentine authorities have shown an interest in imitating Chile's success with table grapes. They are encouraging growers to diversify into the exportable fruit. "Chile's experience serves as a model for us," said Fidel Braceras, a senior official in the Agriculture Ministry. "We're now engaged in converting some of our vineyards to table grapes."
But the recent experience of two young entrepreneurs eager to send Argentine grapes abroad show the obstacles that still remain. The two men, Mario Toso and Jorge Perez Cuesta, had to maneuver through six months of bureaucratic delays just to register their new firm, Argengrapes, as an exporting company -- a procedure that would take much less time in Chile.
They envy their Chilean counterparts for other reasons, too. Farm wages in Chile are half what they are in Argentina. The Mediterranean fruit fly is absent in Chile but still exists in some parts of Argentina, requiring grapes from here to undergo two weeks of refrigeration before they can enter U.S. markets. Dollar earnings are exchanged into pesos in Chile at a free market rate, but in Argentina, exporters must change their dollars into australs at an artificial rate now running about 35-to-40 percent below the free market value.