Chile and Peru have emerged as two of the real powerhouses of the Latin America fruit and vegetable sector

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They have seen exports develop significantly to various international markets worldwide.

Since the mid-1990s, Chilean exports have boomed in terms of value from around US$1.3 to over US$5.5 billion per annum, and Peru has seen its exports grow significantly, in the same period, from under US$200 million to over US$2.4 billion in an annual basis. In more recent years, though, the growth of Chilean exports has slowed while those from Peru have continued to increase impressively.

The two industries share several features in common, but the background to developing their export sectors has been very different. The development of exports from Chile began as far back as the 1940s but kicked into life with the adoption of the free market economic theories, as put forward by the so-called “Chicago Boys”. This was a group of US-trained economists from the University of Chicago. They then went on to hold a variety of senior government positions in the Ministries of Finance and Economy and in the Central Bank.

As a result, in the 1970s and 80s, this saw significant investment into the Chilean economy and not least in the fruit sector. Investment from the US and, to some extent, the Middle East poured into the industry and indigenous finance. This helped produce what is often called the “Chilean Miracle”.

At the time, the influence of US-trained economists in Latin America was not confined to Chile. Over time, there was plenty of similar activity in other countries, such as Peru. However, Chile probably had a 30-year head start in terms of developing a modern, forward-thinking fruit export sector compared to other countries in Latin America.

Looking back, Chile benefited from the so-called prime mover advantage position. While putting them in a solid position to spearhead the development of Latin American off-season exports, it also meant that other countries could look and see what has been achieved and how it has been done and learn from any mistakes made. To be fair to Chile, these have been few and far between.

What Chile has done is look to keep the distance between themselves and other Latino countries, not just by the development in some cases of new markets, but also by a deep involvement in influential trade associations, such as FRESHFEL, SCHAFFE, the PMA, EUREPGAP etc.

The product and export mix of the two countries is somewhat different, too, with Chile building its success mainly on top fruit, grapes, kiwifruit, avocado and some stonefruit. Peru, in contrast, has largely built its reputation on products such as avocado, mango, grapes, citrus, and originally asparagus.

Chile Fruit exports

The Peruvians were the official world champions of processed asparagus at one stage. However, the Chinese entry into this sector over the last 10 years or so has seen the Peruvians forced to look for higher-value products and markets. One area that Chile and Peru have in common is opportunities and interest in products such as blueberries.

The two countries do, however, have several things in common. These include the following:

A rapid rise in the level of exports over the last 10 years in particular, although in Chile, this began some time beforehand

 The diversification of the export base. Historically, both countries developed their exports by looking at the US and the EU markets, but in more recent years, the angle of attack has changed. Markets in China, SE Asia, other parts of Latin America and the Middle East are now playing a much more critical part in the export mix – and will continue to do so.

 The sheer pace at which they have developed a wide range of Free Trade Agreements (FTAs), especially in SE Asia, has seen them develop exports to this part of the world at speed.

Both countries have developed several genuinely world-class growing and export businesses. Both have developed a strong presence at major international trade events, such as Fruit Logistica in Berlin, Fruit Logistica Asia in Hong Kong and at the PMA in the US every year

Chile and Peru have also traditionally enjoyed low market access to the UK as a member of the EU. The decision for the UK to leave the European Union after the Brexit referendum could have meant that difficult trade discussions were needed to re-negotiate new access arrangements to the UK. In fact, both countries have been very
proactive in securing access to the UK at the same level as in the past and, therefore, probably avoided any marked disruption to trade. This is an area where the expertise of both countries in developing FTAs has come to the fore.

Strong industry leadership and direction from umbrella organisations like ASOEX in Chile and AGAP in Peru. This is backed by practical support from government agencies such as PROCHILE in Santiago and the Peruvian Trade Office in Lima. In the cases of ASOEX and AGAP, these organisations are well funded, well staffed and well connected politically and have a clear sense of where they want the industry to move.

In both cases, there appears to be a remarkably overriding and positive attitude towards developing their own industries and that of the international fruit market per se. Having worked with both, this can be summarised as “Don’t tell us why we cannot do it. Tell us what we need to do to make it happen”.

This is still an essential destination for both countries in the UK market. Part of the attraction of the UK has been the relatively large and affluent population of some 65 million consumers. While demanding, both technically and commercially, clear and well-understood routes to market, Peru clearly sees the UK as an attractive market for now – and in the future.

Looking at the basic statistics, it is clear to see why. UK imports of strawberries have increased from 46,000 tonnes to over 53,000 tonnes over the last few years and which are dominated by supplies from the likes of Spain, Belgium and the Netherlands – all of whom could suffer if we end up with a No Deal Brexit – and then exports from North Africa.
Supplies from the Americas are now limited to the US and Mexico.

Imports of raspberries into the UK have increased from 15,000 tonnes per annum to over 27,000 tonnes since 2013. Spain, the Netherlands, and Portugal are all vital in this category. Mexico, South Africa, and North Africa are all essential suppliers outside the EU.

Imports of blueberries have rocketed from 29,000 to 48,000 tonnes since 2013. Peru has a substantial market share and supplies 7,000 tonnes per annum, along with the US, Chile, Argentina, South Africa, and many other EU producers.

The Peruvian mindset is positive. Having secured market access to the UK, the industry seems set for future export growth. It will build on the success of the last 10 years or so and cement its reputation as a highly professional and innovative supplier.

Peru fruit exports

This has all been carried out under the auspices of the “Super Food” label that Peru looks to promote and the evocative imagery of the country. All products go through some sort of life cycle. Peru has done its homework and analysed where its products are on this in the UK.

In Santiago, they seem as determined as ever to keep their industry moving forward, with the development of new markets and forms of promotional support among the critical objectives. Chile began promoting its fruit as “world-class” a few years ago. They continue to do so. Setting this as the industry’s ambition makes it hard to go back.

So, for Chile, the reality is that it has no option other than to keep moving forward. China, others in SE Asia and then developing business in newer markets such as Sub-Saharan and North Africa combined with existing trade to the EU and the US all seem set for further growth, as does the further diversification of the export product mix. At the same time, Peru is very
much hot on their heels, often spurred by the enormous opportunities they both see in SE Asia and China.

Source: John Giles is a Divisional Director with Promar International,

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