Ag-Network-Chile

Competitive and Comparative Advantages

Chilean agribusiness has clear comparative and competitive advantages. Due to its geographical location, Chile produces fruit and vegetables during opposite seasons to the world's main consumer markets in the Northern Hemisphere. The fact that the country extends from north to south allows for staggered harvests throughout the production season.

A second outstanding feature is the low incidence of pests and diseases thanks to Chile 's geographical isolation since natural barriers such as the Atacama Desert in the north, the Andes Mountains in the east, Antarctica in the south, and the Pacific Ocean in the west protect it.

A third feature refers to the quality of the raw materials. Ideal agro ecological conditions, that are typical of a mediterranean climate which is unique in the Southern Hemisphere with the adequate number of cold hours during the winter and significant temperature differences between day and night during the growing season, give fruit and vegetables excellent color, aroma and flavor.

A supplement to the comparative advantages described above is the industry's competitive edge, i.e. the excellent qualifications of its professionals and technicians, an efficient export infrastructure, stable economic policies and compliance with international standards for guaranteeing food safety (HACCP, ISO 9000, Eurepgap, Good Agricultural Practices and Good Manufacturing Practices, among others).

All these factors have contributed to the considerable development experienced by Chilean agribusiness in recent years. As the figures show, exports have grown from US$ 46.6 million in 1985 to over US$ 558 million in 2003. Further room for growth is envisioned for the future.

 

TABLE 1: Agribusiness Exports (1985-2003) Thousand of US$ FOB

Year	Canned	Dried	Frozen	Juices	Total
1985	11,630	28,413	1,599	4,972	46,614
1990	97,641	85,753	22,469	26,219	232,082
1995	209,415	165,401	79,850	96,928	551,594
2000	153,395	173,432	74,449	72,445	473,721
2003	166,117	196,839	101,791	93,541	558,288

Source: Chilealimentos

Main Export Products and Markets

 

Canned Products

As of the 1980s, exports in the canned product industry, as well as in other agribusiness production areas, have grown very quickly with shipments amounting to US$ 166,117 million in 2003.

Processed canned products include: Peaches (halved, sliced and diced, in syrup or water), cherries (pitted and unpitted, in syrup or water), sulphited cherries (whole, pitted), apricots (whole and halved), papayas (whole), fruit pulps, tomatoes (peeled whole, diced, and pureed), asparagus (whole), button mushrooms (whole and sliced), tomato paste (Hot Break and Cold Break), and tomato sauce, among others.

Dried

Dried fruit and vegetable products are a part of agribusiness where exports have grown significantly in the last three decades. From approximately US$ 20 million exported in the early 1980s, returns of up to US$ 197 million were produced in 2003.

Processed dried products include: raisins (Thompson Seedless, Thompson and Flame), prunes (different types and calibers, both dried and tenderized), assorted dried fruits (peaches, pears, apricot halves and diced apricots), walnuts (shelled and unshelled, halved and in quarters), low-humidity dried apples (diced, in flakes, in granules and powdered), dried bell peppers (red, green, field/run, flakes, granules, thin sliced and in strips), tomatoes (flakes, in granules, thin sliced and halved), mushrooms (sliced, whole and powdered), paprika (green, red, diced, flakes, and powdered), broccoli (florettes, granules and powder), leeks (white and green, flakes, leeks (white and green, flakes, granules and powdered), among others.

Frozen

Exports of frozen fruit and vegetables began in 1986 for an amount of US$ 5.2 million. In the previous five-year period, exports amounted to less than US$ 2 million. The value of frozen fruit and vegetables increased strongly in the last two decades and went beyond US$ 101 million in 2003.

Frozen products include: raspberries and strawberries (individually quick frozen (IQF), whole and broken), boysenberries, cherries and blackberries (IQF and block frozen) apricots, peaches and melons (IQF, whole, halved, diced and sliced), strawberries (IQF and block frozen), fruit pulps, asparagus (IQF, in cuts and strips), wild mushrooms (IQF), sweet corn (IQF), artichokes (IQF), peas, bell peppers and green beans (IQF), chard and spinach (block frozen), broccoli and cauliflower ( I Q F ) , assorted vegetables (IQF), and others.

Juice Concentrates

The juice concentrates industry in Chile developed significantly in terms of international markets with sales rising from US$ 2.4 million in 1981 to over US$ 93 million in 2003.

Juice concentrates include apple concentrate (clear and cloudy), grape concentrate, peach concentrate, raspberry and blackberry concentrates (clarified), plum and prune concentrates, pears and raisins, tomato, carrot and bell pepper concentrates and others.

Olive Oil

In industry and trade, major innovations have centered on renewing and expanding production facilities, adopting modern quality assurance systems, updating management methods and integrating marketing as part of the globalization of the business world. Thus, Chile now has a modern production sector which participates in the international market, with considerable potential for expansion. This is backed by the high quality standards that characterize the products offered by Chilean industry.

Estimates show that, in 2004, Chile will have a supply of approximately 2000 tons of olive oil for export. By 2010, exports in excess of 6000 tons are expected. By 2015, this figure is expected to reach 13000 tons, thus bringing in returns equal to more than US$ 70 million per year.

Premium Quality Olive Oil

Chile produces extra virgin olive oil of optimum quality which can compete on an equal basis with the best in the world. Thanks to rigorous processing, coordination of harvesting and agro industrial processing, Chile produces exclusively extra virgin olive oil.

Some of the awards won by Chilean olive oil are undeniable proof of its quality: Tercer Concorso Internazionale Oli da Oliva (Gradara, Italy), SOL d'ORO 2002 (Best Non-Italian Extra Virgin Olive Oil, Verona, Italy), L'Orciolo d'Oro (Gradara, Italy) 2002 and 2003, Cibus Med 2003 (the largest Mediterranean food exhibition in Europe, held in Bari, Italy), Leone d'Oro dei Mastri Olaeri (Italy) 2003, Olive Oil of the Americas Competition (California, U.S.A.) 2003, SOL d'ORO 2003, BIOL International 2003 (Andria, Italy).

 

TABLE 2: Main Agribusiness Exports, by Sub sector (US$ and Tons)

Sub sector/Product	US$	%	Tons	%
Canned	166,117	100	217,509	100
Tomato paste	46,692	28	74,309	34
Peaches	42,358	25	50,448	23
Pulps, Jellies Jams, Peaches	17,275	10	20,553	9
Other Pulpy, Jellies & Jams	15,175	9	27,143	12
Cocktail	9,711	6	10,940	5
Other	34,906	21	34,116	16
Dried	196,839	100	119,585	100
Raisins	45,101	23	48,094	40
Plums	40,485	21	31,318	26
Walnuts	27,688	14	8,901	7
Apples	17,888	9	5,646	5
Rose hip	15,208	8	7,352	6
Bell Peppers and Paprika	12,770	6	4,180	3
Other	37,699	19	14,094	12
Frozen	101,791	100	77,056	100
Raspberries	39,387	39	26,532	34
Strawberries	12,972	13	10,608	14
Blackberries	11,693	11	10,373	13
Asparagus	10,929	11	5,176	7
Other vegetable	14,358	14	13,389	18
Other	12,452	12	10,528	14
Juice	93,541	100	89,516	100
Apples	50,773	54	56,792	63
Grapes	13,725	15	17,746	20
Raspberries	8,124	9	1,769	2
Plums	4,497	5	3,731	4
Other	16,422	18	9,478	11

Source: Chilealimentos

Chile in the International Scene

Through the trade agreements signed with different countries, Chile now has free access to the main markets in the world. Chilean products have gained admittance to a market of 1275 million people who control 77 % of the world's GDP.

 

Free Trade Agreement Between Chile and the United States

In eight years or more, 74 percent of agribusiness exports will be completely duty free under this FTA. The main agribusiness products such as tomato paste, canned peaches, prunes, fruit cocktails, and frozen strawberries will be subject to zero duty in 12 years' time

European Union Association Agreement with Chile

Chilean agribusiness products were subject to high tariffs when exported to the European Union. When the agreement with the European Union became effective, most of these products became eligible for access with a 25 percent tariff reduction.

In agribusiness, dried products were the ones that benefited the most from the agreement with the European Union since most of them were placed in a tariff-free status immediately. These include walnuts, almonds, prunes and raisins, among others.

In four years' time, 63 percent of the value of agribusiness exports will be fully exempt of customs duties under this agreement.

Free Trade Agreement with South Korea

The FTA recently signed with South Korea places most of the products supplied by Chilean agribusiness under full customs duty exemption status in a 10-year period.

International Positioning of Major Products

• Tomato paste and canned peaches: first and second exporter in the Southern Hemisphere, respectively.
• Dried apples: number one world exporter and number two world producer.
• Dried bell peppers: number one world exporter.
• Raisins, prunes, walnuts and almonds: number one Southern Hemisphere exporter. Frozen raspberries and strawberries: number one Southern Hemisphere exporter. Apple and grape juice: number two Southern Hemisphere exporter.
• Olive oil: potential as the number one exporter of extra virgin olive oil in the Southern Hemisphere.

Agribusiness Exports by Market in FOB Values: OTHER 1 %, EUROPE 27%, AMERICA 64% and ASIA 8 %. (Source: Fepach)

The content of this document (Experience the Flavors of Chile - 2004) was kindly provided by the Export Promotion Bureau - ProChile

• E-mail: info@prochile.cl
• Web: www.chileinfo.com

Return to Top of the Page