Agriculture
A Top Export Prospect for Colombia
Sections
Consumer Oriented Products
Market Estimates
(in US$ millions) |
2010 |
2011est |
2012est |
Total Market Size* |
18,011 |
19,160 |
20,250 |
Total Local Production** |
20,050 |
21,250 |
22,400 |
Total Exports*** |
2,910 |
3,100 |
3,300 |
Total Imports*** |
871 |
1,010 |
1,150 |
Imports from the U.S.*** |
155 |
209 |
250 |
Source: See resources at the end, unofficial estimates
Overview
Demand in Colombia for consumer oriented and other high-value food products have been growing steadily since the early 1990’s. Specific products showing an increase in sales since then are red meats, fresh/frozen pork, mechanically de-boned chicken meat, hatching eggs, fresh fruits, processed fruits and vegetables, pet food, beer, nursery products, and various types of snack foods. In 2011, two main conditions supported the rise of consumer oriented products: Colombia’s economic growth of 5 percent which is optimistic compared with other South American countries, and Colombian Peso’s constant revaluation that increased purchasing power. In addition, GOC reduced to zero import duty for equipment and machinery for the industry and reduced import duties for food products via Decree 4114 and 4115to improve the competitiveness of the agriculture and food sectors. This has resulted in a dynamic fast-food industry and has led to drastic changes in the way food marketing is done in Colombia.
Sub-Sector Best Prospects
For 2012, strong foreign direct investment in Colombia is likely to continue and it is unlikely that the Colombian peso will be weaker against the dollar, which will have a positive impact on imports from the United States.
Historically, Chile has been the principal supplier of imported fresh fruits to Colombia, but U.S. fruits can compete during certain times of the year and Colombian retailers are seeking to increase their supply of U.S. products. Foreign competition in wine primarily comes from Chile, Argentina, Spain, and France. Marketing efforts continue to introduce high-quality U.S. wine into the Colombian market, but success has been limited due to the 15 percent tariffs. South American countries receive preferential duty rate because they are members of the Latin American Integration Association (LAIA) and/or the Andean Community of Nations. The implementation of the Colombia-U.S. FTA will reduce import duty to zero for most of the U.S. value added products and establishes a phase out period of 5 years for a few products. The FTA will level the playing field for US consumer products exported to Colombia.
Although the production of domestic processed foods is growing, imports play an increasingly important role to meet consumer demand for these products. Sustained economic growth in the past two years and strong competition in the supermarket sector has also had an important impact on imports. The United States is the principal foreign supplier of consumer-ready food products to Colombia. U.S. food products are highly regarded in the Colombian market for their quality and value as well as for their wide diversity.
Opportunities
U.S. food companies looking to break into the Colombian market for consumer oriented food products and beverages should consider visiting Colombia in 2012 as a preliminary market analysis before the FTA is ratified. The FTA implementation expected in 2012 year will provide increased opportunities for U.S. food and beverages and it is important to develop business relationships early. There will also be increased opportunities for direct foreign investment with local food processing companies.
Resources
Trade Shows: Alimentec is a general food industry exhibition that takes place every two years. Alimentec will occur in Bogotá in June, 2012. Information can be found at www.corferias.com
Information on the processed food sector in Colombia can be obtained from Ms. Maria Carolina Lorduy, Executive Director of Food Industry Chamber at the National Association of Industrialists (ANDI): Calle 73 No. 8-13, Piso 6, Torre A, Bogotá, D.C., Colombia. Telephone (57-1) 326 8521/40, fax (57-1) 347-3196/98, e-mail: clorduy@andi.com.co
The National Institute for the Control of Food and Drugs (INVIMA) is the Colombian government agency that regulates processed food products and is controlled by the Ministry of Social Protection. The main contact is Mr. Cesar Jauregui, Deputy Director for Food and Alcoholic Beverages, INVIMA, Carrera 68D No. 17-11or 17-21, Bogotá, Colombia. Telephone (57-1) 294-8700 Ext. 3922, fax (57-1) 294-8700, Ext. 345. E-mail: invimasal@invima.gov.co, or cjaureguirl@invima.gov.co. Web site: www.invima.gov.co.
Cotton
Market Estimates
(in thousands of metric tons) |
2010 |
2011est |
2012est |
Total Market Size* |
86 |
90 |
92 |
Total Local Production** |
36 |
34 |
36 |
Total Exports*** |
2 |
2 |
2 |
Total Imports*** |
50 |
58 |
58 |
Imports from the U.S.*** |
49 |
56 |
56 |
Source: See resources at the end, unofficial estimates
Overview
Duty free access for textiles and garments to the United States under the Andean Trade Promotion and Drug Eradication Act (ATPDEA) has boosted Colombia’s cotton demand. However, lower international demand due to weaker economies and strong competition with china apparel has impacted negatively Colombian cotton demand. The Government of Colombia is still encouraging cotton production by guaranteeing a minimum price paid to growers. The mandatory requirement for importers to purchase local production (absorption mechanism) was replaced by a new tariff-rate quota system that lowers the import duty if importers/mills purchase local production.
Best Prospects/Services
The expansion of Colombia’s textile industry will be triggered by duty free access for garments and textiles to U.S. markets under the FTA. It will results in larger cotton demand. The high quality of Colombian products and the well-developed garment industry gives Colombia a competitive advantage among other Central and South American countries.
Opportunities
U.S. cotton exports should maintain their market share since Colombia is an important producer of denim, which utilizes short-fiber cotton. In addition, U.S. cotton has the additional advantage of lower freight costs to Colombia and the benefits of the FTA once implemented.
Resources
The U.S. cotton and yarn industry is locally represented by the regional Andean office of the Cotton Council International and the Cotton USA Sourcing Program. The contact person is Ms. Nina Maldonado, Andean Regional Manager, Carrera 14 No. 94A-44, Of 402, Bogotá, D.C., Colombia. Telephone (57-1) 623-3132, fax (57-1) 623-3076, E-mail: sourcingusaandeanreg@cable..net.co or nmoffice@cable.net.co.
Wheat
Market Estimates
(in thousands of metric tons) |
2010 |
2011est |
2012est |
Total Market Size* |
1,446 |
1,578 |
1,1644 |
Total Local Production** |
24 |
24 |
24 |
Total Exports*** |
0 |
0 |
0 |
Total Imports*** |
1,422 |
1,554 |
1620 |
Imports from the U.S.*** |
624 |
780 |
780 |
Source: See resources at the end, unofficial estimates
Overview
Wheat production is marginal in Colombia and is expected to maintain its level of 24,000 tons in 2012. Colombian low quality wheat and limits for expansion will amount to reductions in Colombia’s wheat production in the future, unless the government expands its incentive programs. Despite the reduction for basic import duty to 10 percent during the first half of 2011, The United States has lost market share due to a duty preference of 100 percent for imports from Mercosur countries since January 2009.
On the other hand, the Colombia and Canada Free Trade Agreement will enter into force during the first half of 2012, providing a positive scenario for Canadian wheat, accessing Colombia with zero duty.
The implementation in May 2012 of the U.S. Colombia FTA will level the playing field for U.S. wheat, increasing purchases especially of hard red winter wheat.
Best Prospects/Services
The prospects for the United States to capture a significant percentage of the market would come with the CTPA implementation and the ability of Mercosur and Canadian competitors to supply the market. The CTPA implementation between Colombia and the United States will result in an immediate and permanent zero duty for imports of U.S. wheat.
Opportunities
While bread consumption in Colombia remains low, there has been a steady increase in Colombian pasta consumption creating increased demand for Durum wheat. In addition, this trend could open opportunities for U.S. pasta importers due to the 5 percent duty reduction to wheat derivates (Decree 4114 of November 5, 2010).
Resources
The U.S. Wheat Associates, Inc, from its regional office in Santiago, Chile, serves the wheat trade in South America. Information on the wheat market can be obtained from Mr. Osvaldo Seco, Marketing Specialist, U.S. Wheat Associates, Inc., La Concepción 177/32B, Casilla 16616, Santiago 9, Chile. Telephone (562) 235-7137, fax (562)235-7371, oseco@uswheat.org Website: www.uswheat.org.
The local wheat milling industry is represented by the National Federation of Wheat Millers, FEDEMOL, whose General Manager is Mr. Jaime Jimenez, Calle73 No. 8-13 Torre A, Bogotá , D.C. – Colombia, telephone (57-1) 326-8500 ext. 2420, fax (57-1) 347-3196, E-mail: jjimenez@andi.com.co.
Corn
Market Estimates
(in thousands of metric tons) |
2010 |
2011est |
2012est |
Total Market Size* |
3,526 |
3,503 |
3550 |
Total Local Production** |
792 |
704 |
710 |
Total Exports*** |
0 |
0 |
0 |
Total Imports*** |
3,434 |
3,000 |
3,100 |
Imports from the U.S.*** |
603 |
720 |
700 |
Source: See resources at the end, unofficial estimates
Overview
In 2011, Colombia’s yellow corn production declined despite high international prices and government support to encourage increased production. Colombian Imports of U.S. corn has been reduced over the last 2 years due to the duty preference to Mercosur countries under the trade agreement. For 2012, the duty preference on yellow corn imports from Mercosur countries is 66 percent.
Colombian corn consumption is expected to increase steadily for 2011. Corn production has been affected due to heavy rains caused by “la Niña”.
Best Prospects/Services
The CTPA, when implemented, will provide for more stable market conditions for U.S. corn. The CTPA is expected to win back corn imports from Mercosur countries and Mexico to the United States as the tariff advantages of those countries will be minimized by the CTPA, quality and shipping costs become more important factors in making purchases.
Opportunities
Corn imports (around 75% of the total domestic demand) will increase in the following years due to: A) a continued growth of the Colombian economy and a strong Colombian peso, and B) rising middle class that generates a significant demand of feed industry (chicken, egg and pork consumption has displayed a positive growth trend over the last 5 years).
Resources
Trade Shows: Alimentec is a general food industry exhibition that takes place every two years. Alimentec will occur in Bogotá in June, 2012. Information can be found at www.corferias.com
The U.S. Grains Council has maintained a regional consultant for trade servicing in different grain commodities in Colombia and the Andean region. The consultant is Mr. Jaime Cuellar, Calle 92 No. 10-40, Apto. 503, Bogotá, D.C., Telephone (57-1) 236-7532, 864-8695, mobile phone (57-3) 315-383-3288, fax (57-1) 236-7532 or 864-8704, E-mail: jacuellar@epm.net.co, Website: www.grains.org.
The local feed industry, the primary user of imported yellow corn, is represented by the Feed Chamber at the National Association of Industrialists (ANDI): Calle 73 No. 8-13, Piso 6, Torre A, Bogotá, D.C., Colombia. Information on the feed sector in Colombia can be obtained from Ms. Luz S. Kuratomi, Executive Director of Feed Industry Chamber at (011) (57-1) 326-8500 Ext. 2419, fax (011) (57-1) 347-3198, E-mail: lkuratomi@andi.com.co, Web site: www.andi.com.co.
Soybean Meal
Market Estimates
(in thousands of metric tons) |
2010 |
2011est |
2012est |
Total Market Size* |
920 |
1,057 |
1,107 |
Total Local Production** |
7 |
7 |
7 |
Total Exports*** |
0 |
0 |
0 |
Total Imports*** |
913 |
1,050 |
1,100 |
Imports from the U.S.*** |
46 |
210 |
350 |
Source: See resources at the end, unofficial estimates
Overview
The oilseed meal supply in Colombia is composed mainly of soybean meal, cottonseed meal, palm kernel meal, and sesame seed meal. All fishmeal used in the country is imported from Peru, Chile, and Ecuador.
The CTPA implementation will eliminate the duty on imports of U.S. soybeans and soybean meal. There will be a shift from soybean and soybean meal imports from Andean and Mercosur countries to the United States. Quality and shipping costs become more important factors in making purchases.
Best Prospects/Services
Total domestic consumption of soybean meal and palm kernel meal are forecast to make up 90 percent of Colombian vegetable meal used for animal feed production.
U.S. export market share of soybean meal to Colombia dramatically dropped to 5 percent against MERCOSUR countries in CY 2010. Soybean meal exports recovered in 2011 and it is expected to recover more market share with the FTA implementation.
Opportunities
The CTPA will open up opportunities for U.S. investors in establishing new oilseed crushing facilities and feed manufacturing plants in Colombia. Also, there may be investment opportunities in transportation and port infrastructure.
Resources
Trade Shows: Alimentec is a general food industry exhibition that takes place every two years. Alimentec will occur in Bogotá in June, 2012. Information can be found at www.corferias.com.
The American Soybean Association (ASA) maintains a regional consultant for trade servicing in different grain commodities in Caracas, Venezuela, for the Andean region. The consultant is Ms. Belinda Pignotti, Program Coordinator, Edif. Banco del Orinoco, Of. 7-D, Piso 7. Ave. Francisco de Miranda, La Floresta. Telephone (58212) 285-7697, mobile phone (58414) 308-7705, fax (58212) 285-7697, E-mail: asacar@cantv.net, Website: www.soygrowers.com.
The local feed industry, a main user of imported soybean meal, is represented by the Feed Chamber at the National Association of Industrialists: Calle 73 No. 8-13, Piso 6, Torre A, Bogotá, D.C., Colombia. Information on the feed sector in Colombia can be obtained from Ms. Luz S. Kuratomi, Executive Director of Feed Industry Chamber at telephone (57-1) 326-8500 Ext. 2419, fax (57-1) 347-3198, E-mail: lkuratomi@andi.com.co, Web site: www.andi.com.co.
Soybeans
Market Estimates
(in thousands of metric tons) |
2010 |
2011est |
2012est |
Total Market Size* |
413 |
310 |
360 |
Total Local Production** |
60 |
60 |
60 |
Total Exports*** |
0 |
0 |
0 |
Total Imports*** |
353 |
250 |
300 |
Imports from the U.S.*** |
155 |
105 |
150 |
Source: See resources at the end, unofficial estimates
Overview
Colombian soybean production is expected to remains under 60,000 tons in 2012. Lack of appropriate infrastructure, the need for capital investments, and pest risk all contribute to high production costs, which have kept soybean production at levels below expectations. A significant increase in production is not expected in the immediate future, although there are several commercial projects located in the Colombian high plains (Altillanura- the Colombian departments of Meta, Vichada and Casanare) to produce soybeans on a large scale that are just getting off the ground.
Best Prospects/Services
Oilseed consumption is expected to increase in 2012 as the Colombian economy growth continues. Close to 95 percent of Colombia’s full-fat soybean meal (FFSBM) production utilizes an extrusion or roasting process. In 2004, the Colombian government banned the use of imported bovine protein meal in livestock feeds due to Bovine Spongiform Encephalopathy (BSE, or Mad Cow Disease). This policy is helping to fuel the steady growth in oilseed meal consumption.
The impact of the CTPA with the United States is expected to shift soybeans and soybean product imports from Argentina, Paraguay and Bolivia to imports from the United States as tariff advantages are eliminated.
Opportunities
The CTPA will open up opportunities for U.S. investors in establishing new oilseed crushing facilities in Colombia. Also, there may be investment opportunities in feed manufacturing, transportation and port infrastructure.
Resources
Trade Shows: Alimentec is a general food industry exhibition that takes place every two years. Alimentec will occur in Bogotá in June, 2012. Information can be found at www.corferias.com.
The American Soybean Association (ASA) maintains a regional consultant for trade servicing in different grain commodities in Caracas, Venezuela, for the Andean region. The consultant is Ms. Belinda Pignotti, Program Coordinator, Edif. Banco del Orinoco, Of. 7-D, Piso 7. Ave. Francisco de Miranda, La Floresta. Telephone (58212) 285-7697, mobile phone (58414) 308-7705, fax (58212) 285-7697, E-mail: asacar@cantv.net, Website: www.soygrowers.com.
