Juan Salazar, head of Proexport UK, the London office of the Colombian trade and tourism promotion body, says recent years have been good to his country: “Both our country and our president are doing very well. Economically, we are in a far better situation than five years ago, when inflation was running at 20 per cent. Now it is between 4.5 and five per cent. Our GDP growth in 2006 was 6.8 per cent, and it is expected to grow by 7.5 per cent when 2007 figures are announced.
“Exports will have brought roughly $28 billion (£14bn) into the Colombian economy in the year just ended, and projections put the 2010 export figure at $40bn. At the same time, inward investment has boomed. Colombia used to receive around $2bn a year, but in 2005 it attracted almost $10bn - although one company alone (SAB Miller) invested $4.7bn - and the 2007 figure will come in at around $8bn.
“Tourism has flourished too, as visitors regain their confidence in Colombia. In 2004, 550,000 foreigners visited the country, and in 2007 this more than doubled, to 1.3 million. Most importantly, we will reach the same level as in 1980, the year when our security troubles really began to have an effect. Because of these problems, we have effectively lost 27 years of tourism. By 2010, however, the expectation is that the number of tourists coming to Colombia will top four million.
“There has also been a lot of investment in the infrastructure of the country, both to facilitate the growth in tourism and also future export growth. The challenge set down by the government is to fund this through inward investment, and they have changed some laws to make Colombia a much friendlier country to invest and work in for foreign companies.”
In some sectors, companies have been granted 30-year tax exemptions, while smaller investors are also being given attractive tax breaks to attract them into the country.
“These things make a big difference to the people, and to fresh produce exporters,” says Salazar. “Many Colombians have renewed belief in the system and can see that the social agenda has changed. The government has made significant subsidies available to kick-start small- and medium-sized farmers, and is working with exporters to co-ordinate sustainable production and marketing plans.”
Political stability has been a long time coming to Colombia, but the success of the incumbent president, álvaro Uribe Vélez, has brought about significant constitutional change. Uribe is the 56th president of his country, and when elected in 2002, he was expected to preside for just one four-year term. However, his short-term success convinced Colombians that the right to be re-elected, which was not allowed until November 24, 2005, should be enforced. The Colombian Congress approved this by introducing the Electoral Guarantees Law, modifying the Colombian Constitution of 1991, and Uribe, who ran as an independent liberal candidate, is therefore enjoying a second term in charge, as the country’s most popular president for some time. He garnered three times more votes than the second placed candidate, and six times more than the third in line.
Agribusiness companies, particularly to date those interested in producing biofuels, that are willing to invest upwards of $1bn, or create 500 jobs, will automatically be inducted into a free trade area.
Colombia has huge production of palm oil and sugar cane and lends itself very well to biofuel production. Salazar says: “Due to the internal troubles of the last few decades, around half of our country remains virgin, so we have enough land to move into biofuel in a very big way without chopping down any trees or changing existing production patterns. It would be completely sustainable. A UK company has just committed to invest $270m in a biofuel project in Boyacá, which will see 10,000 hectares planted with sugar beet. And already, an increase of 175,000ha of sugar cane and cassava crops destined for ethanol production is expected by 2020.
“Our government is negotiating a free trade agreement with the US at the moment, which would undoubtedly take biofuel on to the next level in our country. One of our biggest advantages is that we can export to both the east and west of the US just as easily, which is also important for our fruit, veg and flowers.
“Fifty per cent of our country is still undiscovered by the agricultural industry. A lot of work is going into developing central Colombia, but the long-term plan is to extend this work into the poorer eastern areas, where redevelopment would be crucial to the local communities. One of the sectors that would undoubtedly benefit most would be horticulture and fresh produce. The Colombian government would be looking to bring new skills and more money into the country to regenerate these areas and, because of the drive to increase inward investment and international awareness, there will be opportunities for all stakeholders in the fresh produce sector to be involved.”
Proexport has produced a toolkit for potential investors - Colombia, a golden opportunity - which signals the five prime reasons to invest as: macroeconomic stability; skilled and competitive workforce; exporting platform; technological and telecoms structure; and multiple development centres. It is available on request from the organisation’s London office.
However, despite the spotlight on attracting the outside world, the internal clock has certainly not stopped ticking. Astrid Duque, commercial officer at Proexport UK, says: “As a government, there is a commitment to put money into helping exporters meet international standards and regulations. The priorities are constantly being assessed, and through Asohofrucol (Colombian Fruit & Vegetable Association), traders and officials are one year into a four-year plan to ‘technify’ the production sector, and to adopt international standards as local. At the moment, the internal standards in Colombia do not always match international requirements, but the whole point of this transformation is to bring everyone into line.”
ColombiaGAP is a part of this plan, not run by Proexport but by Corporación Colombia Internacional (CCI Colombia), which has been given $70,000 by Proexport to develop the project. “There is recognition that CCI has to work very closely and hard with producers of all sizes to ensure that the standards of the industry are uniform. Within this context, the UK is definitely one of the most important markets to focus on, alongside the US and Asia,” says Duque.
The Colombian ministry of agriculture has been encouraging alliances between producers and research bodies, in order to marry science and technology with commercial requirements and bring more innovation into the fruit sector.
The growth of the fresh produce industry has been limited to an extent by a relative lack of technological know-how and, as such, hamstrung growers have been unable to fully capitalise on the natural advantages of Colombia’s biodiversity.
Resources have been made available for scientific and technological research projects by the ministry of agriculture, through its National Fund for Horti-fruíts Support, and have been doled out through a transparent public process. In the last three years, some 71 projects were approved, an investment of around £1.3m. Although it is widely accepted that these investments neither cover national demand nor reach international standards, the ministry recently committed to increase funding, in an attempt to enhance national critical mass.
There have also been calls for the funding to be used on a more structured basis, with end goals established specifically to meet international demands, and improve confidence levels in Colombia’s research and development capabilities.
Logistics has been another inhibiting factor to domestic and export growth, and a new project named New Methods of Logistics in the Business of Agro-exports (MERLIN) aims to make inroads into the transportation issues within Colombia.
MERLIN was established with the objective of allowing Colombian fresh produce exporters to, wherever possible, reduce their dependence on expensive and hard-to-come-by airfreight space by increasing the volume of shipments by sea.
The project would, by definition, reduce costs and enhance the competitiveness of Colombian exporters. It is supported by the Corporación Andina de Fomento (CAF) and the Fundación para el Desarrollo Universitario (FDU), and a series of trials have been carried out to analyse the technical and logistical feasibility of changing from air to sea distribution.
CAF has provided financial support and technical co-operation, while the FDU, together with the Universidad Jorge Tadeo Lozano (UJTL), provide the research mechanism through the Agro-industrial Research and Development Centre.
International interest has already seen the embassies of both the UK and the Netherlands donate money to the project.
Initially, the concept behind the project was to create a new model for fresh produce exports, which transformed logistics into an added value. Cost reduction, said CAF and FDU, would result in additional benefits to agro-exporters that have been adversely affected in the last few years by four principle factors:
• revaluation of the Colombian peso, up 35 per cent in the last three years
• lack of infrastructure in ports (coldstores, stock control, etc.)
• freight costs have risen by more than 25 per cent in the last three years due to oil costs
• lack of domestic firms with logistical know-how (most is outsourced, and agro-exporters have to export FOB).
The MERLIN project aims to find solutions that take these issues into account, and offer both exporters and their customers overseas the means to guarantee the shelf life, quality and safety of products by using the seafreight option.
Spurred on perhaps by the improved focus on its activities, the fresh produce sector has begun to branch out. FPJ visited Colombia in late 2005, when the focus was mainly on physalis, passionfruit, bananas and herbs. These products remain at the forefront of fruit exports, but the country’s growers, primarily in the traditional coffee-growing areas, are beginning to diversify into crops such as avocado, mango and pineapple. “These are being grown for internal consumption at the moment,” says Duque, “but growers are being advised to plant the varieties in demand by European supermarkets, so that when ColombiaGAP is in place, they will be able to take advantage.”
ASOHOFRUCOL TO ADD STRUCTURE
Rafael Suárez Camacho was appointed general manager of Asohofrucol, the Colombian Fruit & Vegetable Association, in January, and is heading up moves to add some structure to both the domestic and export sectors, as well as promote the take-up of international standards and best practice.
He says: “The promotion and development of the fruit sector represents an important source of growth for agricultural production in Colombia, generation of employment and substitution of illicit crops, as well as an opportunity for equality of growth in the different regions, as different fruits can be grown in the different soil types and climates.”
Largely due to the political and social background of the country, the Colombian fruit production sector has been highly fragmented to date, characterised by a large number of producers spread across the country - the official figure is 320,000. Between them they produce more than three million tonnes annually, but with a relatively low general level of technical expertise. The vast majority of that production is therefore destined mainly to satisfy the needs of the internal market.
“It is clear that the targets for growth and development of the sector are fundamentally dependent on greater penetration in international markets and expansion of the internal market,” says Suárez. “By the same token, these objectives also depend on Colombian national production becoming more competitive.
“In order to guarantee that external competition generates the right conditions for modernisation and specialisation of fruit production, the Colombian government, through its ministry of agriculture and rural development, has devised a long-term export strategy to direct the efforts of the public and private sector, under the umbrella ‘Apuesta Exportadora’: Export Commitment. Through this initiative, 10 product groups exhibiting the most export potential have been identified along with those regions of the country that are best suited to growing each one, and the necessary instruments of political support to increase competitiveness and national production levels.”
The main strand of this strategy, which is designed to make all these aspirations a reality, is the recently formulated National Fruit Plan (NFP), which was conceived by Asohofrucol, a private organisation which represents fruit and vegetable producers in the country.
Running parallel with the NFP, Vision 2019 and the Colombian internal agenda to maximise the potential of the countryside, both highlight the need to gear the efforts of both the public and private sectors to improvement in competitiveness, from the starting point of maximising the comparative benefits of the fruit sector.
Export Commitment is the result of a concerted effort led by the ministry of agriculture and rural development in which different state institutions are working with the private sector, in the form of SAC, the society of Colombian farmers, Asohofrucol and Analdex, the exporters’ association, among others.
“The NFP is a strategic proposal with coherent objectives and programmes based on the vision of the future set out in Vision 2019, the 2006-10 National Development Plan and Export Commitment, all drawn up by the national government,” explains Suárez. “The plan’s initial challenge is to double the area under production nationally and to ensure the right technological and innovation conditions exist for high-quality, safe, sustainable production, as well as adding value to the fresh produce supply chain and achieving full access to international markets.
“Another instrument fundamental to the development of the Colombian fruit sector is without doubt the national plant-health and food-safety policy being drawn up by the government department for national planning. The main objective is to improve plant-health conditions and product safety in order to protect consumer health, as well as achieve competitiveness by gaining access to international markets,” Suárez says.
“This policy has been drawn up in consultation with producers and exporters in Colombia, as well as a host of government departments and agencies including Proexport. It focuses on three key areas: strengthening inspection and control procedures to guarantee food safety; improvement of growers’ capability nationwide to meet maximum residue requirements, and prevent plant-health and food-safety risks through the responsible use of agricultural inputs.”
The NFP sets out the goal of planting a further 235,000 hectares over the next 25 years, and aims to consolidate Colombian fruit and vegetable production, making it an important source of economic and social development by diversifying the export offer and ensuring international recognition and acceptance for Colombian fresh and processed fruit products.
Some 48 different fruit lines are featured in the NFP, with financial support coming in the first instance from the national fruit and horticultural investment fund (FNFH) and administered by Asohofrucol, and then from the fresh produce investment quota, and a levy of one per cent of sales value, paid by producers themselves.
The selection of products for the Export Commitment came out of the work carried out by the national planning department in its Vision for Colombia 2019 document, Realising the Potential of the Countryside. The selection of exportable products was based on the international market opportunities of each one.
“The NFP is the result of a concerted effort between producers and government departments through the agriculture officials in 22 administrative areas of the country. The plan was developed taking into account the climate and soil conditions, technological resources and infrastructure available in each area,” Suárez says.
“So far, the NFP does not cover the whole of Colombia, but it does extend to all those areas where fruit production has been traditional. There are some other administrative areas where there is the potential to develop new areas of production, but some of the areas left out of the plan are sparsely populated and deficient in infrastructure.”
In the short term, Asohofrucol, with financial resources from the FNFH and co-financed by other state agencies, is working on five basic national projects aimed at enhancing competitiveness.
The first is a GAP programme that is targeting 27 product lines and 2,500 producers and aims to train 150 inspectors for compliance with GlobalGAP. FNFH is funding this to the tune of $1.5 million, the national training service, Sena, is putting in a further $1.5m and producers and regional bodies a further $3m.
The second is an integrated weevil management programme. The pests are particularly prevalent in Colombia in the citrus sector, and some 20 different lines in total across all sectors are affected, including limes, which have been selected as part of the Export Commitment programme.
The third is to strengthen the Mediterranean fruit fly detection and management programme by carrying out a national epidemiological study featuring maps that show where the fly is most prevalent and which areas are free of it.
The fourth is to manage black sigatoka in bananas, as well as eradicate other banana diseases in co-operation with ICA.
And the fifth, also in collaboration with ICA, is to draw up a register of nurseries in Colombia in order to achieve the NFP’s goal of 235,000ha of new production area.
“In the medium term, Asohofrucol is working on structured programmes to implement the NFP nationwide,” Suárez says.
BECKERS STILL EYEING POTENTIAL FOR EXOTICS
Johan Beckers, managing director of leading Bogotá-based exotics exporter Andes Export, tells FPJ that the potential of Colombia is still waiting to be unleashed.
“The exotics export business from Colombia is still very limited to physalis, although I feel there is a huge potential for other products, such as limes and baby bananas. There is also potential for expansion of Colombia’s avocado and mango business,” he says.
“Unfortunately, many local circumstances have not allowed them yet to be competitive with other countries of origin. Where GlobalGAP and other quality standards are concerned, progress has been made, and ColombiaGAP will be up and running within about a year.”
Despite the progress, Beckers still believes the sector lacks the necessary level of cohesion. “Unfortunately, most exporters continue to work largely in isolation,” he says. “The sector is having a great deal of difficulty with the MRL standards in Europe, which are far from being harmonised and therefore difficult to manage.”
FPJ was in Colombia in late 2005, and Beckers says that, in production terms, the situation has not moved on radically since that time. “The biggest obstacle,” he says, “is the lack of stability in the European markets, where price issues are increasingly the main point, particularly in Germany, because of the ongoing competition within the retail sector.
“Furthermore, local costs are rising alarmingly, and the revaluation of the Colombian peso against the US dollar is making things very difficult for the whole of the Colombian export sector. The promising crops remain promising, but there is a big problem regarding the packaging required in international markets. This is a particular issue for limes, for which the packaging is simply unavailable domestically and needs to be imported, adding significant cost to the process.”
The National Fruit Plan, has ostensibly been put in place to deal with the issues that are holding back Beckers and his industry colleagues. It is admittedly still in its early phases, and Beckers says its effects are yet to be felt as anything more than a ripple. “For us as exporters, this plan is almost unknown, and in my opinion, it is more meant to optimise the [performance of the] internal market, and not the export market,” he says.
