Chile and Peru have emerged as two of the real powerhouses of the Latin American fruit and vegetable sector and seen exports develop significantly to a wide range of international markets around the world.
Since the mid-1990s, Chilean exports have boomed in terms of value from around US$1.3 billion to over $5.5bn per annum, while Peru has seen its exports grow significantly in the same period, from under $200m to over $2.4bn on an annual basis.
This is the first big difference between the two countries. Chilean exports are at least twice the size of those from Peru, and Chile will remain the dominant exporter from the region for the future.
The two industries share a number of common features, but the background to the development of their export sectors has been very different. The development of exports from Chile began as far back as the 1940s, but really kicked in to 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, who 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, there was 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, along with indigenous finance. This helped to produce what is described as the “Chilean Miracle”.
At the time, the influence of US-trained economists in Latin America was not confined to Chile. Over a period of time, there was plenty of similar activity to be found in countries such as Peru. The reality is, however, that 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 had the benefit of the so-called ‘prime mover advantage’ position. While putting them in a strong position to spearhead the development of Latin American off-season exports, it also meant that other countries can see what has been achieved, how it has been done and learn from any mistakes that have been made. To be fair to Chile, these have been few and far between. Brazil, Argentina, Uruguay and Mexico have all looked to add to the overall competition from the continent. While the “best of the best” from these countries are very good indeed, Chile has remained top of the pile.
What Chile has done is look to keep the distance between themselves and other Latin American 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, Schafe, PMA, Eurepgap etc. Chile has often taken a key role in leading initiatives relating to wider global-based industry issues, such as market and promotional development, water usage and the environment. It has also undergone a bold new rebranding of the industry over the last few years to increase the visibility and consistency of the Chilean sub-sectors in the international marketplace.
The product and export mix of Peru and Chile is somewhat different too, with Chile building its success mainly on topfruit, grapes, kiwifruit, avocado and some stonefruit. Peru, by contrast, has largely built its reputation on products such as avocado, mango, grapes, citrus, and of course, originally asparagus. At one stage, the Peruvians were the world champions of processed asparagus. The entry, however, of the Chinese to this sector over the last decade or so, has seen the Peruvians forced to look for higher-value products and markets. Opportunities and interest in products such as blueberries is one area that both Chile and Peru have in common, although to date, Chile leads the way here.
In the case of both countries, there also appears to be a remarkably positive attitude towards the development of their own industries and that of the international fruit market per se.
The UK market is still an important destination for both countries, and both have also enjoyed low levels of market access to the UK as a member of the EU. The decision for the UK to leave the EU after the recent Brexit referendum will mean that they will need to renegotiate access to the UK. But both countries are well versed in the art of developing trade agreements. It might not be at all surprising to see them develop their new trade agreements with the UK along the same basic lines as they already have with the rest of the EU. How long this takes to achieve though will be interesting to see. They both have plenty of other trade negotiation work already in progress.
So is Peru really the new Chile? To be honest, I am not sure they want to be. Or even can be. Peru, it seems to me, wants to be Peru, not the new Chile and be recognised in its own right in the international fruit sector and not seen as an imitator of anyone.
In Santiago, they seem as determined as ever to keep their industry moving forward with the development of new markets and new forms of promotional support being among the key objectives. A few years ago, Chile began to promote its fruit as being “world class”. They continue to do so. Having set this as the ambition of the industry, it is hard to go back. So for Chile, the reality is that it has no option other than to keep moving forward. And keep the distance between itself and the likes of Peru in terms of export performance.
With the strong relationship found in Chile between the government and the private sector, often cleverly steered by the likes of Chilean fruit export body ASOEX, it would be difficult to see them not remaining as top of the pile, not only in Latin America, but the rest of the world too.
What Chile and Peru have in common
- A rapid rise in the level of exportsover the last 10 years
- The diversification ofthe export base
- The sheer pace at which they havebeen able to develop a widerange of Free Trade Agreements,especially in south-east Asia
- The development of a number ofgenuinely world-class growingand export businesses
- A remarkably strong degree ofinternal industry cohesion
- Strong industry leadershipand direction from umbrellabodies such as ASOEX in Chile and AGAP in Peru. This is backedup by effective support from government agencies such as PROCHILE in Santiago and from the Peruvian Trade Office in Lima
