Ask the typical British consumer what they know about Colombia and the answer will more often than not focus on negative perceptions of the South American nation. The long-term problems with drug trafficking and internal security easily outweigh the impressions made by large-scale exports of Colombian coffee and flowers to these shores. Only last year, one London wholesale trader agreed to a meeting with a Colombian exporter, but ended the appointment by asserting he doesn’t deal with Colombians because there will more than likely be drugs in the consignment.
The Colombians themselves are refreshingly open about the problems that have tainted their nation’s past, but unanimously they genuinely feel that the worst of the problems are behind them. The country, they say, is addressing its internal issues while simultaneously piecing together the jigsaw that, once completed, it hopes can catapult its export potential into a new league.
Incumbent president, álvaro Uribe, has implemented tough measures that have driven the guerrillas far from the major conurbations. His no-nonsense approach has been supplemented by a plan to reinvigorate the fertile Colombian countryside with the re-emergence of agriculture as the country’s main labour provider. In the late 1970s, 70 per cent of Colombians lived outside of its cities, but the desire to find safety in numbers has reduced that figure to 30 per cent. However, just as so many Colombians who fled the country are returning to their homeland, the people who deserted the fields in droves are making their way back to the land with renewed confidence and belief in a system that at last is weighted in their favour. The social agenda has changed. Uribe’s 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.
Colombia is the world’s second largest flower exporter and, although it sends 90 per cent plus of its products to the nearby US market, it increased sendings to the UK by 35 per cent in the first six months of 2005. The business model is being closely analysed by exporters of non-traditional products, although there has not been the same degree of co-operation evident as yet, and exports are relatively small in volume terms.
However, the UK supermarkets have already begun to show their interest. After years of the retail sector steering clear, Tesco has led the way back into the market with a visit to growers this year - it was reportedly so impressed that another visit is scheduled for early in 2006. Wal-Mart is a major customer of the Colombian flower industry and therefore it is little surprise that Asda has also timetabled its first forage into the country at a similar time to Tesco. Undoubtedly, others will follow.
In many aspects, this will be a momentous year for Colombia, with a series of significant milestones for the country in terms of its international status. The country’s exports - of all products - will hit the $20 billion mark for the first time, foreign investment in Colombia will break through the $4bn barrier, and more than one million tourists will visit, which is an increase of more than 30 per cent year-on-year, and represents one of the true yardsticks that the outside world has growing confidence in the country’s security.
On the back of this, export promotion body Proexport will next year, for the first time, begin a high profile campaign to “brand” Colombia in Europe - with the strapline Colombia - It’s passion. It also hosts, in Cartagena in March, the latest in its series of Bizmatch events, which aims to bring together Colombian exporters with matching importers from around the world. The export promotion board is representative of 80 per cent of the country’s exports and with 14 offices around the world, including its London base, it is a first point of contact for prospective purchasers of Colombian products. “We are here to make the initial connection between exporters and importers,” says Juan Salazar, head of Proexport in the UK. “And while we do receive funding from the government, you can be sure that we are trying extremely hard to be effective - 25 per cent of the salaries of Proexport employees are performance-related. Anyone interested in dealing with Colombia should come to us - we know every exporter and we don’t charge any money.”
While more investment will be necessary to bring the country’s infrastructure in line with much of the rest of the continent, years of neglect of the rural road network has not diminished the ability of growers to offer high quality fruit. Harmonised local production standards are a thing of the future. But already a number of horticultural exporters have achieved the level required to receive EurepGAP certification. It is perhaps a measure of their belief in the direction the government is taking that an administrative error that has obliged many of them to undertake the process for a second time appears to be looked upon less as a grave disservice than an inconvenience. The oversight, which delayed registration of the Colombian industry, will be righted in the next few months.
Granada-based Frutierres, which produces tropical fruit, principally physalis, and has a close relationship with Spalding-based Utopia, used around 150 small growers - with as few as 50 plants each - to satisfy demand for its product portfolio until it took on the task of implementing EurepGAP. The demands of the process, and the fact that it is voluntary, have seen that number fall to 15 for physalis, 15 for passionfruit and around 50 more for other products. “We have around 80 growers altogether now,” says the company’s Gaira Velastagul, adding that the most prominent, particularly those that supply product destined for the UK market are all EurepGAP certified. There are 23 growers that are either fully certified or in the certification process, with a target finish date of March 2006. “The providers of certified fruit are very important to us,” she says. “It has been a headache for some to implement because they don’t own their own land and we are still in the transition period this year, but we have made excellent progress. It is above all, a very big change in culture for some producers, but it is a worthwhile change.”
Renzo Antognoli O’Ryan, general manager of aromatic herb exporter Ultraroma, agrees: “It is a complicated process, with a lot of fiddly things involved, but put it all together and it works. The most complicated thing is to change the mentality; to convince people that they need to do things differently. We spend a lot of time telling people where the product they are working with is going and impress upon them that the product is representing Colombia around the world, focusing on making our employees proud of what they are doing. The fact that they feel they are doing something for their country helps quality control and staff retention.”
Jaime Machado Plata, general manager of Golden Fruits, which exports exotic fruits across Europe and works with Oxford Fruit Company (OFC) in the UK, says: “For us, EurepGAP does not signify increased costs, we see it as a necessary investment which will open up a wider marketplace, particularly in the UK. As far as I am concerned, if you have EurepGAP, you can have retail clients, if you don’t then you cannot.”
And Augusto Garcia, manager of baby banana producer Hacienda El Refugio, adds: “Achieving EurepGAP is difficult, but it is all relative. We understand the need to implement tighter controls and new systems for our production and employees.”
EurepGAP is seen as essential, but the social and environmental focus of the Colombian industry could, if the country has its way, lead to further recognition and another point of difference for the marketers. Colombia’s government has approached the Fairtrade movement, with a view to its exporters becoming involved. “We had a meeting with the Fairtrade people and they said that our government is unique in its willingness to pro-actively invest in Fairtrade, whereas other governments have applied hoping for funding,” says Salazar. “We have Fairtrade coffee, bananas and chocolate in Colombia already, but there are opportunities for some of our non-traditional fruit products too.”
While the proximity of the US has ensured that it has received the majority of attention from Colombia’s exporters to date, there is a growing interest in the European market, and the UK is seen as an important long-term partner. “The UK market has taught us how to do business,” says Antognoli. “The domestic market is 20 years behind the UK in terms of herb consumption and working in partnership with English Country Herbs, we have learnt a lot from them and their feedback and advice has been invaluable.”
The partnership option is the route most trodden by Colombian exporters in Europe. While the bigger concerns have their own offices in the US, only a few have UK or European representatives.
One company that has established itself in the UK is Colombitana, which opened a London office in August 2004. With customers including OFC and Mack, the expensive move has proved successful so far, says Colombian arm Cultivos Montana’s Diego Castro, who has been growing herbs at a site just outside Bogota for the last two and a half years. “It was not a decision we made easily, but we wanted to target a market other than the US and felt that the best way to gain the necessary experience and understanding was to be on the ground. We want to build strong relationships by being there with our clients in person, and not just by sending them our product - UK customers are much more loyal than their US counterparts and long-term relationships are therefore more possible,” he says.
Johan Beckers, who owns Andes Export in Colombia and markets exotic fruit through his JB Marketing operation in Belgium, sells into the UK market through Ferryfast. Andes Export has recently moved into new, customised premises and has an eye on expansion. “We only really sell the product into the foodservice market in the UK at the moment. Our products have real potential for the supermarkets, but we have never had anyone on the ground to do the job.”
He also believes that the UK market would open up if more people visited and the industry was better co-ordinated. “We could achieve so much more if people came here more often to see us, and if there was more unity amongst exporters. I don’t fear competition, in fact I want to see more companies in the market, because the volume would make things work, and we can grow together.”
According to Luis Alfredo Orozco, of Colombia’s largest volume exporter of exotic fruits El Tesoro, a lack of real unity is not holding the industry back. His company focuses primarily on physalis and he admits that every grower has their own methods. “Everyone does there own thing, but it all falls into place,” he says. “Research and development is happening, but it is mainly a private thing. We have our own breeding programme and we collaborate with universities and private bodies to improve our production methods. Each company has its own findings, but no-one owns the truth.”
The individualistic nature of exporters to date is bred from inner desire to succeed, says Antognoli. “There is a strong entrepreneurial spirit here - people really want to do things. That is the easy part, but it is the product that turns up in the marketplace that is most important. Anything is possible here, the only real problem is [a lack of] money, which means it takes time to achieve things. Nobody told me to try herb [production], no-one gave me the land. But you have to be committed, prepared to invest and to do something meaningful, you need to be based here in Colombia.”
The government’s desire to encourage people to return to agriculture is being put into practice through joint public and private sector efforts that meet the country’s social agenda. “We have worked with the government to implement programmes for smallholders,” says Orozco. “While the government has the policy, it cannot reach the smaller growers itself, and companies like ourselves can help them. The plans for smallholders in Colombia are extremely wide-ranging, with low interest loans available for extended periods. Growers that may have been planting illegal crops in the past are being genuinely incentivised to grow legal products.”
At CI Samaria, the banana-producing part of the Daabon Organic group of companies, based in Santa Marta, social responsibility is top of the priority list. “There is no point looking after the forests, the soil and the water if you don’t look after the people,” says Germán Zapata Hurtado. “That is central to the philosophy of our business. Apart from our organic certification, we are certified to the SA8000 standard - I believe we are the only Colombian company to have gone this far. It is important for us to guarantee to customers and consumers that we comply with all of our obligations to our employees.” The company has signed an agreement to this end with Tesco.
In Chinchiná, at the centre of one of the largest production regions for freeze-dried and green coffee in the world, growers badly affected by the price crisis in the coffee industry were equally vulnerable to the draw of illegal production. Asparagus was identified as an alternative crop and again a public-private sector initiative has managed to grow the area under gras to 170ha. Local company Erupción has invested its time and energy into co-ordinating a production and marketing project for the crop. General manager Ramiro Salazar says: “We guarantee to growers that we will take their entire crop, pack it at one of our two packhouses, and market it. And the government also puts up certain financial guarantees. There are more than 250 people employed directly in the process, people who had no opportunity to diversify when the coffee crisis hit. They would perhaps have been inclined towards the cocaine or opium business, but asparagus has provided a real alternative for many families.
“In a poor country, it can be very difficult for people to take seriously projects that will only really have big benefits in the long term. Everything has traditionally been focused on the short term and that is understandable. Government policy is gradually changing this and people can see the benefits.” Even so, unsuitable weather has impacted on volume this year, and growers will need some more convincing if they are to continue with the crop.
“It is gratifying to see what is developing here and the jobs we have created,” says Ultraroma’s Antognoli. “This is of course a poor country and we are very aware of our responsibility to the people of Colombia. Our group employs [members of] 2,700 families and on average through the year, the herb business employs 100.” The horticultural industry has played a crucial role in increasing the employment opportunities for women, another reason behind the government’s financial and practical encouragement.
And Castro says: “Our industry has a very good opportunity to help the Colombian people and have a real impact on their lives. We have 23 people, having started with just four and we intend to expand more and create more jobs.”
“We have 120 suppliers and a close relationship with all of them,” says Orozco. “We are able to offer them a complete service from the beginning of the production process to marketing their fruit. We invest in them directly and give technical advice through our own agronomists. We also transport their fruit from the farm to the packhouse, which would cost them a lot of money if they did it themselves.
“It is a win-win situation, good for us and also for the growers,” he says, adding that the size of a grower is no limitation on their ability to provide high quality product: “In my view, a supplier with just one hectare is the best supplier. He will be totally focused on that product for the whole year - and can produce around 20 tonnes of product, which can generate a good living.”
No country supplying Europe from afar is immune from the problem of rising freight costs and sectors that rely on air freight are particularly vulnerable at the moment. “Shipping costs are very expensive, but we can compete by adding value,” says Antognoli, who was due at the Martinair offices for a meeting after FPJ’s visit. His herbs are all airfreighted to the UK, and Martinair provides the only direct route in - to Stansted Airport in Essex. “The fuel surcharge has increased from 20 cents last year to 45c this. You cannot pass that cost onto the end customer - it has to be managed in our margins.”
In the last two years, he says, margins have been cut by two per cent. “We have reinvented our processes to reduce costs. These things force you to be more efficient and that is what we will continue to focus on, although I would prefer to be more efficient and make more money.”
Felipe Ramírez, marketing manager of carnation and mini-carnation exporter Aposentos Flowers, says freight rates are affecting suppliers everywhere. “We are still very competitive on cost and while freight rates are a limitation, they are going up all over the world, so it should not hurt us particularly. There can be a shortage of space at peak times in Colombia, but the skies are opening and it is getting better. In order to get more flights going out though, the airlines need to be bringing more product in, which will happen as the country develops. But these things take time,” he says.
“We are trying to be more productive with the area we have,” says Ramírez. “Costs are obviously rising and freight rates for example are unlikely to come down for some time yet. We recognise the need for greater efficiency in everything we do and next year we expect to produce 85 million stems of carnations and 25m mini-carnation stems. In 2005 we will have produced 75m cars and 21m mini-cars. And the additional volume we can export will also improve our ability to negotiate better freight rates.”
He adds that carnation production is very labour intensive, with an average of 14.5 employees per hectare needed, compared with around 12 people a hectare in the rose business. “Every year, on January 1, we know that our costs will increase by x per cent, so it is crucial that we get the right amount of people to do the job. At the end of each week and month, we have to understand where we are and where we need to be to be better than our competitors.”
So, Colombia is cleaning up its act and the growing confidence of its exporters is almost tangible. They also unanimously told FPJ that the perceived problems with dealing with Colombia have been overstated in the past and should not limit future potential.
The London wholesaler’s view on the likelihood of receiving drugs in consignments is a gross generalisation, according to CI Samaria’s plantations manager Carlos Ochoa, who explains: “Our product leaves the plantation in a sealed truck and no consignment leaves the port without anti-narcotics inspections. It involves a lot of effort, loading and unloading the containers and there is no value added to the process other that it ensures the legality and safety of each shipment. It is all worthwhile though - in 20 years we have never had a problem.”
Ochoa and his colleagues across Colombia’s fresh produce industry cannot alter perceptions alone, but through their efforts and those of Proexport they hope that the positive messages that have rarely found their way out of the country will finally penetrate the global marketplace and enable them to achieve their potential.
The next four issues of FPJ will feature separate articles on companies in Colombia’s organic and baby banana, aromatic herb, exotic fruit and flower sectors.
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