Lessons from Peru and Chile Powerhouses
May 1, 2017 | 3 min to read
Chile and Peru have emerged as two powerhouses in the Latin American fruit and vegetable sector. Both countries have significantly developed their export business to a wide range of international markets around the world, including Europe, where the attention has often been on the United Kingdom, France, Germany and the Netherlands. But with increasing trade in more recent years, there is focus on Scandinavia and the southern European markets, as well as Eastern Europe and Russia.
The two countries have many things in common, but the background to the development of the fruit export sectors has been very different. The development of exports from Chile began as far back as the 1940s. They kicked in to life with the adoption of the free market economic theories, as put forward by the so-called “Chicago Boys,” a group of U.S.-trained economists at the University of Chicago who then went on to hold a variety of senior government positions in the Ministry of Finance and Economic Development and at the Central Bank.
The influence of U.S.-trained economists in Latin America was not confined to Chile, however, and over a period there was plenty of influence to be found in countries such as Peru. The reality is Chile had a 30-year head start in developing a modern, forward-thinking fruit export sector compared to other countries in Latin America.
It’s been said that imitation is the sincerest form of flattery. Chile has kept the distance between itself and other Latin countries, not just by the development of new products and varieties, but also by a deep involvement in influential trade associations, including Freshfel, Southern Hemisphere Association of Fresh Fruit Exporters (SHAFFE), PMA and EurepGap. In addition, the country is leading the way on new initiatives on key areas, such as water and the environment.
Chile had a 30-year head start in developing a modern, forward-thinking fruit export sector compared to other countries in Latin America.
Peru and Chile do, however, have several things in common regarding the development of their export businesses. These include:
• A rapid rise in the level of exports to the European Union in the past 10 years, although Chile began some time before.
• The diversification of the export base. Historically, both countries developed their exports by looking at the U.S. and EU markets. China, Southeast Asia, the Middle East and other parts of Latin America now play a much more important role.
• Both countries have developed a wide range of Free Trade Agreements — especially in Southeast Asia — at great speed.
• Both countries have developed a strong presence at major international trade shows, including Fruit Logisitca and PMA.
• The United Kingdom is an important destination for both countries. Both have enjoyed low rates of market access as a member of the EU. The U.K.’s decision to leave the European Union means both countries will need to renegotiate access to the market.
• There is a strong degree of internal industry cohesion. Behind closed doors, there is plenty of debate between growers, farm unions, R&D and extension agencies, exporters, trade associations and government export development agencies. In front of customers and the competition, though, there is a united front.
• Strong industry leadership and direction from umbrella organizations, such Asoex in Chile and Agap in Peru, and focused support from government agencies such as Prochile in Santiago and the Peruvian Trade Office in Lima, Peru.
In both cases, there appears to be a positive attitude from both countries on the development of their industries and that of the international fruit market, per se. There are transferable lessons here for the fresh produce industries in both the EU and North America. These include the degree of focus and attention that these two countries have given to developing their exports to the EU and other parts of the world; the ability to negotiate trade deals at a heightened pace rather than get involved in protracted discussions that slow the process down; and the degree of industry cohesion and leadership they display, as well as the positive “can do” attitude that seems to characterize their industries.
In the EU — and in the United Kingdom in the next few years as the Brexit process unfolds — these will be industry attributes we need to display, too.
John Giles is a divisional director with Promar International, the agri-food consulting arm of Genus plc., Basingstoke, Hampshire, England. He has worked on fresh produce assignments across the United Kingdom, as well as in Latin and North America, Africa, the Middle East, India, China, Southeast Asia and Oceania. He can be contacted at [email protected].
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