Colombia: Producers from colombia eye Asia for agro exports

A bid to target Asia as a destination for additional of Colombia’s agricultural goods could shore up efforts to diversify exports away from minerals. However, producers face a number of challenges, inclunding limited transport infrastructure, lengthy certification processes and domestic currency appreciation.

Proexport, an agency promoting Colombian goods abroad, has identified specific agro-industrial products that it says could do well in targeted Asian markets, according to the local press. Its inventory includes coffee, aimed at China, Japan and Malaysia, and a range of fruits for Singapore, Malaysia and Vietnam. The agency said price-added agro goods, such as processed vegetables, could as well generate interest. 

Boosting trade with Asia is an aim of the recently formed Pacific Alliance, whose member states – Chile, Colombia, Mexico and Peru – met in Calí in late May. According to the group’s framework agreement, its goals include intra-regional free movement of goods and services inclunding establishing a common platform with which to engage with Pacific rim markets.

Carlos Piedrahíta, CEO of Nutresa, a Colombia food manufacturer that is expanding into Asia, told the Financial Times that the alliance “will generate benefits for companies, consumers and the nations in general at the same time as it comes to commerce, investment ”.

Agro, food and beverage products account for a relatively small portion of exports, making up 11.6% of the total in March 2013, according to the National Department of Statistics (DANE). The category’s overseas sales experienced a year-on-year decline of 9.3% in the initial quarter of the year, which DANE attributed to a fall in the sales of unroasted coffee.

While opportunities in the Asian markets are plentiful, a push to boost Colombia’s agro-produce exports will as well throw up challenges.

The country is likely to focus on further developing crops in areas where it has a competitive chance, such as coffee and flowers, which account for almost half of all agro exports.

However, building on the success of coffee could be a challenge, as the effects of climate change continue to weigh on the segment. Production has been hit by poor weather over the completed three years, prompting Colombia’s agricultural development bank, Finagro, approaching up with a plan to offer subsidised climate change insurance to small coffee producers.

The aging transportation infrastructure has as well proved to be a hindrance, making it difficult to move produce from farms to the ports. According US-government website export.gov, “inadequate infrastructure” is seen as one of the leading challenges to doing business in Colombia, putting the country “at a competitive disadvantage as compared to its neighbours in Chile and Peru”.

Exporters have as well been hit by an appreciation of the peso, which rose in price by nearly 10% in 2012. However, it has come down since January, as the central bank has taken steps to weaken the currency.

Finally, efforts need to continue to educate farmers on the technical requirements of selling to certain markets. For example, exporters of agricultural products to the US must comply with the rules set out by the US Food and Drug Government, and other nations have similar regulatory organisations.

Addressing these internal concerns could go some way towards boosting in general agro product exports, while the efforts of the Pacific Alliance may well help Colombian companies fasten additional business in Asian markets.