Chilean fruitand vegetables

Presented by:Xuan Lam Duong, MN: 21168870Emmanuel Kissiedu, MN: 21227819Rosa Melina Armijo Campos, MN: 21229424

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Outline1. The Chilean Fruit and Vegetables (F&V) industry1.1 Political intervention1.2 Historical facts and figures2. The comparative advantage of Chilean F&V industries2.1 Excellent climatic conditions2.2 Economic openness2.3 Political stability3. Supply Chains in the Chilean F&V industry3.1 Sector Status3.2 Organization and Functioning3.3 Actors

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Outline3.4 The Supply Chain3.5 Supply Chain Coordination3.6 Forms of Coordination3.7 A Chilean Supply Chain Example4. Performance indicators of Chilean F&V supply chain4.1 Competitiveness in international/regional markets4.2 Strengths vs. bottlenecks4.3 Corporate Social Responsibility and Equity4.4 Transparency5.0 References

1. The Chilean fruit and vegetables

industry

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1.1 Political intervention

• The 11st September 1973 coup and Ponochet’s 17-years regime, notably by neo-liberal economic policies

• Agrarian counter reform in 1974 (Bellisario & Antonio, 2007)

• Land reform and the transition to individual properties

• Reconcentration of land ownershipSource: Barientos (1997) , Bellisario & Antonio (2007)

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1.2 Historical facts & figures

• Entered F&V chain as a producer country during 1980s and began to consolidate during 1990s.

• The export led growth after the 1982 recession with the focus on expansion of non-traditional primary exports of fruits, fish and forestry products

• Economic liberalization and rural counter-reform led to the rapid expansion of capitalist agriculture

Source: Fernandez-Stark et al., (2011)

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1.2 Historical facts & figures

• Export growth was facilitated by government-led economic changes

• Producers specialized in the export of fresh fruit

Source: Fernandez-Stark et al., (2011)

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1.2 Historical facts & figures

• Firms developed creative and effective solutions to pack fresh fruit shipped to the US and Europe

• The establishment of packing and storage units

• Extensive infrastructure improvements during 1990s

Source: Fernandez-Stark et al., (2011)

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1.2 Historical facts & figures

• In 2009, Chile exported more than US$1.5 billion in processed fruit and vegetable (US$100 million in 1990)

• Annual growth rate in processed F&V exports by 2017

Source: Fernandez-Stark et al., (2011), CORRFO (2010)

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Fresh Fruit: Chile’s largest food industry

Source: ASOEX, (2010)

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2. The comparative advantage of Chilean

F&V industry over other countries

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2.1 Excellent climate conditions

Source: http://chileclimas.blogspot.nl/, (2009)

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2.2 Economic openness

• Pinochet dictatorship adopted free-market reforms that made Chile the most open economy in the world by the mid-1970s - Bosworth et al., (1994)

• Chile is ranked as the most competitive nation in Latin America in terms of growth prospects

• Placed ahead in the ranking of 15 of the 27 countries in the European Union

Source: USDA (2009). Retrieved from http://gain.fas.usda.gov/Recent%20GAIN%20Publications/FOOD%20PROCESSING%20SECTOR_Santiago_Chile_11-17-2009.pdf

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2.3 Political stability

• Chile had been one of the most politically stable and democratic countries in Latin America

• After retrieving democracy in 1989, Chile’s foreign policy has been based on respect for international law, equality among states, peaceful dispute resolution, and non-interference in the internal affairs of other countries

• Active participant in multilateral efforts to advance peace and stability in the Western Hemisphere

• Chile promoted regional cooperation on peacekeeping and humanitarian relief efforts

Source: Meyer (2013) Retrieved from: http://www.fas.org/sgp/crs/row/R40126.pdf

3. Supply Chains in the Chilean fruit and vegetables industry

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3.1 Sector Status

• 7,800 fruit producers and 518 foreign and local exporting companies.

• Foreign producer-exporter companies : Dole, Unifrutti, and Del Monte.

• Domestic companies: Rio Blanco, David del Curto, and Frusan.

• Processing stage - A mix of foreign and domestics firms. The firms also export their name brand products and also produce private label products for foreign supermarkets.

Source: Lopez, (2010), Gwynne, (1999); Moraga, (2010)

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3.2 Organization & functioning

• ASOEX - Non profit private entity representing Growers and exporters. Made up 204 companies representing 50% total production and 92% of the total volume exported.

• GLOBAL GAP – Private Sector body that sets up Voluntary Standards for the certification of Agricultural products.

• CHILEGAP - ChileGAP is a program for the certification of Good Agricultural Practices (GAP) adjusted to the requirements of major international agricultural markets.

Source: ASOEX, (2003); GlobalG.A.P. Fruit and Vegetable, (2012); ChileG.A.P.,(2012)

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3.2 Organization & functioning

• CORFO - CORFO is a public-sector organization dedicated to promoting entrepreneurship, innovation and growth in Chile.

• INDAP - The Institute for Agricultural Development, INDAP, is a public service of the Ministry of Agriculture.

Source: Retrieved from http://www.english.corfo.cl/about-corfo ; http://www.indap.gob.cl/que-es-indap

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3.3 Actors• The main Actors:

• Growers• Multinational and National Private Export• Processing Companies

• The main Driver of Chilean Supply Chain • Multinational and National Private Export Companies • Extremely influential with respect to the conduct and

fate of growers within the system.

• Three-fold role in nature: 1. marketing, 2. technology adoption/ adaptation transfer, and 3. provision of finance for growers.

Source: Murray, W. E. (1997)

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3.3 Actors• Marketing:

• They provide the facilities necessary for the preparation, packing and cold storage of the fruit.

• They gather produce in quantities sufficient to justify investment in such facilities obtain economies of scale.

• Technology adoption/adaptation transfer: Companies played a critical role in the identification,

adaptation and, transfer of various fruit technologies.

• Provision of finance for growers: The most important role of the marketing companies has

been the development of a system of finance for growers

Chilean fruit and vegetables

Source: Murray, W. E. (1997), Jarvis, (1992)

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3.4 The Supply Chain• Market place – Income as the driver of the Chain.

• The SC is a framework that captures the logistical, economic, marketing, technical, information and human resource elements of the production-to-consumption chain.

 

Source: Collins R, (2003); Fernandez-Stark et al., (2011).

Inputs Production

Packing and Storage Processing

Distribution &

Marketing

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3.5 Supply Chain Coordination

Chilean fruit and vegetables

Source: adapted from McKenney & Murray,( 1997 ) .

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3.6 Forms of coordination• Chilean GAP Industry

Coordination Committee• Vertical and Horizontal (Company Structure and

Relationship with other companies)

Purpose• Harmonization of

standards• Recognition of national

certification systems.

Source: adapted from http://www.fao.org/ag/agn/fv/files/1253_CHILEENGLISH.PDFLastest access: 24th June 2013

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3.7 A Chilean supply chain example

Source: Gwynne (1998)

4. Performance indicators of supply

Chains in the Chilean fruit and vegetables

industry

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4. 1 Competitiveness in international/regional

markets

Source: CORFO, ASOEX (2011)

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4. 1 Competitiveness in international markets

Chilean Decidious

Relative Revealed Comparative Trade Advantage (RTA)

South African Decidious

Grape Chain RTA 62.59(2004)

Grape Chain RTA 18.52

Apple Chain RTA 27.04(2004)

Apple Chain RTA 9.63

Nectarine Chain RTA 26.66(2003)

Nectarine Chain RTA 1.15

Source: adapted from Mashabela & Vink (2008)

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4. 1 Competitiveness in international/regional

marketsFacts & figures about the chilean table grape industry:• Between 2000 and 2010 the planted surface area of

table grapes grew 17%• This accounts for a 31% growth in the exports • The industry jointly with the University of Chile is

trying to improve table grape’s handling techniques mainly focusing in irrigation and phytosanitary techniques

• The industry is lacking a grape comittee• Main competitors: Peru, South Africa and Brazil• Key Markets: USA 47% and Europe 23%

Source: freshfruitportal.com / SEASON FORECASTS 2012/2013

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Source: ODEPA(2011)

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4.2 Strengths vs. bottlenecks• Chile is the largest apple exporter in the Southern

Hemisphere but faces unpredictable competition from Argentina and Brazil

• Chilean apple industry is threaten by declining in profitability in the world market. The world production of apples is rising whereas the demand seems to remain static

• In 1999 and 2000 Chilean apple industry was pointed out by the Northern Hemisphere for offering the apples at lower prices than producers in in this area, but in contrast Chilean producers have demonstrated that producers here are augmenting their apple stocks making them available also out of season.

Source: McKenna, M. K & L., Murray, W. E. (2002)

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4.3 Corporate Social Responsibility and equity

In the early of the 1990’s for small holders who posses less than 10 ha. the globalization of fruit export markets implied:• Export companies were the unique source of

credit, thus leading to asymmetric power relation• Were indebted to marketing export companies• This situation led them to sale their land• Nowadays credit is provided to small holder by

the government through INDAP a dependency of the Chilean Ministry of Agriculture

Source: Murray, W. E. (1997); INDAP, (2013)

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4.3 Corporate Social Responsibility and equity

• Female workers called “temporeras” are employed in packing activities

• Barrientos has called them: “the hidden ingredient”, because their contribution has been a key element to the success of chilean’s fresh produce exports

• At the end of the 1990’s, it was discovered that do no exist statistical data of how many “temporeras” work in the Chilean’s fruit and vegetables industry

• Generally do exist groups of environmentalists who are critical of labor legislation and farm practices

Source: Barrientos, (1997); McKenna, M. K & L., Murray, W. E. (2002)

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4.4 Transparency• Chile counts with its own certification standard

“Chile G.A.P.”, which is an equivalent schema, recognized by Global G.A.P.

• By 2012 Chile occupies the 9th position in the ranking of countries wherein companies count with Global G.A.P. certifications

• Depending on the export destiny, the Chilean association of Fruit exporters count with specific work plans as well as phytosanitary agreements http://www.asoex.cl/AsoexWeb/Menu.asp?Id_Menu=69, thus encouraging transparency

Source: ASOEX, (2013); Global G.A.P., (2007); Chile G.A.P., (2013)

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5. References• Asociación de Exportadores de Frutas de Chile A.G- ASOEX. (2013). Convenios

Fitosanitarios. Retrieved from http://www.asoex.cl/AsoexWeb/Menu.asp?Id_Menu=69• Bown, R. (2010). Chile – A reliable fresh fruit supply partner to the world. Asociación

de Exportadores de Frutas de Chile A.G- ASOEX. • Barrientos, S. (1997). The Hidden Ingredient: Female Labour in Chilean Fruit Exports.

Society for Latin American Studies. Vol. 16, No. 1,71-81• Bellisario, Antonio (2007). The Chilean Agrarian Transformation: Agrarian Reform and

Capitalist ‘Partial’ Counter-Agrarian Reform, 1964–1980. Journal of Agrarian Change, vol 7, pp. 1-34.

• ChileGap (2012). Buenas Prácticas Agrícolas. Retrieved from http://www.chilegap.com/bpa/

• Chilean Fresh Fruit and Vegetable Export Industry GAP Program (2002-2003). Retrieved from http://www.fao.org/ag/agn/fv/files/1253_CHILEENGLISH.PDF

• Collins, R. 2003. SUPPLY CHAINS IN NEW AND EMERGING FRUIT INDUSTRIES: THE MANAGEMENT OF QUALITY AS A STRATEGIC TOOL. Acta Hort. (ISHS) 604:75-84

• CORFO (2010). Cluster Alimentario. Corporación de Fomento de la Producción Retrieved September 3, 2010.

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5. References (cont)• Fernandez-Stark et al. (2011), The Fruit and Vegetables Global Value Chain: economic

upgrading and workce development. Center on Blovalization, Governance & Competitiveness, Duke University

• Grapes from Chile, Season forecasts 2012/2013. (2011).Retrieved from http://www.freshfruitportal.com/wp-content/uploads/2012/11/grapes_chile_i.pdf

• GLOBALG.A.P., (2012). FRUIT & VEGETABLES. Retrieved from http://www.globalgap.org/export/sites/default/.content/.galleries/documents/120813-InfoKIT_FV_web_en.pdf

• GLOBALG.A.P., (2013). What We Do. The GLOBALG.A.P. System. Benchmarking. Equivalence. Retrieved from http://www.globalgap.org/uk_en/what-we-do/the-gg-system/benchmarking/BM-Equivalence/

• GLOBALG.A.P., (2013). Who We Are. Retrieved from http://www1.globalgap.org/cms/front_content.php ?client =1&changelang=2&parent=

&subid=&idcat=9• Gwynne, R. (1998). Globalization, Commodity Chains and Fruit Exporting Regions in

Chile. Royal Dutch Geographical Society. Vol. 90. No. 2, 211-225.• INDAP (2013). Quiénes Somos. Retrieved from http://www.indap.gob.cl/que-es-indap

Chilean fruit and vegetables

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References (cont)• Instituto de Desarrollo Agropecuario – INDAP. (2013). Programas de fomento

productivo. Opciones de financiamiento. Retrieved from http://www.indap.gob.cl/• Lopez, Rodrigo. (2010). Chile Workforce Development in the Fruit and Vegetable

Sector: Presidente Comite Laboral ASOEX. Personal communication with K. Fernandez-Stark. September 28, 2010.

• Mashabela, T.E., Vink, N. (2008). Competitive performance of global deciduous fruit supply chains: South Africa versus Chile. Agrekon, Vol . 47, No. 2, 240-257

• McKenna, M. K. L., Murray, W. E. (2002). Jungle Law in the Orchard: Comparing Globalization in the New Zealand and Chilean Apple Industries. Economic Geography. Vol. 78, No. 4, 494–514

• Ministerio de Relaciones Exteriores de Chile. Dirección General de Relaciones Económicas Internacionales – DIRECON (2013). Tratados de Libre Comercio / Acuerdos Comerciales Vigentes. Retrieved from http://www.direcon.gob.cl/acuerdo/list

• Murray, E.W. (1997). Competitive Global Fruit Export Markets: Marketing Intermediaries and Impacts on Small-Scale Growers in Chile. Vol. 16, No. 1, 43-55.

• ODEPA(2005). Agricultura Chilena 2014: Una Perspectiva a Mediano Plazo: Oficina de Estudios y

• Politicas Agrarias (ODEPA) Ministerio de Agricultura-Chile . Retrieved from http://www.odepa.gob.cl/odepaweb/serviciosinformacion/publica/Agricultura2014.pdf.

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Thank you for your attention!

Chilean fruit and vegetables