Published On : Thu, Mar 4th, 2004

Agriculture Minister Campos Hails Impetus Given By Free Trade Agreements (March 4, 2004, Ed. Note: Chilean agricultural exports, including forestry products, increased by 13.6 percent to US$5.8 billion in 2003.

This figure belies the commonly-held belief that in the globalization process, it is the agricultural sector of the smaller, less developed countries that stands the most to lose.

How can Chilean wheat and corn producers, for example, compete with subsidized U.S. producers?

In the interview below, Agriculture Minister Jaime Campos gives a very upbeat appraisal of the prospects for Chile’s agricultural sector and suggests that the Free Trade Agreements (FTAs) recently signed with the European Union, the United States and South Korea will only spur greater growth in Chilean agricultural exports.)

Question: How do you explain last year’s 14.6 percent increase in agricultural exports?

Jaime Campos: The only way we can explain it is to say that Chile’s development model, based on exports, is finally beginning to consolidate itself after all these years of implementation. You also have to add to that the positive effects coming from the FTA with the United States that went into effect this year, and the FTA with Europe that went into effect last year. There is also the newly passed agreement with South Korea.

We are extremely optimistic about the future because of two new elements now in play. In all our new FTAs – with the European Union, the United States and South Korea – we have incorporated, for the first time ever, products that are emblematic for our southern agricultural sector – milk products, for example, and also meat products and forestry products. These are all products to which added value has been given.

The second factor is that, in terms of who the players are, traditionally they have been large agricultural companies. But in the case of our southern agriculture export development, the players are mostly small and mid-sized producers. Fifty percent of our milk, meat and cereal production comes from small and mid-sized producers.

Q: It seems, looking at the figures, that cattle production is pushing these figures more than anything else.

JC: In percentage of growth, yes. But in terms of total volumes, fresh fruit exports and wine exports, among others, are the most important. Cheese exports grew by 125 percent, while condensed milk exports grew by 60 percent.

Q: And this is mostly from small producers?

JC: Of course. The increase, percentage-wise, is very high. But the total volumes aren’t yet that significant. Still, liquid milk exports, the primary base product, which has no added value, fell by 32 percent.

Meanwhile, fruit with added value grew sharply – frozen fruit by 51.6 percent, dried fruit by 17 percent, tinned fruit products by 23 percent and juices by 38 percent.

What is most interesting is that, today, 36.7 percent of our agricultural exports all have some kind added value component. In our export growth we are tending more and more to value added products, while moving away from the export of primary products.

Perhaps the most emblematic example is in the forestry sector. The export of industrialized (or value added) forestry products grew from US$1.87 billion in 2002 to US$2.1 billion in 2003, and the tendency is towards a decreasing reliance on raw material exports, without any added value.

Q: But isn’t all of this, in the final analysis, quite marginal? Because copper continues being our most important export product.

JC: Be careful there. Because even though it is true that copper is still our most important export, the agriculture sector is in second place.

Q: But led principally by wood pulp, which is basically a commodity.

JC: Not really. Or, rather, the forestry sector is very important, but other agriculture exports, all combined, are of greater importance. Forestry exports totalled US$2 billion, or about half the value of the other combined agriculture exports.

Q: And the agricultural sector’s total combined exports, second now to copper, will continue gaining ground?

JC: Our agricultural sector has been growing at an average rate of 5 percent each year for the past five years. And this without the help of the FTAs with the European Union and the United States and South Korea. As a result, all of the studies that we are familiar with suggest that the tendency will not only continue, but will grow stronger in the coming years. Several different studies all agree that our agricultural exports could total US$10 billion by 2010.

Q: What are your projections for this coming year?

JC: I am not comfortable with making predictions, but if you had asked me a year ago about 2003’s prospects, I would have given you figures somewhat below what the final results turned out to be. What’s happening is that these FTAs are creating all sorts of business opportunities. The FTAs have opened up a vast network of contacts for us, great opportunities. Now how much we really occupy this space is yet to be determined and depends entirely on the private players involved. But I see no reason why this year should be any different than last year, or perhaps even better.

Translated By Steve Anderson

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Camila Berrios