Fruit drives growth in Colombia's agriculture sector

With the agriculture sector seeking ways to boost production and increase output, many eyes are on Colombia’s fruit sector, which has the potential to deliver big returns to the industry. In Latin American, Colombia is the country with the third-largest area of planted land for only fruits and vegetables at 921,000 ha, after Brazil and Mexico. However, in terms of production volume it ranks fifth. While banana exports have always been a driver of exports, fresh fruits are seen as key to growth in upcoming years given the ever-increasing statistics for exports in the segment. At the end of 2016 fruit exports, excluding bananas, had increased 56.4% year-on-year, largely driven by the strong performance of Hass avocados and pineapples, items that reported increases in export revenues of 182% and 241% when compared to 2015, respectively.

New Policy

The reasons behind these strong numbers include policies to boost certain exports, the opening of new markets, and growing demand for exotic and tropical fruits around the world, all providing important export opportunities for Colombia. Products such as uchuva (cape gooseberry), gulupa, avocados, granadilla and pineapple are fruits with the best potential in international markets, and the government has been quick to seize this opportunity. In the case of passion flowers, Colombia has about 15,000 ha planted for purple passion fruit, or gulupa as it is known in Spanish, granadilla, curuba, cholupa and badea, according to figures from the Colombian Agriculture Association (Sociedad de Agricultores de Colombia, SAC). The total production from these fruits is estimated at about 170,000 tonnes per year, of which passion fruit and granadilla are the largest categories, with a share of 54% and 28% of production, respectively.

Avocados are considered to have the greatest export potential in the future. Closely behind come mango, pitaya, pineapple and granadilla as some of the fruits that are gaining popularity throughout the world and which could give the country the opportunity to supply the needs of the European and US markets. According to figures from the country’s trade promotion agency ProColombia, avocado exports in 2016 grew by 266.3% to $27.1m in 2016, compared to $7.3m in 2015. These figures place avocado as the main fruit that Colombia exports after bananas, with the main markets being the Netherlands, UK and Spain. “The reality is that we will not change overnight and we still depend on some exports, though a rebound in agricultural exports would help the economy, and fruits could be one of the biggest drivers,” Javier Díaz Molina, president of the National Association of Foreign Trade (Analdex), told OBG. SAC estimates that avocado production has the potential to increase from 12,800 ha currently to around 25,000 ha by 2020. Another important breakthrough in 2015 was that Colombian pineapples were able to enter the European market for the first time ever.

Uchuva

The second-largest fresh fruit export is uchuva, of which Colombia exported $23.6m worth in 2016, down 5.4% from $24.9m in 2015, according to figures from Analdex. The fruit is seen as having major export potential in the coming years. Even if total exports of uchuva in 2016 were lower than the previous year, with a decrease from 6016 tonnes to 5197 tonnes, this 13.6% reduction is largely due to the El Niño phenomenon, and most exporters are confident that there is still massive potential and the segment will rebound. The top export markets for the fruit were the Netherlands ($15.1m), Germany ($3.8m), the US ($1.2m) and Belgium ($1.03m). The US in particular is a market that is worth closely watching. Colombia has only been able to export the exotic fruit to the US without cold treatment since June 2014, which means an up to 40% saving in terms of export and logistics costs.

Numbers suggest that the trend will continue. The Netherlands, which accounted for 64.3% of uchuva exports by value in 2016, and Germany, with 16.2%, are still the two top importers of the exotic fruit. Colombia also boosted exports of the fruit to the US by 176.4% in 2016 from 66,966 kg to 240,640 kg. “Golden berry exports to the US are going through a process similar to what happened with the fruit in Europe in the 2000s. When it started, it was a niche export and today it represents a large market. It will continue to increase in popularity. It is important that the US Department of Agriculture [USDA], which regulates the regions allowed to ship the crop, and the [Colombian Agricultural Institute, Instituto Colombiano Agropecuario, ICA] continue to work closely together in order for new regions to be allowed to export uchuva. As of today we can only export to the US from the Boyacá and Cundinamarca departments,” Matt Aaron, general manager at uchuva-exporting firm Andes Fruits Colombia, told OBG.

Avocado Rush

Colombian Hass avocado producers are expanding their reach into larger markets and this trend is expected to continue. In 2016 Colombian avocado producers strengthened trade ties with European markets and were able to increase exports from 40 tonnes of Hass avocados in 2015 to a high of 400 tonnes in 2016. Furthermore, between 2014 and 2015 total export revenues from this crop grew 188% from $3.57m to $10.1m. The Netherlands, which was the main destination for Colombian avocados in 2015, doubled its number of orders. According to Maersk Line, Colombian avocado shipments to the UK and Spain swelled by 268% and 2955%, respectively.

Expectations for the success of avocado are high, as Colombia is on the verge of gaining access to the US market. The USDA is in the final stages of an agreement that would allow avocado imports from the country. “Continued analysis by [the Animal and Plant Health Inspection Service, APHIS] shows that the proposed importation of Hass avocados from Colombia poses a minimal risk of introducing pests of concern, including the pink hibiscus mealy bug, into the United States,” said a February 2017 USDA press release. Colombia now has around 14,000 ha of avocado farms, and between 2010 and 2015 exports of the fruit grew by more than 150%, leading avocados to become the country’s most exported fresh fruit, according to the country’s National Administrative Department of Statistics.

Container Push

Among the factors for the spike in Colombian fruit exports is the fact that trade in refrigerated containers increased gradually in 2016, with this type of containers having a market share of 25% during the year, up from 10% in 2015.

Colombia also saw a 9% increase in container exports cargo in 2016, according to a fourth quarter 2016 report on Colombian exports from Maersk. “Refrigerated containers meant a shift in the method of shipping, which has proven to be more efficient due to more advanced technologies that allow better quality products to reach destination markets,” Juan Camilo Vásquez, sales manager for Maersk Line Colombia, told OBG. “Colombia is now better equipped to compete with countries like Ecuador and Costa Rica through containerised foreign trade, and this will bring to the country more shipping companies and create new routes and destinations.”

According to the Maersk report, during the last quarter of 2016, exports to European markets grew by 90%, boosted by a surge in Colombian banana shipments. This was largely due to the opening of a direct export route between the port of Turbo in the Urabá region, which is located on Colombia’s Atlantic coastline, and Europe.

Certification

If Colombia wants to take its exotic fruit exports to the next level, trading a wider variety of products with a greater number of countries, it must continue to work on obtaining export certificates issued by national entities. The ICA, which works on obtaining international accreditations, is encouraging producers to focus on exotic fruits in demand around the world. “Expectations are high regarding improvements in accreditation, certification, testing, standardisation and meteorology services for the admissibility of products such as Colombia’s Hass avocados to other markets,” Díaz Molina told OBG. The exotic fruit segment seeks to play a much larger role in the agricultural sector overall in terms of output, which will require higher standards. Ulloa Cáceres, entrepreneurship coordinator at the Colombian Horticultural Association, told OBG, “We need all sorts of certifications and good practices for the local and international market, such as Global GAP and Rainforest Alliance certification.”

With the right policies and government commitment, Colombia could see a considerable increase in fruit exports in years to come both in terms of production and the number of countries it trades with. Maersk expects Colombia’s containerised foreign trade to grow 3-4 % in 2017, and adds that exports will likely increase by approximately 4-5%, boosted by the shipment of fruits to northern markets.

A positive sign is that in the Atlántico department (see Atlántico chapter) Colombia is working on a project that will consolidate processing at a Caribbean fruit and vegetable centre in the Malambo region. Fruit will be collected, processed and packaged for export at the centre, which will initially process mangos, pineapples and papaya for domestic and international markets.