Chilean fruit and vegetables

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

Outline
1. The Chilean Fruit and Vegetables (F&V) industry 1.1 Political intervention 1.2 Historical facts and figures 2. The comparative advantage of Chilean F&V industries 2.1 Excellent climatic conditions 2.2 Economic openness 2.3 Political stability 3. Supply Chains in the Chilean F&V industry 3.1 Sector Status 3.2 Organization and Functioning 3.3 Actors
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Outline
3.4 The Supply Chain 3.5 Supply Chain Coordination 3.6 Forms of Coordination 3.7 A Chilean Supply Chain Example 4. Performance indicators of Chilean F&V supply chain 4.1 Competitiveness in international/regional markets 4.2 Strengths vs. bottlenecks 4.3 Corporate Social Responsibility and Equity 4.4 Transparency 5.0 References
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1. The Chilean fruit and vegetables industry

1.1 Political intervention

The 11st September 1973 coup and Ponochets 17years 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 ownership
Source: 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: Chiles 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%20PROCESSIN G%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, Chiles 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
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3. Supply Chains in the Chilean fruit and vegetables industry

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
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-toconsumption chain.
Packing and Storage

Inputs

Production

Processing

Distribution & Marketing

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

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3.5 Supply Chain Coordination

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.PDF Lastest access: 24th June 2013

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3.7 A Chilean supply chain example

Source: Gwynne (1998)

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4. Performance indicators of supply Chains in the Chilean fruit and vegetables industry

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) Grape Chain RTA 62.59 (2004) Apple Chain RTA 27.04 (2004) Grape Chain RTA 18.52 South African Decidious

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 markets

Facts & 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 grapes 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 1990s 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 chileans fresh produce exports At the end of the 1990s, it was discovered that do no exist statistical data of how many temporeras work in the Chileans 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_Men u=69, thus encouraging transparency
Source: ASOEX, (2013); Global G.A.P., (2007); Chile G.A.P., (2013)
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5. References
Asociacin 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. Asociacin 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, 19641980. Journal of Agrarian Change, vol 7, pp. 1-34. ChileGap (2012). Buenas Prcticas Agrcolas. 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. Corporacin de Fomento de la Produccin 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/120813InfoKIT_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-ggsystem/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). Quines Somos. Retrieved from http://www.indap.gob.cl/que-es-indap

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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, 494514 Ministerio de Relaciones Exteriores de Chile. Direccin General de Relaciones Econmicas 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!

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