Emerging Markets / January 5, 2018

Agribusiness and Chile’s Outlook for 2018

On March 11, the international executive Sebastian Piñera will be inaugurated as Chile’s President once again; he was already President from 2010 to 2014. The prospect of a second Piñera presidency in Chile has been long awaited by the country’s financial sector as well as international investors. Currently, Chile has a gross domestic product of US$247 billion in terms of the official exchange rate and of US$440 billion in terms of purchasing power parity. Furthermore, the Chilean economy is expected to grow over 3.0% annually until, at least, 2021. One of the Chilean sectors of particular interest to international investors is agribusiness, particularly organic and niche products geared for export towards international markets. Throughout the last decade, between 2005 and 2015, the total area devoted to the production of fruits, nuts, and wine in Chile increased by some 32% to a grand total of over 422.000 hectares. This increase is due not only to the country’s favorable climate and to its geography, but mainly to the fact that Chile has successfully positioned itself as a reliable off-season supplier for North American and European markets. Therefore, Chile’s strong economic performance and its reliable political institutions make it a major destination for international agricultural investment.

Agribusiness and Chile’s Outlook for 2018

During the last decade, the Chilean crop that saw the largest increase in cultivation area was blueberries, which went from 1.361 hectares in 2005 to approximately 14.600 hectares in 2015. Similarly, the cultivation area of cherries also increased from 869 hectares to some 8.712 hectares during the same decade. Olives saw an increase in area under cultivation from 5.742 hectares in 2005 to 20.221 hectares in 2015 as well as kiwifruits, which went from 6.606 hectares in 2005 to 10.428 hectares in 2015. Meanwhile, between 2005 and 2015, Chilean peaches saw their area of cultivation reduced from 5.616 hectares to 2.019 hectares.

Overall, Chile’s food and agriculture industry represents the country’s most economically important productive activity. The Chilean food and agriculture industry accounts annually for more than US$30 billion and is compliant with internationally recognized phytosanitary standards. Approximately 54% of Chile’s food production is destined for its robust domestic market, while the other 46% in destined for export to almost 190 countries worldwide. In terms of trade, during 2016, Chile imported US$57 billion worth of goods and exported US$58.5 billion, resulting in a trade surplus of US$1.5 billion. Furthermore, Chile’s main export, representing 21% or US$12.4 billion of the country’s total in 2016, was copper ore. Likewise, the country’s second most important export was refined copper, accounting for 20% or US$12 billion of its total exports. On the other hand, the country’s main import that same year, representing 5.8% or US$3.3 billion of all international purchases, were cars. Cars were followed by refined petroleum as Chile’s second largest import in 2016, totaling 5.2% or US$3 billion of all international purchases. Similarly, Chile’s main trading partners are China, the United States, Brazil, and the European Union.

(Read more about Land Ownership in Developing Regions)

Latest Media