Colombian Fruit Exports To The EU Continue To Climb

Called one of the world's food pantries by the United Nations Food and Agriculture Organization, Colombia currently ranks 8th out of the top 10 countries that export food to the EU. The value of Colombian fruit and vegetable exports reached USD$1.05 billion in 2016 and is still climbing. Colombia is now poised to become a global leader in the supply of organic agri-food products.Why Colombia?With only 8 million hectares of a possible 40 million under cultivation, and a climate favorable to year-round production of many crops, Colombia is in an excellent position for growth in this sector.Of critical importance, Colombia's water resource availability also ranks as one of the highest in the world, according to the Food and Agriculture Organization of the United Nations. This ranking is due to a well-developed system of irrigation for districts with excellent infrastructure.Colombia ranks 22nd of 223 countries with the greatest potential for sustainable agriculture land expansion. Colombia's climactic variety, thermal floors, and nutrient-rich soils give it the unique advantage of being able to produce fresh fruit when other countries are in the offseason. And with ports located on both the Pacific and Atlantic oceans, Colombia is in an excellent logistical position, with the EU ports of entry being only 11 days away by ship, or 9 hours by plane.New technologies implemented by Colombian agricultural companies have driven an increase in certifications and include processing, packaging, food safety, and traceability. A partial list of certifying agencies that have certified Colombian products includes HACCP, ISO, GLOBAL GAP, BRC, FAIR TRADE, and ORGANIC.There has also been an increase in the awareness of corporate social responsibility, which is quickly taking hold worldwide. The high percentage of smallholder farms and significant percentage of women in the workforce, who are responsible for 85% of Colombia's production, is a new factor that is driving investment as well.Rounding out the "Why Colombia?" question is the fact that buyers have an increasing preference for certified organic Colombian fruits and vegetables over other countries in the subtropical regions. This preference is because Colombian fruits and vegetables have demonstrably better color, taste, smell, and higher soluble solids content and Brix level.Who is Buying?The EU is increasingly demanding organic, healthy, sustainably grown fruits. Colombia's Organic Certification is an opportunity to create new market entry for the country's products. As regional cuisines grow in popularity across the EU, and the world, there has been a significant increase in the demand for exotic fruit and new taste sensations.Colombian exports have increased enormously since the 1990s, when the government began to allow more international trade due to free trade agreements like the U.S.–Colombia CTPA. During this time, the government privatized foreign trade investments, invested in high-quality development processes, and lifted several restrictions to favor international trade. According to the European Commission, exports of organic tropical fruits, both fresh and dried, increased by 31%, from 19,000 to 24,900 tonnes, in 2019Historically, USD $61 million in pulps, concentrates, dehydrated, freeze-dried, canned, and frozen mango passion fruit, gulupa, blackberry, papaya, lulo, cape gooseberry (golden berry), Guanabana (Soursop) and dragon fruit, have been exported by Colombia to more than 46 countries. Exported fruits include banana, papaya, and mango, among others. Now, Colombia is the 5th largest fruit producer in Latin America, with 95 different fruits grown. It exports 90% of those fruits, and the export prices are up to 6X higher than in the domestic market.For instance, the top destinations in the EU for many of Colombia's exotic fruits are the UK (USD 4.5 million), Germany (USD 3.1 million), the Netherlands (USD 3 million), and France (USD 2.6 million). Exports also go to Spain, Belgium, Italy, Switzerland, and Portugal.What Does the Future Hold?Innovative internal programs, like the "Colombia Siembra Plan," brought one million more hectares into potential production. This forward-thinking plan has opened up opportunities for Colombian fruit producers who are eager to partner with investors due to the availability of arable land and the growing need for processing and packing facilities.Major international development companies like KKR and Sumitomo, eager to take advantage of Colombia's unique combination of climactic variety, arable lands, and well-developed infrastructure, are also making significant investments in Colombian agriculture.The need for investment grade, non-correlated hedges against inflation are also driving investors worldwide towards increasing the "hard asset" aspect of their portfolios, i.e., farmland and shares in established vertically integrated production capabilities. Many advisors expect this portfolio shift to accelerate as the impacts of the QE type programs, in effect in all developed countries to deal with the COVID-19 induced slow down, begin to take effect in 2021 and beyond, increasing inflation, and reducing the number of available non-correlated type investments.How Can Colombia Prepare?With all of the positives mentioned, there remain challenges to increasing Colombia's exports to the EU, and the rest of the world. These include a.) high internal transportation costs to points of departure due to poor infrastructure and b.) a deficient "cold chain" solutions, which can lead to inconsistent maintenance of product quality due to a lack of understanding of this particular supply chain requirement. Given the speed at which Colombia has risen to the top tier of the fruit export business, this should not present a problem for long.Foreign Direct Investment, FDI, has also increased quickly, and that will provide the initial base of support for overcoming these challenges. The well-educated, young, and highly motivated Colombian workforce will solve the rest.Developments to infrastructure and supply chains will increase the penetration of Colombian fruit exports into EU markets and others around the world. The combination of availability of high-quality water, ample arable land, and a wide variety of certified organic, sustainable, healthy fruit, coupled with the increasing FDI in Colombian agriculture, will continue to drive the Colombian fruit export business in the EU to new heights.Read more from Farmfolio.