Chilean ag sector is open and ready for business

Delegates of the Minnesota Soybean Research and Promotion Council’s “See for Yourself” mission to Chile covered a lot of ground Wednesday, visiting the US Embassy’s agricultural attaché, the Trade Chile consultancy, the Chilean agricultural service (SAG) and the Chilean mega meat producer AgroSuper.

It was a big day. Here’s the big picture (as we see it):

Chile is a world player in agricultural trade

Chile is has a relatively small population (about 17 million), but boasts an economy that claims Latin America’s top ranking for market access and business development potential. In fact, Chile has the most open economy in the world, with 50 free-trade agreements and access to 85% of the of the world’s GDP (Source: TradeChile and www.investchile.com).

Agriculture is a significant segment of the Chilean economy, with $4.6 billion (US) in sales in 2009, representing about 5% of the country’s GDP. Agriculture officials at the US Embassy gave us some facts to consider:

• There are more than 330,000 farms in Chile with about 2.5 million acres under cultivation.
• Chile is the top-ranked exporter of fresh fruit in the southern hemisphere, and the number one exporter of grapes in the world. Chile is the world’s 5^th largest wine exporter.
• Chile’s salmon industry will likely soon surpass Norway’s as the world’s largest exporter of ocean-farmed salmon.

We also visited Chile’s SAG (Agricultural Service), which has regulatory jurisdiction over border inspections and the protection of Chile’s agricultural and plant and animal resources. We did some rhetorical tap-dancing around the issue of transgenics, but the take-home message was that while genetically enhanced materials are carefully restricted to plant breeding and seed export, the incoming administration in Chile may be more open to allowing the domestic use of such products in the future. We learned that Chile’s SAG has already established a good track record of cooperation on import/export controls and inspections with their US counterparts, which has laid the foundation for growing the trade relationship.

Chile represents a significant opportunity

What does all that mean for Minnesota growers? Plenty. As we moved through the meetings of the day, we pieced together a picture of a country that is gaining ground as both a competitor and customer. The picture really began to crystallize as we toured AgroSuper, a major producer of Chilean meat and food products, and one of the country’s largest agriculture product exporters.

Bill Gordon, a crop farmer and pork producer from Worthington, Minnesota, said it was very helpful to hear first-hand what Chilean producers are doing.

“It’s challenging because it seems we often only get part of the story,” said Gordon, “But that’s why it’s so important we do trips like this. We need to meet face to face, and shake hands with the people who are actually buying our product. If we can get the real story, and see how they are managing their business, then we can make better decisions for our business, including determining how best to tailor our product to fit their needs.”

Here’s the story of AgroSuper in Chile:

• The privately-held company owns a fully integrated pork production system that includes 130,000 breeding sows, and nurseries weaning 8,000 pigs per day. They currently finish 3.3 million of their own pigs every year, and operate two dedicated feed mills with a capacity of 100,000 metric tons/month.
• 

  See For Yourself mission delegates looked sharp for their tour of AgroSuper's pork processing plant.

  They slaughter 12,000 pigs/day in state-of-the art facilities. We toured their flagship pork processing plant today (about 1 hour south of Santiago). It was truly impressive.

• Here’s the scary part (at least for competing pork producers): they will soon add a new integrated system of breeding, finishing and processing units, that will bring in another 130,000 sows and effectively double their export volume. AgroSuper already sees annual pork sales of $600+ million and exports pork to 50 countries.
• Here’s the cool part: That’s just the pork production. They also process 2.6 million chickens/week and 140,000 turkeys/week, and who knows how much salmon (a lot).
• Now this is the very cool part: Chile is a net importer of feed grains. AgroSuper, and anyone else feeding hogs, birds and fish in Chile must import most of their feed. In fact, AgroSuper imports 65% of its feed grains, and that spells significant potential for Minnesota soybean and corn growers.

The take-home message? Chile might have greater potential as a trade partner for Minnesota than was once thought.

Lance Peterson, a farmer from West central Minnesota who serves as a director for both the Minnesota Soybean Growers Association and the American Soybean Growers Association, noted that AgroSuper’s spokesman revealed some very important information about how they source and manage their feed ingredients.

“They told us they source a large majority of their feed grains from the U.S. (95% of their corn), and that they prefer to purchase from the U.S. because of the high quality of the product and reliability of the source. That’s very encouraging news,” said Peterson, “Interestingly, we were told that GMOs were not really a concern because their customers were not asking for GMO-free product anymore, and that represents a shift from what is generally reported,” said Peterson.

The AgroSuper spokesman also told the group that they ship most of their U.S. grains from the West coast. “That is very good news for growers in the upper Midwest,” said Peterson.

“We also found out that these guys are importing whole beans, running their own crushing mills and extruding oil for use in their own rations.”

Doug Diekmann, a crop farmer and pork producer from Beardsly, Minnesota, also found the AgroSuper presentation enlightening and encouraging.

“It was interesting to see how integrated their pork production system is,” said Diekmann, “But also interesting to know that they face some of the same challenges we face in the U.S., like labor costs and environmental regulations. And though we compete on the pork production, it was good to know they see us as a reliable source of quality soybeans.”