Agribusiness Opportunity in Latin America

By Stephen Kaczor

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Latin America is home to hundreds of farming cooperatives and small regional growers associations.   Often these cooperatives and associations are home to as much competition as cooperation.  This represents a challenge when growers seek access to export markets for their produce.  It also represents an opportunity for development that will create sustainable growth in the agribusiness sector. 

Mexico’s proximity to the USA, coupled with its climate and the availability of low-cost farm labor, make it a logical source for meeting growing fruit and vegetable consumption in the USA.   The value of U.S. agricultural imports from Mexico is roughly equal to the value of U.S. agricultural imports from all S. American countries combined.  (Source:  USDA Market News)

Orange Case Study

Development banks are willing to invest in infrastructure to support export market development for agribusinesses.  Nacional Financiera, S.N.C. is currently working on such a project with Mangazo SA de CV for exporting oranges from Mexico’s Baja California Sur.   This orange project provides a good template for considering opportunities across Mexico. BCS growers are selling their oranges domestically rather than exporting them to the USA where willing markets await with citrus prices ten times higher than Mexico’s.

In order to take advantage of this attractive price multiple, small growers in the region need to cooperate and invest collectively.   They need more than physical infrastructure such as a USDA-certified packing shed with cooling and sorting equipment and country-of-origin labels with the proper price look (PLU) numbers and bar codes used by retailers in the USA and other countries.

Exporters also need marketing representatives in export markets to plan promotions with retail merchandisers, point-of-sale materials, pricing quotations to be provided five weeks in advance to retail buyers along with volume and sizing forecasts, steady supply through the entire season, reliable freight providers to deliver on-time, and analysis to ensure the produce arrives at the retailer’s warehouse with the desired shelf life for distribution to stores.

Mango Case Study

With the proper physical and professional infrastructure, export programs have been very profitable.  A case study which provides valuable insights into agricultural exports opportunities in Mexico is the mango crop.  Prior to Nafta, mangos were exported to the USA through produce brokers in Florida, Texas, Arizona and California.   Thes.....




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