This document discusses strategies for Central American small and medium enterprises to export fresh fruits and vegetables to the European market. It outlines the traditional and more recent models of the supply chain from producer to retailer. The role of the importer has changed to include category management, distribution, food safety, and logistics. Most fresh produce sales in Europe now go through supermarkets, giving buyers significant power over suppliers. Financial terms, contracts, insurance, and risk management are important considerations for Central American exporters seeking to access this market.

1. Connecting Central America
Promoting sustainable exports
from Central American SMEs to the European
market
Doing business
in practice
EXPORT

2. Traditional Trade
Grower
Exporter
Importer
Wholesaler
Retail

3. More recent model
Grower
Exporter
Importer / Service provider
Supermarkets

4. Changing role of the importer to:
Category manager
Chain manager
Distribution manager
Food safety manager
Logistic manager

5. Chain of supply from seed to shelf
Seed company Grower Exporter
Importer/distributor
Supermarket
= Chain manager

6. Distribution of FFV
› Distributor –
Supermarkets
› Wholesaler – Small Retail
› Food service –
Restaurants, Institutions,
company canteens, etc

7. Traditional Wholesaler
› Loosing market share
› Wholesale markets
still strong in France,
UK, Spain
› Strong in “Ethnic”
trade

8. Food service:
› Growing market
› Innovative
› Convenience
› Quality segment

9. Retail power
Aprox 75 % of
the Fresh Fruit
& Vegetables
sales in Europe
is going
through the
supermarkets

10. Top 4 retailers made up more than
70% of the grocery market
Country Market Share
(few examples)
Findland90.02%
Sweden81.8%
Ireland81.4%
Slovenia81.6%
Estonia78.8%
Austria78.7%
Germany75.1%
France70.0%

11. Top 10 European Retailers:
Carrefour (FR)
Metro Group (GM)
Tesco (UK)
Schwartz Group (Lidl) (GM)
REWE (GM)
Auchan (FR)
ALDI (GM)
Edeka (GM)
Leclerc (FR)
Intermarche (FR)

12. German Retail:
Edeka (26 %)
Metro
Rewe
Aldi
Lidl

13. UK Retail
Tesco (31%)
Asda
Sainsbury’s
Morrisons
M & S

14. Dutch retail
Albert Heijn (32 %)
Jumbo
Superunie
Plus
Aldi
Lidl

15. Segments:
› Luxury
› Full service
› Neighborhood
› Discount

16. Supermarket Buyer / Category manager = VIP
Assortment planning
Program planning
Responsible for
profitability
Pricing
Choice of partners /
brands

17. Consumer price level dictates:
Part of the assortment
Shelf Space
Special displays
Special promotions

18. Top down calculation:
› Ideal consumer price
› Promotions
› Clear margins
› Clear costs
› Price vs volumes
› Final result

19. Colombia avocado Aguadas Avocado 4 kg box, 264 boxes per pallet , 5280 per container
Supermarket preferred size 16/18 Consumer price Euro 1,19 per piece 0.99
Box price consumer level 20.23 16.83
VAT 9 % 9% 1.82 1.51
Margin supermarket 33% 6.08 5.05
Distribution chain Euro p/pall 100.00 0.38 0.38
In Euros per box: In Euros per box:
Importers net sales price F.O.T. 11.96 9.88
Commission - margin 8% 0.96 0.79
Storage + ripening costs Euro p/box 1.00 1.00 1.00
Import Duties Average Euro p/box 0.00 0.00 0.00
Clearing costs Euro per Cont 85.00 0.02 0.02
Phyto inspection costs Euro per Cont 75.00 0.01 0.01
Transport port Euro per Cont 250.00 0.05 0.05
Terminal Handling Charge Euro per Cont 350.00 0.07 0.07
Sea Freight incl Controlled Atmosp USD per Cont 5000.00 0.85 0.85
Terminal Handling Charge origin USD per Cont 250.00 0.04 0.04
Documents and other FOB costs USD per Cont 150.00 0.03 0.03
Handling Port USD per Cont 500.00 0.08 0.08
Tranport farm - port USD per Cont 1500.00 0.25 0.25
Inspections USD per Cont 500.00 0.08 0.08
Packaging material costs USD per Cont 3432.00 0.58 0.58
Packing costs USD per Cont 2640.00 0.45 0.45
Return at farm gate per 4 kg € 7.49 € 5.59
Only fruit 8.39$ 6.26$
Return per kg exportable fruit in USD 2.10$ 1.56$
* All calculated in Euro
IN USD

20. Terms of Trade
Who is the partner ?
Chain of supply?
Program?
Spot market?
Contract growth?

21. Chain of Supply
Next link in the chain
known
Working in programs
Volumes planned
Eventual price returns
fixed
Need from both sides

22. Program / contract
Obligations from both
sides
Thorough planning
Less risk
Penalties for breech of
contract

23. Spot Market
Daily Trade
Good market – High price
Slow market – Low price /
No price
High risk

24. Commercial terms
Fixed Price
Free Consignment
Minimum Guaranteed Price
Profit split
Final payment?

25. Fixed Price
› Simple
› Clear for both parties
› Limited risk for seller
› Difficult in Europe
› Acceptance at low price

26. Free Consignment
(commission deal)
› Simple (for buyer)
› All risk for seller
› Follows the market
› Trust or Control?
› Open ended deal
› Negative result possible
› Profit / Loss split?

27. Minimum Guaranteed Price
(MGP)
› Risk mainly for the buyer
› Gives a certain minimum return for the
seller
› Follows the market
› Parameters clearly defined
› Trust or Control?
› MGP on program or shipment?

28. What MGP?
› Production costs?
› Production costs plus margin?
› Minimum or ….. Maximum?
› Expected result?
› Historical figures?

29. Client name: Frutales Las Lajas
Pereira
Colombia
Manifest number: 1
Motor Vessel: Santa Maria
Arrival date: 19/07/2019
Arrival port: Rotterdam
Terms Commodity Variety Size Volume Price per Currency Total
box Amount
Gross Sales: Limes 42 720 4.00 Euro 2,880.00
(F.O.T. Duty Paid) Limes 48 2,040 4.50 Euro 9,180.00
Limes 54 1,560 4.00 Euro 6,240.00
Limes 60 960 3.50 Euro 3,360.00
F.O.T. Duty Paid Total 5,280 4.10 Euro 21,660.00
Costs: Commission 8% Euro 1,732.80
Warehousing costs including handling " 540.00
Transport to warehouse " 250.00
Clearing + phyto " 175.00
QC inspection " 100.00
Laboratory " 125.00
C+F price port of entry Total 2,922.80 18,737.20
Convert
Oceanfreight incl THC US$ 4,900.00 Euro 4,375.00
Advance payment per box US$ 3.25 Euro 17,160.00
"
F.O.B. port of departure Total Euro 21,535.00 (2,797.80)
F.O.B. port of departure Box Euro (0.53)
Transfer to: Total Euro (2,797.80)
Remarks:
Free consignment = Loss for the seller

30. Client name: Frutales Las Lajas
Pereira
Colombia
Manifest number: 1
Motor Vessel: Santa Maria
Arrival date: 19/07/2019
Arrival port: Rotterdam
Terms Commodity Variety Size Volume Price per Currency Total
box Amount
Gross Sales: Limes 42 720 4.00 Euro 2,880.00
(F.O.T. Duty Paid) Limes 48 2,040 4.50 Euro 9,180.00
Limes 54 1,560 4.00 Euro 6,240.00
Limes 60 960 3.50 Euro 3,360.00
F.O.T. Duty Paid Total 5,280 4.10 Euro 21,660.00
Costs: Commission 8% Euro 1,732.80
Warehousing costs including handling " 540.00
Transport to warehouse " 250.00
Clearing + phyto " 175.00
QC inspection " 100.00
Laboratory " 125.00
C+F price port of entry Total 2,922.80 18,737.20
Convert
Oceanfreight incl THC US$ 4,900.00 Euro 4,375.00
=MGP Advance payment per box US$ 3.25 Euro 17,160.00
"
F.O.B. port of departure Total Euro 21,535.00 (2,797.80)
F.O.B. port of departure Box Euro (0.53)
Transfer to: Total Euro (2,797.80)
Remarks:
Consignment with an MGP = Loss for the buyer

31. Financial conditions
Pre-season Advance
Advance on arrival
Account of sale ?
Final payment?

32. Pre-Season Advance
› Helps cash flow producer
› Gives some guarantee
› Not easy to get
› Mostly existing relationships
› Limits flexibility

33. Advance on Arrival
› Mostly on “good” arrival (who
decides?)
› Helps Cash flow exporter / producer
› Part or total product paid = security

34. Account of Sale
› Showing sales and costs
› In consignment or partly consignment
deals
› Cost chain must be agreed
› Trust or control?

35. Final Payment
› In case of a consignment
or partly consignment deal
› After how many days?
› Per Shipment or program?

36. Control !
› Investigate client
› Commercial reputation and Financial
strength
› Swift confirmation on transfers
› Bill of Lading as security (limited)
› Credit Insurance

37. Credit Insurance
› Against insolvability
› Not against disputes or claims
› Need to follow strict protocols
› Gives basic judgement on (potential)
clients
› Costly premium

38. Main FFV insurance players
› Coface – France
www.coface.com
› Attradis – Netherlands
www.attradis.com

39. Bottom Line
› FFV – Risks unavoidable
› Need to know clients
› Work with written contracts
› Contracts must be simple and workable
› Follow protocols and communicate
› Juridical Pursue expensive and difficult

40. Definition:
› The market decides what the
producer will have as a result.

41. Thank you!
www.cbi.eu/devco-ca
devco-ca@cbi.eu
CBI.EU / Connecting Central America
@cbi_nl