Colombian Agribusiness Sector


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Colombian Agribusiness Sector - 2011

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Colombian Agribusiness Sector

  1. 1. INVESTMENT IN AGRIBUSINESS SECTOR “This is an investment-friendly country with huge potential; its GDP is rising very quickly and the country enjoys sound tax policies and a large workforce. Colombia is a very attractive market for PepsiCo, especially in the food and beverages sector.” Indra Nooyi, President and Chief Executive Officer, PepsiCo, 4th Summit of the Americas, April 14, 2012. L ib erta y O rd e n
  2. 2. WIDE RANGE OF AGRIBUSINESS PRODUCTION ALTERNATIVES AVAILABLE IN COLOMBIA World-class agribusiness sectors: BOVINE MEAT; CHOCOLATE AND CONFECTIONERY PRODUCTS AND RELATED RAW MATERIALS; PALM, OILS, AND FATS; AND SHRIMP CULTIVATION. Productive Transformation Program, 2011. More than half of the soil that could be used for farming is located in 7 tropical countries: ANGOLA, ARGENTINA, BOLIVIA, COLOMBIA, BRAZIL, CONGO, AND SUDAN. 3. 4. Latin American country with the greatest annual precipitation rates, and holds the 10th spot worldwide. FAO, 2011. country in Latin America with available lands for agricultural production. FAO, 2011. Colombia’s tropical location provides various climates with altitudes above sea level, going from 0 ft ( 75 F) to 13,125 ft ( 43 F). Earthtrends, 2011.
  3. 3. 2. 5% Between 2010 and 2012, the GDP share for the Colombian agricultural sector increased by nearly 5%. The National Administrative Department of Statistics (DANE). 92.9 35.6 MILLION 16% According to the agro-ecological zoning map, Colombia’s agricultural potential covers 12.7% of the national territory, that is, ACRES. 3.7% 3.6% Chile 4.1% Venezuela 5.2% Mexico 5.9% Brazil 6.4% Latam 5.9% Peru 6.5% Colombia 2012, Latin America´s agriculture sector GDP share. Colombia’s agricultural production has risen by nearly 16% between 2002 and 2012. Agricultural Statistics, Ministry of Agriculture and Rural Development (Ministerio de Agricultura y Desarrollo Rural, MADR). 9.1% Argentina Agustin Codazzi Geography Institute (Instituto Geografico Agustin Codazzi, IGAC) and the Colombian Agricultural Institute (Instituto Colombiano Agropecuario, ICA), 2011. million acres are intended for agricultural production of which 71.9 million acres are for livestock, 7.1 million acres are for agriculture, 8.8 million acres are woodlands, and 4.4 million acres are for other uses. Agricultural Statistical Yearbook-MADR, 2011. Ecuador THE SECTOR WITH THE GREATEST DEVELOPMENT POTENTIAL In 2012, Colombia was the second country in the region with the highest Gross Domestic Product share (6.9%) in the agricultural sector. Economist Intelligence Unit. Source: EIU, 2012.
  4. 4. IMPORTANT FOREIGN COMPANIES CHOOSE COLOMBIA AS AN INVESTMENT DESTINATION Pronaca, Ecuador: The meat company arrived in Colombia in 2005 with Mr. Cook product line. It is a supplier chain of McDonald’s fast food restaurants. Danone, France: This company entered the Colombian market through an association with Alqueria, opening a manufacturing plant in Cajica, Cundinamarca. Mondeléz, Kraft Foods, United States: This American multinational acquired Kraft Foods, which invested to expand its manufacturing plant and confectionery shop in Cali. M OPPORTUNITIES IN THE AGRIBUSINESS SECTOR The growing production of oil palm and sugarcane requires new biorefineries and biomass facilities and development of transesterification techniques to transform sugarcane and oil palms into biodiesel. Olmue, Chile: This fruit company built a fruit processing facility in Valle del Cauca. Source: Main dailies and newspapers. Construction of manufacturing plants for processed foods like pulps, jams, canned food, sauces, and other fruit and vegetable products to introduce them to the domestic market and to search for export markets. Colombia has appropriate mainland and maritime zones available to grow different species like cod fish, trout, grouper, bocachico, and palmaro fish, etc. Colombia’s geographical location, climate and temperature also allow shrimp cultivation all year round.
  5. 5. COLOMBIA AS AN INCENTIVES AND BENEFITS TO INVESTORS EXPORT PLATFORM FOR LOGISTICS HUBS IN THE COLOMBIAN AGRIBUSINESS SECTOR Privileged logistic location with access to the Atlantic and Pacific oceans, only: Late yield crops: 10 year income tax exemption starting at the beginning of production in late yield crops such as cocoa, rubber tree, oil palm, citrus, and other fruits planted until December 31, 2014. Income tax exemption for forestry: Permanent income tax exemption for investment in new forest plantations and sawmills. Forestry Incentive Certificate (CIF): The Government refunds up to 50% of the costs of establishment and maintenance (up to five years) of new timber plantations, for specific native and non-native species. This benefit excludes other publicly funded incentives, such as the income tax exemption. Plan Vallejo Programs: Under these programs, goods such as certain capital goods1, raw materials, inputs, and parts may be imported with total or partial exemption of import taxes (customs duties and VAT). These benefits are subject to certain export commitments. Free Trade Zones (FTZ): FTZ are areas in which companies may undertake industrial activities, taking advantage of tax and customs benefits, such as a reduced income tax rate and no import duties over equipment and raw materials brought from abroad. No export commitments apply. Purely agricultural projects cannot be developed under the FTZ regime; industrial transformation of agricultural raw materials must take place. 1. Covered capital goods are those listed in Resolution 1148 of 2002 of the Ministry of Trade, Industry and Tourism. 6 DAYS BY SHIP 3 HOURS BY PLANE FROM THE US 11 DAYS BY SHIP 11 HOURS BY PLANE FROM EUROPE, RESPECTIVELY International Air Transport Association (IATA) and Airlines Information processed by Proexport. 13 Colombia has free trade agreements in force, including partial scope agreements, five signed and three in negotiation. Ministry of Trade, Industry and Tourism.
  6. 6. CAGR Exports 2002-2012: 8.2% 4,772 2,127 2,207 2,617 2002 2003 2004 3,119 3,446 4,095 4,433 4,440 4,680 3,861 SOURCE: DANE. 2005 2006 2007 2008 2009 2010 Agribusiness exports // 2002-2012 - USD Millions PARTNER ENTITIES Ministry of Agriculture and Rural Development: It develops, manages, and evaluates the policies that promote competitive, fair, and sustainable development of agricultural, forestry, fishing, and rural development procedures applying decentralization, agreement, and participation criteria with the purpose of improving the quality of life of Colombian citizens. The Productive Transformation Program (PTP) is an alliance between the public and private sectors driving productivity and competitiveness in industries with high exporting potential through better coordination efforts. Proexport is the Government office in charge of attracting foreign investment, supporting nontraditional exports and promoting the country as an international tourism destination. 2011 2012