|Exporting High-Value Food Commodities: Success Stories from Developing Countries (WB, 1993, 119 p.)|
|Appendix The development and performance of case study commodity systems|
Chile's production and marketing system for vegetables is much less developed than that for fruit, with most production geared toward the domestic market. Production is of low-to-moderate quality and high post-harvest losses occur. Chile's exports of fresh vegetables have remained small and highly variable, with periodic sales of onions, garlic, and potatoes to deficit markets in Latin America. High airfreight costs have prevented Chile from being competitive in the U.S. market (vis-a-vis Mexico and Central American suppliers) for more perishable items.
Chile's distant location from major markets has proven less of a disadvantage for processed vegetable products, principally tomato paste. Chile's trade in this product is relatively recent. In the mid 1970s, there was only one Chilean tomato processing company and its products were sold locally. With the idea of developing off-season production for the U.S. market, two U.S. companies provided technical support for improving Chilean product quality. Based on contracted production, several firms developed export-oriented operations. Still, Chile's position in the world tomato paste market remained marginal, with 1987 exports of 8982 tons accounting for only 1.2% of world trade.
The boost to Chile's industry came in 1988 when there was a sharp reduction in the U.S. tomato crop (and processing) and when a 100% tariff was placed on EEC canned tomato imports into the U.S.. Although the tariff does not apply to tomato paste, the EEC's paste sales have declined sharply. Chile was one of a few countries which took advantage of the sharp increase in U.S. imports and the reduced competition from EEC sources.
Between 1988 and 1990, Chile's tomato paste exports increased four-fold from 12,163 tons to 51,823 tons. In the latter year their value reach $48.8 million, placing Chile sixth in world exports, with a market share of 5.4%. Chile not only increased its share of the U.S. market (to reach nearly 25% in 1989190), but also expanded sales to Japan, South Korea, and Brazil.
Chile Tomato Paste Exports
Source: USDA Horticultural Products Review (April 1991)