American agribusiness leaders and government officials are in Santiago, Chile, this week trying to drum up business for U.S. producers, and several sectors are poised to take advantage of the celebratory timing of the relationship between the two countries.

This year marks 200 years of diplomatic relations between the U.S. and Chile and 20 years since the two countries signed a free-trade agreement. Despite the 2019 riots that shook Santiago, Chilean consumers have the highest GDP per capita in South America, according to 2022 data from the World Bank.

Agricultural trade with the country has also been buoyed by the 2015 expiration of tariffs on U.S. ag goods, allowing American producers and agribusinesses duty-free access to Chile’s ports and pocketbooks.

“Chile is a wealthy country, and this is an important thing for folks who want to do business here,” Bret Tate, agricultural attaché for USDA’s Foreign Agricultural Service in Santiago, told the delegation. “Consumers in Chile can buy high-value U.S. products — they can afford it. They can afford our steaks, they can afford our whiskey, they can afford our beer.”

Indeed, Chile is the world’s top importer of American beer. That product contributes to the 60% of all U.S. agricultural exports to the country that are consumer-oriented goods. Exports of cheese grew 79% between 2015 and 2022, with the potential for even more growth, since Chileans like to serve a variety of cheeses with the country’s famous wine.

Pet food has also been a major beneficiary of the slashed duties. Sales of U.S. product have nearly tripled since 2015, and the dog food market — which is supplied primarily by imports — is expected to top $1 billion by 2027.

Bret-Tate-FAS-Chile.jpgBret Tate, USDA FAS“Everybody has a dog, and the dog has a sweater,” Tate quipped about Chile’s pet culture.

The country is also a growing market for U.S. wheat. Purchases of American product grew 190% in 2022, a figure largely in line with historic trends and caused in part by a 60% drop in 2021. But 2022’s total was the first time the commodity topped $100 million in sales to the country. Some of that wheat is used for flour — Chilean consumers love their bread — but Tate noted a growing opportunity to use U.S. wheat as salmon feed for the Chile’s aquaculture industry.

Tate also reported major growth opportunities for corn, animal feed, pork, and distilled spirits; the latter is dominated by European product, whereas the American contribution to the Chilean liquor aisle is mostly limited to Jack Daniels.

“If we had some actual, good-quality Kentucky bourbon here, it would sell,” Tate said.

Aside from Chile, the trip is also focusing on two other South American markets: Peru and Ecuador. Of the three countries, Peru is actually the largest market for U.S. agriculture; the country imported $1.2 billion in U.S. ag exports in 2022, slightly ahead of Chile ($1.1 billion) and comfortably more than Ecuador ($740 million).

Alvaro Loza, an agriculture marketing specialist with the U.S. Embassy in Lima, Peru, said the market could grow even more if the country’s retail grocery sector — which currently accounts for only 25% of food sales in Peru — could flourish. Currently, the country’s consumers purchase the bulk of their food at “mom-and-pop corner stores and wet markets,” he said, creating logistical and pricing challenges for food exporters.

“When I got into this job 16 years ago, the penetration was below 10%,” Loza said, attributing much of the gain to a U.S.-Peru trade pact that took effect in 2009. “We have room to grow; we have three major supermarket companies in Peru, (and) two of them are going to be part of the trade mission.”

But for all the region’s promise, U.S. businesses interested in exporting to the market face a litany of challenges.

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The U.S. currently has 11% of the ag import market share in Chile. Argentina has the largest share of any individual country (26%), with other heavy-hitters including Brazil (14%) and the European Union (13%), which agreed to a new trade agreement with Chile late last year.

As is commonplace for the EU, the pact includes geographic indicator provisions that have frustrated the U.S. dairy industry. Those provisions prevent producers outside Europe from using a term such as Parmesan. 

Renato Poblete, a cheese buyer for Delicasei, told the delegation the Chilean government apparently plans to start enforcing the EU's GI protections on new importers while leaving existing importers alone. 

Alexis-Taylor-USDA-Chile.jpgUSDA Trade Undersecretary Alexis Taylor

Chilean regulations also require the flag of the country of origin on certain food products, including cheese; Tate argued the U.S. agriculture system has a good reputation in Chile, so companies should view that as “free marketing.”

A quirk in Chilean food labeling also could present a challenge to exports of American ground beef. In the U.S., the most popular lean-to-fat ratios in the ground beef section range from 80-20 to 90-10. In Chile, any blend with more than 10% fat cannot legally be labeled as beef, although stores can still sell the product through rebranding. Lider, the Chilean Walmart brand, uses the term “Americana” on packaging.   

The trade mission is USDA’s fourth this year. USDA Trade Undersecretary Alexis Taylor, the trade mission’s lead, said participants in the previous three missions have reported $32 million in projected 12-month sales from contacts generated during those events. There are two more missions on the schedule for 2023 — an October trip to Southeast Asia to spotlight Malaysia and Singapore, and a November mission in Angola.

Taylor said USDA’s “ambitious and aggressive” itinerary for 2024 will be released soon.

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