Colombia: A significant market for US red meat upon FTA ratification
U.S. Meat Export Federation | 5 November 2007
Colombia - A Significant Market For U.S. Red Meat Upon FTA Ratification
When the U.S. Congress ratifies the free trade agreement (FTA) the Bush Administration signed with Colombia nearly a year ago, it will increase exports of U.S. beef and pork to the South American country.
Colombia is the third most populous country in Latin America, behind Brazil and Mexico, so there is demand for protein. Colombia struggles to maintain efficient livestock and meat production, however, due to continued political unrest and corruption.
USMEF Director, Central & South America and Global Strategic Coordination Ricardo Vernazza-Paganini recently traveled to Colombia for nearly two weeks to gather information on the market to use for planning purposes to expand U.S. red meat opportunities there.
“U.S. red meat products exported to Colombia will be more competitive to other products due to the preference of U.S. pork consistency by large processors and the higher quality of U.S. beef products compared to domestic or other imports,” said Ricardo Vernazza-Paganini.
Currently a 70-percent duty is applied to U.S. beef exported to Colombia, with the exception of a 300-metric-ton (mt) quota. Beef products do not come from surrounding countries since they have access to only 1 percent of the Colombian market, so the United States has an opportunity to create a market for its beef.
“There is very little awareness about U.S. beef among importers, foodservice personnel, retailers and consumers in Colombia,” Vernazza-Paganini said. “Currently, products from Zebu cattle are available, which tend to be less consistent in quality. USMEF has an opportunity to introduce high quality U.S. beef to chefs and retailers with the potential of creating a niche market.”
Vernazza-Paganini said some foodservice personnel are not satisfied with the variable product supply. After he spoke with them about the attributes of U.S. beef, many said they would buy the product if the duty was not as high.
With ratification of the FTA, U.S. Prime- and Choice-grade beef would have a zero duty and U.S. Select grade beef would face a duty-free 2,000-mt quota. U.S. beef variety meat also would have a duty-free 4,200-mt quota.
Meanwhile, U.S. pork exports are subject to a price band duty set by the Colombian government between 5 and 80 percent, averaging around 30 percent. Since this duty is not set, uncertainty deters many exporters from selling product to Colombia and dissuades importers due to increased chances of losing potential profits due to higher tariffs.
The FTA would eliminate the variable duty on U.S. pork and replace it with a 20-percent fixed duty that would phase out in five years time to allow duty-free access. This increases opportunities for U.S. pork exporters, but the first job, according to Vernazza-Paganini, is to persuade Colombians to eat more pork.
As with other countries in the region, pork consumption is low in Colombia due to negative perceptions consumers have that pork is not safe to eat due to it coming from dirty animals.
USMEF has worked to turnaround this perception in other countries, such as Guatemala where U.S. pork and pork variety meat exports through August have increased 29 percent in volume to 3,935 mt and 27 percent in value to nearly $7.9 million compared to the same time last year.
“We have an opportunity to work with Colombian pork producers as we did in Guatemala to turnaround the perception that pork is unhealthy,” said Vernazza-Paganini. “By educating consumers about the benefits and safety of pork, they are more apt to eat pork again.”
Although there are no official statistics, USMEF estimates around 50 percent of pork production in Colombia comes from family-owned farms where the main distribution channel is through wet markets and butcheries. Pork processors, therefore, like U.S. pork due to its consistent quality and supply.
The size of the Colombia market is significant, and the FTA is a positive step for both U.S. pork and beef producers. U.S. red meat exporters will have increasing opportunities to do business in this country as barriers to product entry are reduced over the next several years.
USMEF looks forward to the day when the U.S. Congress ratifies the FTA so it can begin projects and activities to expand U.S. red meat exports.
The U.S. Meat Export Federation is the trade association responsible for developing international markets for the U.S. red meat industry and is funded by USDA, exporting companies, and the beef, pork, lamb, corn, sorghum and soybean checkoff programs. For more information, go to www.usmef.org.
