If approved by Congress, the CTPA will certainly improve import conditions and facilitate trade for agricultural products. Some of the main agricultural raw materials imported from the United States, such as corn, wheat, soybeans, and soy products will enjoy a zero import duty or will achieve that level in a given period, and in the meantime will have access to duty-free tariff rate quotas.
Demand in Colombia for consumer oriented and other high-value food products have grown steadily since the early 1990’s. Specific products showing an increase in sales since then are beef offal, fresh/frozen pork, mechanically de-boned chicken meat, hatching eggs, fresh fruits, breakfast cereals, beer, pet food, and assorted snack foods. In 2008, Colombia experienced low economic growth of 2.5 percent, however a weak dollar contributed to a 35 percent increase in U.S. imported agricultural products. In 2009, the Colombian economic growth will experience a further decline to 0.5 percent as a result of the full impact of the world economic slowdown, and the value of U.S. agricultural exports to Colombia is expected to decline 50 percent. In 2010, the economy is expected to regain momentum and economic growth should increase to 2.5 percent. The strong foreign direct investment in Colombia continues and it is unlikely for the Colombian peso to debilitate against the dollar, which will have a positive impact on imports from the United States.
Historically, Chile is the principal supplier of imported fresh fruits to Colombia, but U.S. fruits can compete during certain times of the year and Colombian retailers want to increase their supply of U.S. product. Foreign competition in wine primarily comes from Chile, Argentina, Spain, and France. Marketing efforts continue to introduce high-quality California wines into the Colombian market, but success has been limited due to 10-15 percent tariffs. South American countries receive preferential duty rates, because they are members of the Latin American Integration Association (LAIA) and/or the Andean Community of Nations.
Although the production of domestic processed foods is growing, imports play an increasingly important role in meeting consumer demand for these products. The Colombian market for processed foods and other high-value food products is growing as a result of urbanization, which has also resulted in a dynamic fast-food industry and drastic changes in food marketing. Strong competition in the supermarket sector has also had an important impact on imports. The United States is the principal foreign supplier of consumer-ready food products to Colombia. U.S. food products are highly regarded in the Colombian market for their quality and value as well as for their wide diversity.
U.S. food companies looking to break into the Colombian market for consumer oriented food products and beverages should consider visiting Colombia in 2009. The CTPA, once implemented, will provide increased opportunities for U.S. food and beverages and it is important to develop business relationships early. There will also be increased opportunities for direct foreign investment with local food processing companies.