rest being imported from Canada and Argentina. However, during the off season in North
America, Chile and Argentina account for almost all U.S. imports,
with Chilean products
accounting for about two-thirds of total imports. As stated by some of the executives interviewed
for this study, in the fruit industry in general, competition takes place more between Chilean
exporters and those from other countries in the market (South Africa, Australia, and New
Zealand) than among Chilean exporters.
There have been, of course, some cases of falling prices owing to the exuberance of
Chilean exporters. Perhaps the most dramatic is kiwis. Between 1985 and 1993, the entry of
Chilean exporters caused a huge decline in relative prices: the price of kiwis deflated by the U.S.
GDP deflator fell by about 85 percent. The Chilean industry recovered only after 1997, and has
continued to grow strongly since then, partly at the expense of producers from higher-cost
countries. In the case of avocados, there have also been precipitous price declines, although these
are unlikely to have been caused by Chilean producers, because their exports represent a
relatively small percentage of world consumption, Mexico being the largest producer.
4.3 The Provision of Public and Semi-public Goods: Government and Business Associations
According to industry representatives, the government has played four basic roles in promoting
the cluster. Pride of place is taken by the Agriculture and Livestock Service (Servicio Agrícola
Ganadero, SAG), a branch of the Ministry of Agriculture in charge of sanitary and phytosanitary
norms (SPN). Protecting Chile’s naturally sound phytosanitary conditions has been a permanent
concern of this agency, and this has played a major role in the development of Chilean food
exports. SAG also disseminates information on best agronomical practices, ensuring that SPN
norms in importing countries are met by individual producers, issuing SPN certificates for export
to major markets, and negotiating agreements in this area with importing countries.
A second government action in providing a key public good has been the negotiation of
free trade agreements with practically all importing countries: the United States, the European
Union, Korea, China, Mexico, most Latin American countries, and, most recently, Japan. Chile
is one of the countries that has negotiated the most free trade agreements. Practically all the
executives interviewed began by stating that these diplomatic successes had been a key factor
behind the growth of fruit exports.
This information was provided by Felipe Julleriat, Marketing Director, Vital Berry.
Third, in recent years, there has been a great deal of attention to R&D, and several
government agencies have become involved in this task. As in the case of wine, the INNOVA
program provides funds on a competitive basis to consortia of business associations and
universities for technological innovations. The Exporters’ Association (ASOEX) is participating
in one of these projects through a special business unit, with the objective of developing new
varieties of fruit through the application of vegetable genomics and other biotechnological
The fourth area of government involvement has been export promotion, through
ProChile’s campaign to create a “country image” and the dissemination of commercial
information. Several of the individuals interviewed mentioned participation in fruit fairs abroad
as being of particular importance. ProChile personnel work closely with industry executives and
business associations in organizing participation in these fairs.
Despite these undoubtedly beneficial actions, what strikes the observer is the relatively
modest role of the state in the development of the industry. Besides the efforts mentioned above,
there has not been a great deal of deliberate industrial policy toward the sector. This may now be
changing as the emphasis shifts from producing commodity-like crops to genetic engineering,
which requires R&D as a basic input.
The most insistent complaints of the business people interviewed had to do with the
uncompetitive level of the exchange rate (which has appreciated substantially in the past two
years as copper prices and export volumes have soared). Given the huge importance this activity
has for exporters, most of those interviewed, while praising SAG, complained that the volume of
resources allocated to the institution was too small and that SAG was too slow in granting its
permissions and certifications.
In the case of fruit, as in that of wine, business associations, and in particular ASOEX,
have provided important public goods to exporters, which would have been very difficult to
finance by individual firms. In addition to its role in R&D, ASOEX has provided the sanitary
certifications and quality control procedures that are required by importing countries. There is a
bewildering array of regulations in the major importing markets that have to be met in order to
be able to sell in them. ASOEX has developed a norm of good agricultural practices, ChileGAP,
based on the European Union’s (EUREPGAP). It has obtained recognition for these norms from
European supermarkets, and now it is enough for Chilean exporters to meet Chilean quality
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norms to be acceptable by European Union importers. It should be noted that the industry is
moving rapidly toward the elimination of intermediaries, and fruit is tending to be imported
directly by supermarket chains, thus giving supermarkets a much larger role in the importing
Along the same lines, ASOEX negotiated with the United States to have Chilean fruit
inspected by the U.S. Department of Agriculture before it leaves Chilean ports. For this service,
it charges its members a fee to defray costs.
Berries, and particularly blueberries, are one of the success stories of Chilean exports in the
period since 1990 (see Figure 11). Berries were not an important export item in the early 1990s.
In fact, of total non-copper exports of US$4.2 billion, berries accounted for about US$25 million
in 1990, with blueberries not even reaching US$200,000. Fresh and principally frozen
raspberries and blackberries began to be exported in 1982, but the explosive growth in berry
exports took place after the mid-1990s. Although berry exports in general have grown rapidly
since then, blueberries have exhibited one of the fastest growth rates among all fruit and
vegetable exports; indeed, among all Chilean export products. By 2005, blueberries had become
the fifth largest fruit export in value terms. The rate of growth in the value of exports of
blueberries (deflated by the U.S. GDP deflator) was more than 40 percent per annum between
1990 and 2005. In 1993, blueberry exports surpassed the US$1 million mark (in nominal terms).
In 2005, blueberry exports were US$95.3 million. Whereas in 1995 there were only two
exporters, only one of which exported more than US$1 million, in 2005, 59 firms exported
blueberries, of which 11 exported values greater than US$1 million.
5.1 Why Did Chilean Producers Begin to Export Blueberries?
Blueberries are not consumed in Chile. Therefore, from the beginning, production aimed at the
export market, particularly that of the United States. The United States is the main export market
for the three exporters interviewed, Vital Berry, Hortifruit, and Driscolls. They also export to
Europe and Asia. Vital Berry and Hortifruit are Chilean firms; the former is owned by five
parteners who are also growers, the latter is a family firm with important interests abroad.
Driscolls is a major multinational in berry trading.
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The principal advantages of Chilean blueberries are those of Chilean fruit in general: off-
season production, high-quality fruit, climate conditions favorable to blueberry cultivation, and
good phytosanitary conditions. Hortifruit and Vital Berry began exporting raspberries in the
early 1980s and were able to use to good advantage what they had learned when they decided to
switch to blueberries.
Blueberries arrived to Chile in 1979 through a government initiative carried out by the
INIA (National Institute for Agricultural Research). The government wanted to extend the
development of agriculture south in the the Central Valley to climates that were colder and more
humid than those of the traditional agricultural zones of the country. For this purpose, INIA
tested the adaptation of blueberries, sarsaparrilla, and redcurrants, among others, to the country’s
climate and soil. About 20 plants of 12 varieties each were planted. The results indicated that
blueberries adapted well to the soil and climate of Regions IX and X (in the southern part of the
Central Valley). During the period that followed, INIA developed micropropagation techniques,
trained researchers in the production of blueberries, and provided technical assistance to
potential users of its research. All these activities were fundamental in the subsequent
development of the industry.
Commercial blueberry production was initiated by Fundación Chile and private partners
in the blueberry-producing region in 1985.
Fundación Chile and its partners set up a private
firm (Berries La Unión) to experiment with the planting and production of blueberries. In this
task, Fundacion Chile was able to draw on the information gathered by INIA, and utilized its
experience. The country was just emerging from the banking and balance-of-payments crisis of
1982-83, and Fundación Chile was prospecting for new exports that could be produced profitably
in a particularly depressed geographic area (Regions IX and X). There were other experimental
efforts in blueberries at the time, by Universidad Austral, in Valdivia, now one of the major
blueberry production centers (Region X), and by UTC, a fruit exporter. What these efforts
revealed to other, potential entrants was that high-quality blueberry production could be
undertaken in Chile to meet out-of-season demand in the U.S. market at very profitable prices.
Fundación Chile is a venture-capital-cum-innovation firm with 50 percent government ownership and operated as
a profit-making enterprise. In the early 1980s, it was responsible for the introduction to Chile of cultivated salmon
production and exports, perhaps the greatest success in new export production in Chile over the past decades. It
should be noted that Chile is now the second largest exporter of salmon in the world, behind Norway.
In 1992, after production proved to be successful, Fundación Chile sold its participation.
Nonetheless, the entirely private firm that emerged from that venture went bankrupt owing to
poor management decisions, and its assets were sold to a producer that sells its output of
blueberries to one of the medium-size exporters, Sun Belle Berries.
The rapid growth of blueberry production was the result of investments made by other
firms, in particular the two market leaders, Vital Berry and Hortifruit, which began exporting
blueberries in large quantities toward the mid-1990s. These firms have the business savvy that
Berries La Unión lacked.
5.2 First Movers and Followers
Vital Berry is the product of an association of five exporters of raspberries, who founded the firm
in 1989 with the objective of ensuring the availability of raspberries for the U.S. market. The
first partner to produce and export blueberries in 1994 was Ignacio del Río, who settled in the
Temuco area (in Region IX), where the weather is cool and winters are rainy, after making a trip
to the United States to explore the market for blueberries. Del Río had some contacts with INIA
and learned about blueberries from them. Although we do not know for sure, the experience of
Fundación Chile with Berries La Unión was probably common knowledge among producers of
small fruit crops in Chile. Now, practically all of Vital Berry’s fresh berry exports are
The second largest exporter, Hortifruit, is a family-held firm. It also started out exporting
raspberries in 1982, and during the the late 1980s turned to blueberries, which now represent
about 80 percent of its exports. Hortifruit started planting blueberries in 1985-87.
In fact, exports of fresh strawberries, raspberries, and blackberries have tended to decline
and be replaced by blueberries. The main difficulty for Chilean producers is the distance to
consumer markets and the high attendant transport costs. In the case of raspberries, the delicate
post-harvest process makes maritime transport non-viable, and air freight costs are much higher
than for competitors that are much closer to the consumer markets, such as those in Mexico.
Blackberries grow well in many climates, and Mexican producers, again, are much closer to the
market. They have completely displaced Chilean exporters from the U.S. market. Strawberries
are highly perishable, a fact that makes distance an important stumbling block to their export
Information provided by Plutarco Dinamarca, consultant on berries for Fundación Chile in the 1980s.
from Chile. Fresh blueberries, by contrast, are sturdier and require special climate and soil
conditions that are met in certain regions of Chile (and Argentina) but not in Mexico. In the case
of frozen berries, of course, the situation is quite different, because they do not require special
handling. In these products, Chile has remained highly competitive. Figure 12 shows the
remarkable difference in the export performance of fresh and frozen strawberries.
The major exporters of blueberries are Vital Berry, Hortifruit, Agroberries, Vitafoods,
Driscolls, and Comercial Frutícola. All of these firms export more than US$5 million each and,
together, the value of their exports represents 85 percent of all blueberry exports from Chile.
There are 51 other, smaller blueberry exporters identified in ProChile’s database by exporting
firm. The largest exporters produce their own blueberries but also purchase significant quantities
from independent producers. Hortifruit claims that it sells plants to its suppliers at preferential
prices, but there does not seem to have been any effort to develop a customer base for plants,
such as was the case with the pioneer blueberry exporter in Argentina (see Sánchez, Rozemberg,
Butler, and Ruffo, 2008, prepared for this project). Exports are still dominated by the largest
companies in the sector.
How did the production of blueberries for export disseminate from Vital Berry and
Hortifruit to other exporters? According to the executive interviewed, information is readily
available and there are no impediments to entering the market, other than the fact that a large
initial investment is required (he estimated it to be about US$80,000 per hectare). However, the
owner of Hortifruit claims that the firm lost highly qualified workers, both in the exporting and
production fields, to other newcomers to the export business.
A key input is, of course, finance. Vital Berry faced severe financing constraints in the
beginning, which were overcome through advances from the trading firms that bought their
products in the United States. The government did not provide any assistance to relax these
The executives interviewed did not think that prices had declined owing to the rapid
growth of Chilean exports, although one of them warned that the market would not be able to
absorb at current prices the large increases in Chilean exports that can be foreseen in the next
few years. As shown in Figure 13, unit values (in 2000 prices) have held steady, in spite of the
surge in U.S. imports from Chile and Argentina. Prices have in fact already declined from their
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highs in 2000, but they are still considerably above their levels in the early 1990s; and they are
judged to be very profitable by exporters.
5.3 The Importance of the Marketing Connection
Both Hortifruit and Vital Berry invest in other producing countries. Both firms produce in
Argentina, which allows them to complement their supply of produce from Chile at a later time
in the season, when the Chilean crop has already been exported and Argentine production is
coming on stream. Hortifruit is also a large producer of blackberries in Mexico. Both firms have
joint ventures in the United States, Hortifruit through a company in which it has one-third
and Vital Berry with a large marketing firm. In the United States, both firms sell
exclusively through their joint ventures. In Europe and the United Kingdom, Vital Berry
channels all of its sales through specialized traders.
Driscolls is a multinational firm from the United States and one of the largest marketers
of berries in the world. It used to purchase blueberries from a Chilean firm (SRI); it bought SRI a
year ago and set up a subsidiary in Chile. It should be noted that SRI was one of the pioneers in
the exports of Chilean blueberries in the early 1990s, together with Vital Berry and Hortifruit.
SRI had begun in the fruit export business exporting “large” fruit (grapes and nectarines) to
Brazil, Argentina, and Mexico. The problems experienced by Mexico and Argentina after the
December 1994 financial crisis led SRI to attempt to diversify to other fruits and markets. Thus,
it started to sell blueberries in the United States through a contact the owner had made with
Driscolls. Now Driscolls is mainly an exporter of blueberries produced by others. It purchases
about 70 percent of the blueberries it exports, through long-term contracts with producers, to
whom it gives technical assistance in production and quality requirements in various markets
(mainly the United States and Europe). Driscolls has brought in its own technical staff from
abroad for these purposes.
The company is called Global Berry Farms. Its partners, besides Hortifruit, are the Michigan Blueberry Growers
Association (MBGA), a large marketing cooperative representing 25 to 30 percent of North America’s cultivated
blueberries, and Naturipe Berry Growers, a California marketing cooperative that represents 8 to10 percent of
California’s fresh strawberry sales. Prior to the founding of this joint venture, Hortifruit had a marketing contract
with MBGA dating back to 1991.
5.4 The Role of the Government, Now and in the Next Stage
All of these relatively large exporters have worked closely with independent producers in order
to meet their export objectives. This has involved technological assistance, quality control, and
help meeting SPN. In the latter, SAG, again, has played an important role. In addition, all firms
have used CORFO’s program of supplier development (PDP).
The major blueberry producers are likely to welcome the importance that CORFO
attaches to R&D. The larger exporters have begun to stress the need to carry out more R&D to
differentiate their products and improve quality (taste, juiciness, color, size, etc). In fact, Vital
Berry has begun investing in R&D. These investments are oriented not only to blueberries, but
also to other varieties that are not yet exported in large quantities because of technical reasons or
because Chile has not yet subscribed SPN protocols in these crops with the importing countries.
Thus, Vital Berry is actively researching the technical requirements for exporting persimmons,
kakis, and figs, for which purpose it has an agreement with a university in the United States to
undertake research leading to the export of these new products. The executive interviewed
claimed that what had been learned exporting blueberries, including contacts and logistic chains,
would be very useful in any incursion into the markets for other products.
Hortifruit is already diversifying into other products, such as figs and asparagus. In
addition, it has diversified locations to make use of the comparative advantages of different
countries in the production of different products.
6. Pork Meat
6.1 A New Star Is Born
Pork meat is an even more recent export discovery than blueberries, and perhaps an even more
successful one. There had been some exports of this product since the late 1980s to the less
demanding Latin American markets. In 1997, exports took off, going from US$6.6 million (in
2000 U.S. dollars) to US$26.5 million. In 1996-2005, exports grew at a rate of 51.1 percent per
year. Exports today are US$272.3 million (2000 dollars; US$305.6 million in current dollars).
Figure 14 shows this remarkable growth.
Pork shares some of the advantages of Chilean fruit in the international market. Chile’s
geographic location between the Pacific Ocean, the Andes, the Atacama Desert, and the South
Pole have prevented the introduction of most exotic swine diseases. The only three that have
been detected (FMD, Newcastle, and Swine Fever) have been eradicated. Benign climate
conditions (low humidity and rainfall, and moderate temperatures ranging from 30 to 90 degrees
Fahrenheit) favor swine reproduction and productive efficiency, and reduce energy costs. One
big disadvantage of pork production and exports is the relatively capital-intensive nature of any
successful operation, which means that there are entry barriers that prevent rapid spread of the
6.2 Market Structure
Exports outside Latin America began when Nippon Meat, the subsidiary of a Japanese
multinational in the food business, began exporting frozen pork meat to the Japanese market.
Nippon Meat arrived in Chile with the intention of exporting sea urchins. Although it is still in
that business, pork exports are now its chief business in Chile. Nippon Meat started prospecting
for suppliers of pork for the Japanese market in the mid-1990s, when foot and mouth disease hit
Taiwan and Denmark, the two main suppliers of pork meat to Japan. The company found that
Agrosuper, a diversified producer of food products, and other firms already exported pork to
Latin American markets. The first export to Japan, by Nippon Meat, which purchased the
product from Agrosuper, took place in 1997. The advantage of Nippon Meat is its marketing
channels in Japan and its knowledge of the Japanese language and culture, which are barriers for
Chilean firms. The advantage of producing in Chile is that the country has excellent
phytosanitary conditions, such as being free of foot and mouth disease. The executive
interviewed said that SAG certification had made an important contribution, because it had
gained recognition from the Japanese authorities. European destinations are now appearing
attractive, but the European Union requires its own certification, and Chile has only three plants
that are certified by the EU.
Nippon Meat does not produce pork meat. It has a supply contract for export to the
Japanese market with Agrosuper. All of its exports from Chile are purchased from Agrosuper.
Originally, it also sourced pork from FRIOSA (Frigorífico O´Higgins S.A.). FRIOSA withdrew
from this tripartite agreement in 2001, seeking to sell its product through traders rather than
through Nippon Meat. The intention of the agreement was to create a brand that could
differentiate the product and be adapted to the tastes of Japanese consumers. In this, the
relationship between Agrosuper and Nippon Meat has been extremely successful. Between the
two of them, they export almost US$200 million, while FRIOSA’s exports have remained below
Agrosuper is a very interesting company. It is family held and now its sales, within Chile
and for export, are worth about US$1,200 million. It started out as a producer of eggs in 1955,
later branching out to chickens and chicken meat. It created a brand name (Super Pollo) that has
wide recognition in Chile. Later, through greenfield investments and acquisitions, it diversified
into fresh and processed fruits, turkey meat, salmon, wine, pork, sausages and hams, and, very
recently, olive oil (a new export product, with an excellent chance of becoming an export
discovery). It is a vertically integrated firm producing feed, raising hogs, and processing them
into pork meat. This helps to ensure the quality of the pork produced, which is tailored
specifically to individual consuming markets. In the case of Japan, with the assistance of Nippon
Meat, they developed a brand that was suited to the demands of Japanese consumers (Japan
Andes Export), which has similar characteristics to the pork that is consumed in Japan. In order
to achieve this, Agrosuper practiced genetic engineering with the objective of obtaining products
that would sell in the demanding Japanese market (in terms of taste, juiciness, color, and
consistency). In Japan, Agrosuper’s exports (through Nippon Meat) now represent 3 percent of
Likewise, in Korea, the second largest market for Agrosuper’s pork exports, Agrosuper’s
share of imports is now 15 percent, exceeding that of U.S. producers, which are a traditional
source of imported pork. Its success is due to its diligence in producing a product that is tailored
to the demands of Korean consumers. Agrosuper sells to three large importers exclusively and
has developed a specific product for each importer. It emphasizes long-term relationships with
importers. The executives interviewed claimed that Korean consumers were unable to tell the
difference between domestically produced pork and Agrosuper’s product. This allowed the latter
to be considered “Korean” and to fetch higher prices than other imported pork. For U.S. and
European exporters, the Korean market is treated as a residual, and they do not tailor their
products to the market or have exclusive sales arrangements with importers. This has given
Agrosuper’s products an edge: not only are its costs lower, but its products fetch higher prices at
the wholesale level.
Agrosuper uses the latest technology in the whole chain of production. It does R&D at
the level of breeding, but in the processing operation it uses imported technology. It does not
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