Agriculture

Chile's agricultural sector is large and dynamic and has been one of the largest benefactors of the country's economic development. The agricultural sector accounts for 9% of Chile's GDP, and employs 33.8% of its workforce. Agricultural farmland accounts for an estimated 5% of the total land area, with no permanent crops reported. Permanent pastures represent 18% of land area and there is12,650 sq km of irrigated land in Chile.

In Central Chile, export-oriented horticultural activity is predominant. In the south forestry, fishing, aquaculture, beef, dairy and sheep farming are the main economic activities.

Chile has many highly developed agricultural industries. It is self-sufficient in most foods and is a net food exporter. Chile exports roughly US$4 billion worth of agricultural products annually, while importing roughly US$1 billion. Fruits and vegetables (fresh, canned, frozen and dehydrated) are a major export for Chile , and the country's growing dairy industry is a sector which the government is targeting as a potential key export in the future.

Trade Agreements

At a bilateral level, Chile has entered into a number of Free Trade Agreements (FTAs), including deals with Canada , Mexico, Venezuela, Ecuador and Costa Rica.

At a regional level, Chile is an associate member of Mercosur (Argentina, Brazil, Paraguay and Uruguay) and receives preferential trading access to the trade bloc. Additionally, Chile has a trade liberalization agreement with Bolivia. Negotiations

are underway with Peru, South Korea and, in a longer-term process, the European Union and the United States. Deals with the EU and the US are expected to be completed by the end of 2002. Studies for agreements with Singapore, New Zealand and Japan are also being undertaken.

As investment has been one of the catalysts of the Chilean economy, Chilean officials have signed bilateral investment protection agreements with 45 countries. Twenty-two of these agreements await ratification by the Chilean congress.

Chilean Dairy Industry

The Chilean dairy industry is growing and incorporating high technology in view of export potential that comes as a result of free trade agreements that are in place with Canada , Mexico , the European Union, the United States, Mercosur, and several other countries. Since the early developmental stages most of the industry's machinery and equipment has been imported from Holland, Denmark, and other EU countries. However, there is market potential for U.S. equipment, machinery and supplies due to the lower value of the US $ versus the Euro, and a shorter shipping distance from the United States to Chile.

The Chilean dairy sector forecasts $80 million in exports for 2004, compared to $55 million for 2003, Chilean Deputy Agriculture Minister, Arturo Barrera, said. Chile 's dairy export target for 2005 is $100 million.

The target is entirely feasible in view of the international dairy prices, especially of milk and cheese, as well as the consolidation of the markets and Chilean increased milk output, Barrera pointed out.

Chile exported $44.3 million worth of dairy products in the first seven months of 2004, up 60%. The jump in exports was achieved under an operating plan aimed at boosting the country's dairy product exports, which is a joint initiative of the public and private sectors.

High increase in Chile dairy exports

Chile dairy exports during the first eight months of 2004 amounted to US$ 50 million, say a 55% rise compared to the same period of 2003.

According to Carlos Furche from Chile's Agriculture Studies and Policies Office, the main items exported during the period include condensed milk with US$ 20 million, cheese $19 million and milk powder with $6 million. According to Mecropress, Chile dairy products are exported to Mexico (65%); Cuba (9%); Costa Rica (7%); Peru (5%); United States (4%); Venezuela (3%); Ecuador (2%); Bolivia (2%).

Chilean Cheese Exports

Chilean cheese exports registered a huge increase of 240% in the first quarter of this year, compared to the same period in 2003, the Agrarian Studies and Policies Office (ODEPA) reported. During the period Cheese exports totaled US$7.4 million in terms of value and totaled 2,951 tons in terms of volume, representing an increase of 192% compared to the first three months of last year.

The main destination of the cheese exports was Mexico, representing 98% of the total exports. Other destinations for Chilean cheese were the United States, Peru, Bolivia, the United Kingdom and Brazil.