Opinion: why is the Chilean export sector so weak?

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Opinion: why is the Chilean export sector so weak?

By Instituto Libertad agricultural economist Jorge Neira

In the last Chilean fruit industry meeting, several critical issues were discussed, including exchange, labor shortages, export promotion and plant safety. Worrying to me, none of these points should have been mentioned, as if there were a real sectoral policy with the healthy fear that we lack production for a particular market. The biggest concern should be how to further increase production and, thus, productivity. But the reality is different.

In these times, when the exchange rate is low and increasingly polluted by copper prices, economists are worried about the sector and we see the symptoms of Dutch disease, a phenomenon that happened in this country some years ago and caused harmful consequences for the rest of the economy. The events were caused by a significant increase in revenue from one of the export sectors.

If called to intervene in the exchange rate, though there are several positions on the issue, the authorities have many mechanisms at hand such as reduced spending or, at least, restricted spending. But consensus is building that, at the very least, state intervention should be increased to boost productivity and give greater resources for export, opening new commercial areas to intensify supply.

However, Chile is still missing out on its own fruit week in Germany, like New Zealand with kiwifruit, and a more aggressive campaign to promote Chilean produce.

I think a US$12 million budget a year to promote Chilean fruit and exportable agriculture products is very little.

I am bothered by the idea that these private matters between between private actors should not be intervened in by authorities. Obviously you have to respect the law, but it is also true that the sector provides jobs, moves other sectors of the economy, helps development and also uses the natural resources of the country.

There should be tax incentives for production areas that, far from the capital city, become new centers of economic development. For example, there could be some kind of rebate, incentive or bonus for permanently hiring professionals.

And if we talk about the cost of energy and say that legally this production sector should be given a minimum return, with even greater reason we should consider some benefit that impacts the average cost fruit growers should be given.

I have spoken with growers and directors and we reached the same conclusion. It seems the sector has not been given solid or tangible importance through all these years.

Personally, I am struck by the financial issue even away from fruit farm management or activity. The finance system has not been opened up through investment funds, which could come in direct competition with the bank that generates a very substantial interest rate cut in funding.

Right now with a group of professionals we are studying the feasibility of conducting financial transactions with the commodity exchange in selling discounted berries, and I hope that in the short term, we can do the same with apples, pears and kiwifruit.

I look forward to sharing developments. The conclusion of this discussion focuses on the need for institutionalization of state policy for a sector that has proved to be very nationalistic, fine tuning the sovereignty of a country using available natural resources and has great potential to become the agricultural power that we all want.


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