CAFTA: Facts, Myths, Opportunities and Fears.

1
CAFTA Facts, Myths, Opportunities and Fears.

• Miguel García-Winder
• IICA
• FIU
• November 2006

2
Fears

• We oppose to CAFTA because we will be invaded by
  cheaper food products with doubtful quality. We
  will be out of business soon
• Nos oponemos al tratado porque seremos invadidos
  de productos baratos por los subsidios que
  reciben y eso terminará con la agricultura de
  nuestros países

3
Common issues for farmers in CAFTA Countries and
S. Florida

• Small in nature.
• Left out of main stream government programs.
• Lack of infrastructure.
• Production of no commodities.
• Access to technology and innovation.

4
CAFTA Agricultural highlights

• Concluded in January 2005
• As October 2006 Costa Rica had not ratified the
  agreement.
• Includes 5 countries of CA, Dominican Republic
  and USA.
• 99 of the agricultural products from these
  countries had already preferential access to USA
  (0 tariffs).
• USA ag products were subject to an average tariff
  of 20 in the countries of the region.

5
Central America
Honduras 7.2 million GDP per capita 963
Guatemala 12.3 million GDP per capita 2,039
Costa Rica 4.2 million GDP per capita 4,292
El Salvador 6.7 million GDP per capita 2,243
Nicaragua 5.6 million GDP per capita 730
6
The Other Member!
Dominican Republic 9.2 million GDP per capita
7,500
7
Primary US Exports to the CAFTA Countries
With USDA Data
8
Primary Imports by the USA from CAFTA Countries
9
Why CAFTA is good for Agribusinesses in Florida

• US food exports to CAFTA countries has increased
  200 since 1990.
• Real expenditure in food has continuously
  increased in CAFTA countries and will continue to
  do so.
• Florida will benefit from elimination of barriers
  in grapefruit juice
• Florida tomato industry will benefit from
  elimination of tariffs (15 yrs)
• Other sectors beef, dairy, sugar, poultry.

10
USA Export Prospects (USDA predictions)

• Fruits
• Grapes, raisins, apple
• Cherries, peaches
• Vegetables
• Frozen fries
• Tomatos (fresh and proccesed)
• Grocery Products
• Soups
• Juices
• Canned fruit
• Cookies
• Pet food

• Feed grains
• Rice
• Wheat
• Cheese
• Poultry
• Beef
• Pork
• Wine
• Nuts
• Soybean meal/oil

11
Strengths of Florida Agriculture (from USDA-FAS)

• Poultry and eggs
• Strawberries
• Potatoes
• Sweet Corn
• Cucumbers
• Peanuts
• Watermelons

• Greenhouse and nursery
• Oranges
• Sugar cane
• Tomatoes
• Cattle
• Dairy
• Peppers
• Grapefruits

12
Some thoughts that make no sense

• There is a discrepancy between those products
  that are expected to succeed and what Florida
  traditionally produces.
• The products that are exported to the CAFTA
  region are commodities and from non tropical
  origin.
• The imported products are different to those
  produced in Florida.

13
What are the CAFTA Countries looking at The
potential markets
14
What are the CAFTA Countries looking at US Ag
Imports-Exports
15
What are the CAFTA Countries looking at US in
2005

• Surging imports of food threaten wider trade
  gap (WSJ, 11-8-2004)
• Trade off of trade agreements.
• From 1996 to 2004 agricultural imports have
  increased 62 while exports have increased only
  5.
• 78 of shellfish and 27 of wine are imported.

16
What are the CAFTA Countries looking at USA
Food Expenditure
Gehlhar and Regmi, 2005
17
What are the CAFTA Countries looking at USA
Food consumption

• US consumer 3800 calories per day.
• Loss of 1/3 of them in the process.
• Higher consumption.
• Meat
• Cheese
• Fruits
• Salads
• Sugar based products
• Refined grains

USDA,2001
18
What are the CAFTA Countries looking at Specific
products (Lettuce)
Food Institute,2005
19
What are the CAFTA Countries looking at USA
population dynamics
USDA,2001
20
What are the CAFTA Countries looking at USA food
channels
Euromonitor,2004
21
What are the CAFTA Countries looking at Niche
markets (organic)
Food Institute, 2004
22
What are the CAFTA Countries preparing for

• Great appetite of USA.
• Linking to food channels.
• Looking at serving ethnic segments.
• Niche markets.
• Linking to complement strengths.

23
How big is CAFTA?
24
Who competes against USA in CAFTA Region

• Mexico
• Chile
• EU
• Colombia

25
Conclusions?

• Is CAFTA really a threat for Florida
  Agribusinesses?
• What type of capacity building is required to
  face these challenges?
• Are Florida and CAFTA countries entrepreneurs
  willing to join forces to serve the markets
  jointly?
• Should not we be more concerned about the other
  competitors?

26
The Big Obstacles for CAFTA

• Government intervention and lack of stability.
• Corruption.
• Illicit trade.
• Violence.
• Poverty.
• Migrations and Human Rigths.
• Structural Changes.

27
Why are we interested in this topic

• Agriculture/Agribusiness is the backbone of the
  economies.
• National integrity depends on safe and continuos
  food supply.
• Trade is an essential tool for development.
• There is an inseparable link between agriculture
  and the environment.