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The Agricultural Market Of The Caribbean And Central America: Promising Organic Farming Foreseen, Rapid Development To Occur Within 10 To 15 Years
Aug 24, 2018

This is an excerpt partly from the theme report – Opportunities and Challenges for Entry to the Caribbean Agrochemical Market, as presented at the 2018 China Pesticide Exporting Workshop (2018CPEW) by Managing Director of Caribbean Chemicals & Agencies (CCA) Joe Pires. 

The report provides a detailed analysis of the agricultural structure of the region, as well as calls for special attention required for entry into the market, such as the longer registration process, the issue of organic farming and the language barriers. In the report, opportunities of business in the market are also addressed. Pires holds the view that in the next 10 to 15 years, more and more multinationals will set their sights on this market, which will undergo a rapid development. Of course, Chinese companies are expected to play an important role in the rapid development of the market.

Compared to other important markets, the Caribbean and Central American markets are relatively smaller. However, this region contains a larger number of countries, including Guatemala, Costa Rica, Panama, Cuba, Dominica, the Dominican Republic, Haiti and Jamaica. Therefore, it is not a region to be ignored. In the region, the Caribbean islands have some 40 million people with an agrochemical market value of US$215 million, while Central America has 180 million people with an agrochemical market value of $597 million. 

CCA is the largest supplier of agricultural inputs in the region, being founded in 1966. The company has more than 50 years of marketing experience and is the sole formulations supplier working in the English language in the Caribbean region. The company is headquartered in Trinidad and Tobago, with branch offices in Jamaica, Suriname, Guyana and Dominica. Its products are exported to 22 countries. CCA is a member of Caricom, and so, its products are supplied duty free to Colombia, Cuba and Argentina.


CCA’s partners of supplies include multinationals such as BASF, Bayer and Arysta, as well as several Chinese companies, including Rainbow. Meanwhile, the company makes large purchases of raw materials and the pesticide technical from China. As calculated with regard to the pesticide technical, the company’s imports from China amount to some $10-15 million. It should be noted that the sharp price rise of the pesticide technical from Chinese companies beginning from the end of 2017 has proved to be a challenge to CCA.


There are a number of island countries in the Caribbean region, where 50% of market share is under the control of CCA. The chemical crop protection market value of the Caribbean and Central America in 2016 was some $800 million, 10% up year on year, which is quite a fast-growing region.

Back in the early 80s of the last century, there used to be more than 80 large companies in this market. However, a lot of mergers and acquisitions have taken place over the last 30 years, resulting in just some five larger companies in existence as of today. It is envisaged that in the next 10 to 15 years, China is expected to play a significant role in this market, attributable to the strong business capacity of Chinese enterprises, according to Pires.


Major Pesticide Products for Application in the Caribbean and Central America


Market Structural Analysis of Countries in the Region


Vegetables are mostly planted in Trinidad and Tobago of the Caribbean region, with fewer other crops. Banana is Guyana’s main crop, which has a planting area of 5,000 hectares. Surinam’s farm products are directly exported to Europe, and therefore, no small number of Dutch companies is planting banana and citrus in the country, which are then exported duty free to Europe. Jamaica and Guyana are small countries, where coffee is one of their main crops. These island countries are rather small; their agricultural market value is around $50 million. Despite being small, the profit margin is not bad.


Agricultural Market Value——Trinidad and Tobago: $12 million


Guyana: $10 million

Surinam: $10 million

Jamaica: $20 million

The rest of the Caribbean region: $80 million 


Cuba has an agricultural market value of $100 million. Over the last five years, Cuba has endeavored to promote its market development. The land area of Cuba is quite big and its market is growing fast, although it is not big at the moment. Cuba currently only has a market value of $100 million. What needs to be noted is that the pesticide registration process in Cuba takes long, which is normally around three years. In other Caribbean countries, pesticide registration takes six months at most. Besides, social connections and lobbying are needed to do business in Cuba. 


Cuba has an agricultural market value of $100 million


The Dominican Republic is the most developed country in the Caribbean, and its official language is Spanish. The banana industry of the Dominican Republic grows very fast. As it is a member of the organic banana production alliance, a majority of the bananas are exported to the United States and Europe. The figure below shows the banana planting area in 2016, which is already approaching 40,000 to 50,000 hectares as of today. Some 80% of these bananas are organic certified; this indicates a strong demand for biopesticides. The Dominican Republic is also exporting a large quantity of vegetables, especially to the United States during winter.


The Dominican Republic has an agricultural market value of $5500 million


Panama of Central America is a small market worth $15 million. Thanks to the Panama Canal, there is a smooth transportation system in Panama. Costa Rica has got large-sized plantation farms, covering rice, banana and sugarcane. The planation farms of Costa Rica are very famous in the region. Corn is mainly planted in Nicaragua, as corn is regarded as their staple food. There are fewer suppliers of formulations in these countries, farmers mostly rely on imported formulations.


Costa Rica has an agricultural market value of $185 million


The labor cost of Honduras is rather low, and therefore, there are quite a lot of local large-sized banana plantation farms. El Salvador has a relatively smaller market, where the main crops include coffee and corn. The pesticide application to these two kinds of crops accounts for 30% of the total pesticide application. The agricultural market value of Honduras has somewhat decreased.


Some 50% of the population of Guatemala is engaged in farming. Farming accounts for 23% of the total economy of the country, where the main crops include corn, sugarcane and coffee, as well as some melons and pumpkin for export.


Belize is a special place, which is a British colony. It is the only country in Central America with English as the official language, and where many people can speak both English and Spanish. It is a duty-free Caribbean country, which imports agrochemicals at zero tariff. Citrus fruit is its main crop.


Belize has an agricultural market value of $30 million


Opportunities and Barriers


The sugarcane industry of Guatemala is presently under a constant process of development. As Africa wants risks to be shared, the production and export of palm oil and pineapple in this region are quite strong. Costa Rica wants to promote green agriculture, so biopesticides have become popular there. There are laws and regulations in the country, which require biostimulants and biopesticides to comply with local governing policies. 


As of 2017, the import of foodstuffs to Cuba accounted for 60% to 80%. However, the Cuban government is prepared to change this situation in the years ahead by planting crops on its own. Cuba has currently 1.5 million hectares of cultivated land. Land was always owned by the state five years ago, and there were quite a few pesticide applications at that time. Since the last three years after Raul Castro took power, some new policies have been issued, which stimulate demand for seed, pesticide and mechanical technology.


What are the barriers to entering the market of the region? The main difficulty lies in the different registration processes of these island countries. For example, in Cuba, the registration process takes very long. Also, there is the language barrier. Many countries of the region speak Spanish, and some variants of English. Additionally, due to the difficulties of geographic locations of each segregated island country, the lower demand and the longer process of issuance of purchase orders, suppliers are not willing to do business with buyers of the region. For quite a long time in the past, agrochemical suppliers have had to route supplies via transit to Colombia. 


For access to the market of the region, it is necessary to cooperate with local companies via the establishment of a joint venture or acquisitions. For CCA, a decision has been made to launch a factory in Cuba in 2019. Acquisitions are also planned in the Dominican Republic in 2020. These initiatives are expected to further expand the production capacity of CCA. Through the strategy, the business scale of the company will grow, which will ensure a better foundation for cooperation with foreign companies, including Chinese companies, to share the market of the region. 


It is undeniable that the market of the Caribbean and Central America is much smaller than that of Brazil and India. However, the investment cost is expected to change for the better in the next couple of years, and then, more large international companies are expected to gradually move into the Caribbean and Central America. To this end, a prior understanding of the market and proper planning will be very important to companies that wish to explore this international market.