USDA/FAS GAIN report CI 6011

Report Highlights

Another increase in planted area, production, and exports are expected in 2005/6, as large multinational seed companies increase contracts in response to an expected increased demand.

General

Chile has very good conditions for commercial seed production. Consistently good climatic conditions, farmers with a generally high education level and the absence of diseases and insects are among the factors that have expanded seed production over the last couple decades. A Mediterranean-type climate with mild winters and dry summers covers a great part of central Chile’s seed growing areas. Almost all crops and plants grown in temperate climates can be found in this growing area. Chile’s geographic isolation has prevented the development of major plant diseases and kept most harmful insects away. It’s counter seasonal production with respect to the Northern Hemisphere has helped the country develop a successful commercial seed industry to supply those markets. Seed exports in Chile have grown from US$70 million in 1995 to over US$160 million in 2005 and is expected to exceed US$200 million by 2008. The seed industry benefits from its southern hemisphere location which permits the harvesting and conditioning of seeds and their rapid export to the
Northern Hemisphere in time for spring planting, thereby enhancing the quality of germination. Latin American and Asian markets have also been developed over the last few years. Most large multinational seed companies are present in Chile, producing seeds for  both the domestic and export markets. They market their products through their own channels of distribution.

Policy

General Agricultural Policy

The Ministry of Agriculture enforces strict phytosanitary regulations in order to maintain an environment relatively free of plant pests and diseases, which facilitates the multiplication of seeds. The government does not subsidize the planting seed industry.

Planting Seed Production Policy

Under a 1991 regulation, the Government of Chile permits imports of genetically modified (GM) seeds for multiplication by the seed industry. When seed companies request an import permit from the Ministry of Agriculture’s Agriculture and Livestock Service (SAG), they must provide information about the type of material, the genetic modification incorporated in the material, the quantity, the type of packaging, country of origin, port of entry, commercial use, name of farm, address, botanical characteristics, type of pollination, method of
propagation, natural predators, parasites, and methods for protecting bio security. SAG evaluates the risk associated with release on a case-by-case basis and may or may not authorize the import. When an import permit is issued, SAG sets the conditions for handling and safeguarding the material in order to prevent its spread outside of the zones of control. In no case does SAG permit the introduction into Chile of a new transgenic product directly from the laboratory to the field. Currently all seeds propagated from imported transgenic seeds must be re-exported. According to the Seed Producers Association an estimated 45 to 50 percent of the total seed exported is transgenic.

Back in 2002, a national commission was created to review all aspects of Biotechnology. In reference to seed production, the commission report recommended that a legal framework be established for the production, distribution and use of transgenic products. However to date there is still no progress in establishing the framework legislation for commercializing genetically modified seeds within Chile.

Plant Health

Chile follows the international phytosanitary regulations dictated by the International Plant Protection Convention (IPPC), the European Union and the International Seed Trade Association. To sell seeds to Chile, exporters must meet Chilean phytosanitary requirements. Some species are accepted with a phytosanitary certificate, while others require a certificate and a specific treatment with fungicides and fumigants.

Seed Certification
      
No changes have been made to the seed certification process since our last report. Chile’s system was accepted by the OECD certification scheme in 1972 and became effective in 1977. In 1980, Chile’s certification scheme was accepted as equivalent to the EEC certification regime. The seed certification process is done by SAG. SAG reports that there are a total of 110 protected varieties registered.
 
Plant Variety Protection   
          
Chile is a member of U.P.O.V., which stands for Union for the Protection Of new Varieties of plants. The law, which protects varieties, was published in November 1994, allowing Chile to join the U.P.O.V.’s convention of 1978. Variety protection operates through the Registry of Protected Varieties. Varieties created abroad may be registered and enjoy the same rights as Chilean varieties, provided they also have been registered in their country of origin. Acceptance of varieties in the Registry grants the owner the exclusive right to produce and trade the seed.   
                  
Variety Approval     

There are no changes since our last report on variety approval. The variety approval system was last modified by Law # 19.342, which was published in November of 1994.

Tariffs

The import duty for all US seeds is zero since January 2004, as a result of the US-Chile Free Trade Agreement. A 19% value added tax applied to all products (domestic and imported) regardless of origin.

Production

Chile is a major producer of hybrid corn seeds, sunflower seeds, and vegetable seeds and to a lesser extent forage seeds for export. Production is concentrated south of Santiago in Region VI. Industry sources estimate that large multinational companies present in Chile produce over 80 percent of all seeds. There also are some smaller Chilean seed companies producing under contract for other multinationals that are not present in Chile. Most of these smaller seed companies specialize in the production of seeds of new species and/or varieties. Although seed production in Chile normally follows world demand and supply, that is, when the northern hemisphere is affected by adverse conditions and has a fall in production, companies contract more and increase their output in Chile, a constant expansion in production and trade can be observed during the last few years.

Although there are no official figures on Chile’s total area planted for seed production, the Seed Producers’ Association reports that plantings totaled a little over 20,000 hectares in 2004/05. Good weather conditions during the growing season and at harvest contributed to a larger output than last year. Official export figures also reflect this increase. Seed production and exports for the 2005/06 season are expected to increase significantly as
planted area is estimated to be close to 28,000 hectares. However competition is developing from other southern hemisphere seed producing countries such as Argentina, Australia and New Zealand, which have been growing in seed production and exports, particularly for a variety of horticultural products. Normally over 60 percent of total Chilean seed production is exported.

Trade

Total seed exports in CY2004 placed Chile as the fifth largest export in the world, after Netherlands, United States, France, Germany and Canada. For the Southern Hemisphere Chile is by far the largest seed exporter. Although seed production in Chile, which is mainly export oriented and is of significant importance in total Chilean agricultural production, these exports do not represent more than 5 percent of total world seed trade. Corn is the most important seed produced and exported by Chile, followed by flowers and melons. Vegetable seeds as a group are also important in total exports, accounting for 25 percent of total exports. Total seed exports rose from US$150 million in 2003/04 to US$171 million in 2004/05. Seed imports also rose last year from US$21 million in 2003/04 to US$26 million in 2004/05. Most seeds are imported for further multiplication and then re-exported.

The United States and various European countries are Chile’s main export markets. Exports to the United States, totaled US$91.5 million in 2004/05, up from US$73.9 in 2003/04. The US is by far the primary market for corn seed exports. France is the second largest export market for Chilean seeds with a total of US$18 million in 2004/05 season.

Full report in PDF format: http://www.fas.usda.gov/gainfiles/200605/146187700.pdf