By Sophie Harrison
bUSiness Chile, the magazine of Chilean- North American Chamber of Commerce
via ANPROS, Chilean Seed Producers Association

In 1980, Chile exported seeds worth just US$2 million; today, it is one of the world’s leading exporters but, say producers, their success is fragile in the face of a strong currency.

"Chile boasts technology that would be the envy of any seed-producing country.” Jaime Ibieta, President, National Association of Seed Producers.

“Intellectual property rights have to be assured.” Víctor Venegas, Director of International Affairs, ODEPA.

“All the big seed companies now recognize Chile as an important country.” Martin van Vaals, Executive Director, Food & Agribusiness Research, Rabobank.

This is a little known triumph. While wine, fruit or salmon took the headlines, Chile’s seed export industry was growing quietly but steadily, helped by natural advantages and skillful management.

“Within Chile’s agricultural businesses, seed production has been one of the few to achieve sustained growth,” maintains Jaime Ibieta, president of the National Association of Seed Producers (ANPROS) and manager for South American operations at Nunhems, the Dutch multinational seed company.

Chile’s main advantage in this business comes from its position as a counter-season producer - a southern hemisphere country growing seeds for clients in the north. And while this is also true for many of Chile’s other agricultural industries, the advantage is magnified in the seed industry because the time taken to produce seeds is so short.

“You can watch what happens in, say, the U.S. and then plant what you know they’ll need six months later,” explains Ibieta. “With fruit, changing direction like that would take years.”

Other geographical advantages also work in Chile’s favor. The country has its natural isolation, surrounded as it is by desert, mountains and ocean. And this, combined with a hot dry climate, reduces the likelihood of plants suffering from bacterial and fungal infections.

“All the big seed companies now recognize Chile as an important country for the multiplication of seeds,” noted Martin van Vaals, executive director for food and agribusiness research at the specialist bank, Rabobank, during a recent ANPROS seminar on intellectual property protection in Chile’s seed business.

However, it is not just natural advantages that have fostered Chile’s success. Seeds are a high-quality product and are technically challenging. “One thing that makes seed companies different from other businesses is that you’ll find many people have worked for them for a long time,” said van Vaals. “Knowledge is extremely important and the people are a real asset.”

Of the 75 members of ANPROS, 18 are multinationals. And these big international companies, like Monsanto and DuPont, have brought to Chile expertise which has filtered through to local producers.

Today, Chile boasts technology that would be the envy of any seed-producing country, says Ibieta. Maize, which is among the most technically demanding crops to process for seeds, accounts for close to half of Chile’s exports, and one of the biggest maize processing plants in the world, owned and run by Pioneer, a subsidiary of DuPont, is in Paine, just south of Santiago.

Chile’s seed industry also has sophisticated Global Positioning Systems (GPS) to track plantings and avoid similar crops being sown too close together and cross-pollinating. These were put in place both by ANPROS and the Servicio Agrícola y Ganadero (SAG), Chile’s agricultural inspection service.

The SAG is credited with having played an important role in strengthening Chile’s natural barriers against disease and contamination. “In other South American countries, the situation is more complicated and they take things far less seriously,” says Ibieta. “Chile can sometimes be a little bureaucratic but, in the end, foreign companies have confidence in Chile because they know there is greater security here.”

Testing Times

Last year, Chile’s seed exports reached US$172 million, making it the leading southern hemisphere exporter and around the fifth largest globally. Maize seeds, which are often genetically modified, accounted for sales of US$65 million, followed by seeds for vegetables, such as lettuces, cabbages, leeks, onions and tomatoes, at US$41 million, while other important seed crops include flowers (US$14 million), sunflowers, beans and grasses. Organic seeds make up only a fraction of the total and are, according to Ibieta, very tricky.

The total area under cultivation for seeds in Chile is now estimated at 36,000 hectares. And, today, the seed industry generates 7,000 permanent jobs, employing a large number of women who do the bulk of the manual cross-pollination needed for many vegetables and flowers.

As regards the destination of exports, 55% go to the United States, which is the principal market for maize seeds, and 30% to European countries. Chile’s Achilles heel is its distance from its customers, which adds to costs that are already significantly higher than third-world competitors notes Ibieta.

The industry’s challenge now is to maintain its competitiveness, and one urgent necessity on this front is to improve the situation regarding intellectual property. Speaking at the recent ANPROS seminar, Víctor Venegas, director of international affairs at the Chilean government’s Agricultural Research and Policies Office (ODEPA), was emphatic on this point.

“Chile needs to broaden its base away from natural resources,” said Venegas, who has participated in the negotiation of all the country’s main Free Trade Agreements. “And for that we need credibility; intellectual property rights have to be assured.”

Despite the best efforts of the SAG and its inspectors, too many seeds in Chile are produced and sold informally. And, as Venegas explained, this directly affects research and development because, when a competitor appropriates a patented product, the developer is forced to lower its prices, undermining the return on its investment.

Chile is now working towards modifying its legislation and, within the next two years, aims to comply with the UPOV 91 principles established by the International Union for the Protection of New Varieties of Plants (UPOV). This would oblige producers to pay for intellectual property rights and “is an opportunity, not a threat,” said Venegas.

According to Ibieta, the seed industry also needs to make itself better known within Chile and so carry more weight. “We have been rather silent…despite being strong economically,” he says.

Seed exporters generate more revenues than meat or milk exporters, but are a less powerful group. Moreover, key issues like genetic modification, organic cultivation and intellectual property are not generally well understood. “If the industry were better understood in this country, it would enable it to grow more,” maintains Ibieta.

But all these concerns are dwarfed by the anxiety of Chile’s seed producers on account of the strength of the peso against the U.S. dollar. “Two years ago, the dollar was at 750 pesos, now it’s at 525 and costs have increased,” points out Ibieta.

“The multinationals are alright but Chilean seed businesses will go under if there isn’t a solution,” he predicts. “What was once business for them isn’t good business anymore.”