USMEF Strategic Market Profile

Central And South America

• There is a slow growth in per capita pork consumption in the region driven by loosely-organized efforts from local producer groups to change the negative perception consumers hold towards pork in general.  
• Per capita income growth and increasing tourism are important factors driving expansion in the foodservice sector. Per capita income has grown by 22% since 1990. Moreover, the number of tourists in Central America grew by 131% since 1996.
• However, poor economies still characterize the region and average per capita purchasing power ($7,353) is 30% and 40% lower than Mexico and Russia, respectively. This limits the extent to which U.S. pork can expand in the region.
• The Chilean pork industry is growing but it is primarily focused on the premium export markets, creating a domestic shortage in pork. Chilean pork exports have grown by more than 400% in the last five years.

• Domestic production has increased by more than 130% since 1990, with Chile, Brazil and Costa Rica leading this expansion.
• The regional FMD situation has increased the supply of South American pork within the region.
• U.S. market share has declined as a result of displacement by growing pork producing nations such as Chile and Costa Rica.

• The processing sector will continue to be the main buyer of U.S. pork in the short and medium term.
• The vast majority of the pork raw materials are used by local processing companies to produce products such as sausages, “chicharrones,” hot dogs and hams. The export of raw materials takes place primarily on a spot market basis.
• In the medium and long term, USMEF expects to penetrate more into the retail and HRI sectors by means of expanding per capita pork consumption in the region.

Product/Industry Image

• The negative perception about the healthiness and safety of pork products is a weakness but yet also an opportunity to position U.S. pork as a safe and wholesome product.
• There is high regard towards products from the U.S., thereby creating and opportunity to market the “Made in the USA” image of U.S. pork branded products. 
• There is a positive perception towards U.S. food safety standards which can help differentiate U.S. pork from other regional products. 
• Pork variety meats are largely consumed by medium and high socioeconomic classes. This creates an opportunity to increase the margins of these low-value commodities.

Operating/Marketing Environment and Trade/Distribution Issues

• In many countries, modern retail is displacing wet markets. For example while the recent annual growth rate of the modern retail sector in the U.S. was 1%, the growth rate in the Central and South America region ranged from 2.5% in Guatemala to 4.5% in Brazil. Income growth and urbanization, as well as liberalization of Foreign Direct Investment policies for retail investments have contributed to this phenomenon.

Access Conditions

• FTAs are broadening opportunities in many markets such as Central America, Chile, Panama, Peru and possibly Colombia. However, many products still face a 10-20 year tariff phase-out period.

Import and market share data is based on import data of Colombia and Guatemala (from GTA), and U.S. export data is from the U.S. Department of Commerce, Trade Census Bureau.

Long Term Strategy:

• Expand the overall consumption of fresh pork (for example, hams, loins, picnics and ribs) by changing the negative perception consumers have toward it by promoting the safety of U.S. production practices and the high quality aspects of fresh pork from U.S. origin. Activities will be targeted at medium-high and high income consumer groups that regularly shop in the HRI and retail sectors.
• Expand sales of U.S. pork variety meats by gathering market information on opportunities for adding value to low-priced commodities, such as pork feet and jowls, that U.S. companies process and that are consumed by medium, medium-high and high income groups in the region. 
• Develop a market for processed/branded products with importers and retailers by identifying an in-country brand representative that can create brand awareness among upper-end consumer groups.

USMEF Export Forecasts: