World Grain - October 2008 - 22

COUNTRYFOCUS

Focus on Chile
Nation feeds strong appetite for bread
through thriving grains sector, large
wheat imports
by Chris Lyddon

Chile

Chile has a thriving grains sector despite having a limited
amount of farmland. A strong grain industry is essential for Chileans, who eat more bread than almost anyone else and have a
growing livestock sector that demands more and more feed grain.
Although it is dependent on imports, Chile's own agriculture
makes a worthwhile contribution.
"Chile is one of the most stable economies in Latin America,"
Erik Ordonez, marketing manager at the Canadian Wheat Board,
one of the biggest suppliers of grain to Chile, told World Grain.
"45 to 50% of the economy is based on copper exports, but it also
has diversified well, with things like wine and fruit
"They produce quite a bit of grain. In a good year they can
produce 1.1 to 1.5 million tonnes of wheat. Not all the wheat
they produce is suitable for milling. They import around 700,000
tonnes of wheat a year."
Even though Chile has less agricultural land than many South
American countries, it has built an effective farm sector on what
is available. "They're 16.5 million people in a long narrow piece
of land," he said. "Chile has been able to utilize every hectare."
In its latest report, the International Grains Council
Bolivia
(IGC) put Chile's wheat crop at 1.4 million tonnes in
2008, up from 1.3 million the year before. It predicted
Chilean grain imports for 2008-09 at 2.8 million tonnes,
up from 2.6 million. The IGC put Chile's imports of
wheat at an unchanged 900,000 tonnes in 2008-09.
Argentina
It forecast maize imports at 1.8 million tonnes for
2008-09, compared with 1.6 million the previous year.
Chile is also expected to import 60,000 tonnes of sorghum, down from 90,000 the year before, and 100,000
tonnes of durum, up from 19,000 in 2007-08. It will
also import an unchanged 700,000 tonnes of soymeal.
The most recent U.S. Department of Agriculture
(USDA) attaché report on the grains sector in Chile,
prepared by Agricultural Specialist Luis Hennicke and
published in April, stressed the importance of wheat to
Chile. "Wheat is politically Chile's most important annual crop," it said. "There are an estimated 89,000 producers, of which a little over 10,000 producers are in the
so-called subsistence group with little or no alternative
crops." Of the remaining total, just over 70,000 are small
farmers, 55,000 are medium-size producers and less than 3,000 are
large producers, according to the report.
It described how plantings had varied over recent years. Plant-

Key Facts
Capital: Santiago
Population: 16,454,143 (July 2008 est.)
Religions: Roman Catholic 70%, Evangelical 15.1%, Jehovah's Witness 1.1%, other Christian 1%, other 4.6%, none
8.3% (2002 census).
Location: Southern South America, bordering the South
Pacific Ocean, between Argentina and Peru.
Government: Republic; chief of state and head of government: President Michelle Bachelet Jeria (since March 11,
2006).
Economy: Chile has a market-oriented economy characterized by a high level of foreign trade. During the early 1990s,
Chile's reputation as a role model for economic reform was
strengthened when the democratic government of Patricio
Aylwin, which took over from the military in 1990, deepened the economic reform initiated by the military government. Growth in real GDP averaged 8% during 1991-97, but
fell to half that level in 1998 due to tight monetary policies
implemented to keep the current account deficit in check and
because of lower export earnings, which was a product of
the global financial crisis. A severe drought exacerbated the
recession in 1999, reducing crop yields and leading to hydroelectric shortfalls and electricity rationing, causing Chile
to experience negative economic growth for the first time in
more than 15 years. Despite the effects of the recession, Chile
maintained its reputation for strong financial institutions and
sound policy that have given it the strongest sovereign bond
rating in South America. Between 2000 and 2007, growth
ranged between 2% to 6%. Throughout these years, Chile
maintained a low rate of inflation with GDP growth coming
from high copper prices, solid export earnings (particularly
forestry, fishing, and mining) and growing domestic consumption. President Bachelet in 2006 established an Economic and
Social Stabilization Fund to hold excess copper revenues so
that social spending can be maintained during periods of copper shortfalls. This fund probably surpassed $20 billion at the
end of 2007. Chile continues to attract foreign direct investment, but most foreign investment goes into gas, water, electricity and mining. Unemployment has exhibited a downward
trend over the past two years, dropping to 7.8% and 7%
at the end of 2006 and 2007, respectively. Chile deepened
its longstanding commitment to trade liberalization with the
signing of a free trade agreement with the U.S., which took
effect on Jan. 1, 2004. Chile claims to have more bilateral or
regional trade agreements than any other country. It has 57
such agreements (not all of them full free trade agreements)
with, among others, the European Union, Mercosur, China,
India, South Korea and Mexico.
GDP per capita: $13,900 (2007 est.); inflation: 4.4%
(2007 est.); unemployment 7% (2007 est.).
Currency: Chilean peso. 529.7 Chilean pesos equal 1 U.S.
dollar (Sept. 22, 2008).
Exports: $43.99 billion f.o.b. (2007 est.): copper, fruit, fish
products, paper and pulp, chemicals, wine.
Imports: $81.17 billion f.o.b. (2007 est.): petroleum and petroleum products, chemicals, electrical and telecommunications equipment, industrial machinery, vehicles, natural gas.
Major crops/agricultural products: Grapes, apples,
pears, onions, wheat, corn, oats, peaches, garlic, asparagus,
beans; beef, poultry, wool, fish, timber.
Agriculture: 4.8% of GDP and 13.6% of the labor force.
Internet: Code. .cl; 745,375 (2007) hosts and 4.156 million (2006) users.
Source: CIA World Factbook

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