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United States-Colombia trade promotion agreement pays dividends to American farmers and exporters

The United States-Colombia Trade Promotion Agreement (CTPA) entered into force on May 15, 2012, laying the foundation for a surge in U.S. agricultural exports. Since 2012, U.S. agricultural exports to Colombia nearly tripled from $1.1 billion to $2.9 billion in 2018. Despite its geographic proximity to major U.S. competitors Brazil and Argentina, Colombia, the third-largest economy in South America, purchases half of its agricultural imports from the United States. Preferential access from CTPA and a strong Colombian economy have allowed the United States to increase its market share from 19 percent prior to CTPA, to 50 percent in 2018. Changing demographics, a growing middle-class, and consumer trends toward more modern retail outlets is expected to keep demand strong into the future for high-quality U.S. agricultural exports.

Colombian Macro-economic Trends and Changing Demographics

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In addition to CPTA, political stability and a dynamic economy have contributed to Colombia becoming the United States’ 12th-largest destination for agricultural exports, up from 19th place in 2012. Colombia ranks as the 29th-most populous nation with 49 million people and the 39th-largest economyi. Colombia’s per capita gross domestic product (GDP) is $15,600 and growing at a healthy annual rate of 3.5 percentii. Over the past decade, economic development has lifted most Colombian households out of poverty and into the middle class. Colombia’s middle class will increase by a million households to five million by 2024 . Middle class households have the purchasing power to shop at modern retail outlets and to purchase higher-quality imported goods. Eighty percent of Colombia’s population resides in urban communities. Urbanization and middle-class expansion play a major role in educating and exposing Colombian consumers to healthier and higher-quality food alternatives.

Over the past decade, Colombian retail food and non-alcoholic beverage sales have grown by 36 percent compared to only 19 percent in the rest of South Americaiii. Colombia has recently undergone a period of consolidation in its food retail sector that has led to more large-scale, modern retailers and food chains, reducing the number of mom and pop retail outlets. The larger retailers that emerged have better facilities, enhanced distribution networks, improved cold storage, and more shelf space allowing them to carry more imported foods.

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Traditionally, Colombians have consumed most of their meals at home eating locally produced foods. These home-cooked meals were preferred because they were locally available, well known, and inexpensive. Imported and packaged foods were traditionally viewed as expensive and unhealthy. However, higher levels of disposable income and shifts in the household structure have contributed to changing dietary habits and food consumption patterns. Colombians can now afford to base their purchasing decisions on the quality, variety, and convenience of products, and not entirely on price. This shift is creating opportunities to sell more U.S. prepared foods and consumer-ready goods.

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