INVESTMENT IN THE FRUIT AND VEGETABLE SECTOR

Colombia is one of the countries with the best topographical conditions and with a great variety of climatic zones for the cultivation of fruits and vegetables. Thanks to being a tropical country located on the equator, its national territory benefits from sunlight year-round, which means that it is always able to harvest all kinds of crops. Crops can grow both at sea level and at altitudes of 2,800 meters (9,168 feet), which represents close to 95% of the national territory.

FRUIT AND VEGETABLES IN COLOMBIA

GROWTH, CONFIDENCE AND OPPORTUNITIES TO INVEST

Libertad y Orden

Colombia is a tropical country with a great variety of ecosystems where close to 95 types of fruit are native to the country and other species have been introduced in other equatorial areas.

Colombia is ranked third in Latin America for the number of hectares devoted to fruit production, 748,604 hectares, which is equivalent to 10.5% of the country. It is also the fifth largest producer in the region with 8.5 million tons, equivalent to 7.2% of total agricultural production. FAO - Figures for Colombia Ministry of Agriculture.

Colombia is the seventh largest producer of vegetables in Latin America, with 4.2% of the total area used for vegetable cultivation (107,694 hectares) and vegetables accounting for 4.2% of total agricultural production (1.89 million tons). FAO - Figures for Colombia Ministry of Agriculture.

COLOMBIAN FRUIT PRODUCTION (MILLIONS OF TONS), 2007-2012.

The fruit and vegetables produced in Colombia are better in physical quality in regard to their organoleptic qualities, such as color, flavor, aroma, higher content of soluble solids, and degrees Brix compared to those from other subtropical countries both in the northern and southern hemisphere.

Colombia has two of the most accredited International Research Centers for Tropical Agriculture (CIAT) and CORPICA (Corporación Colombiana de Investigación Agropecuaria [Colombian Corporation for Agricultural Research]).

2007 2008 2009 2010 2011 2012

7,7 7,4 7,5 7,7 7,9 8,5

3,63,33,23,13,03,23

Source: Ministry of Agriculture and Rural Development.

Including bananas and plantains Excluding bananas and plantains

Regions (departments) such as Antioquia, Bolivar, Santander, Cundinamarca, Risaralda, Quindio, Caldas, Tolima, Huila, Nariño, Cauca, Valle del Cauca, Meta, Casanare, Boyaca and Magdalena are the greatest vegetable and fruit producers and offer great potential for new crops.

The current offering of fruit and vegetables in Colombia includes:

Mango Lemon WatermelonPitaya Pineapple guava BerriesMelon Pineapple PotatoTomato Onion bulbs MushroomPassion fruit Banana PlantainAsparagus Citrus fruit PapayaChili Guava Chili pepper Avocado Limes Green onion Peas

COLOMBIAN FRUIT AND VEGETABLE PRODUCTION (MILLIONS OF TONS), 2007-2012

CURRENT AREAS SUITABLE FOR FARMING:

2007 2008 2009 2010 2011 2012

1,721,68 1,76 1,70 1,711,89

Vegetables Source: Ministry of Agriculture and Rural Development.

INVESTMENT OPPORTUNITIES

New areas for planting and improvement of existing areas: fresh fruit and vegetable exports under free trade agreements with the United States and the European Union are seen as a big challenge and an opportunity. Asian markets also represent a big opportunity, especially when the treaty with South Korea enters into force. Thanks to the FTA’s in force, Colombia has preferential access to the 10 most important import markets for fruit and vegetables, which account for almost 60% of global purchases.

Assembly of production plants for preserves, marmalade, sauces and other food products made from fruits and vegetables. Nowadays many companies have to import their final products, which increases production costs.

Assembly of processing plants that create products for supplying other companies (i.e., tomato sauce).

Organic and sustainable products represent a big opportunity given new international trends in nutrition. Many of these products can grow in the country.

PROCESSING COMPANIES

There are approximately 30 fruit and vegetable processing companies.

The biggest corporate producers are located in the departments of Magdalena, Valle del Cauca, Antioquia, Cundinamarca, Atlantico and Caldas. Some of them are:

Conservas California S.A.

Compañía Envasadora del Atlántico Ltda.

Panamericana de Alimentos S.A.S.

Productos Alimenticios Bary S.A.

Productora de Jugos S.A.S.

Industrias la Coruña Ltda.

Dole.

Olmúe.

Comercializadora Internacional Agrofrut S.A.

LARGE COMPANIES HAVE CHOSEN COLOMBIA AS A PLACE TO INVEST

INCENTIVES

OLMUÉ (CHILE): Established a fruit processing plant in Valle de Cauca (pineapple, mango, melon, papaya).

ASOHOFRUCOLVegetable and Fruit Growers’ Association of Colombia.

MINISTRY OF AGRICULTURE AND RURAL DEVELOPMENTResponsible for the management of agricultural and livestock policies.

• Investments in new late-harvest crops (fruits, vegetables, palm oil) are exempt from income taxes1. This benefit is applied to plantations established between January 1, 2003 and December 31, 2014, and will be in force for 10 years after starting production2.

• Programs for productive companies seek to unite small producers with industrial landowners (producers and dealers) for the continuous development of projects in the medium and long term where there are supply commitments. Close to 30% of the agricultural phase of the project is subsidized.

1. Act 939 of 2004, Article 1. In any case, only companies are subject to the CREE (impuesto sobre la Renta para la equidad [Income tax for equality]) (9% for 2013-2015 and 8% since 2016).

2. Act 939 of 2004, Article 2.

PROCOLOMBIAThe entity in charge of promoting international tourism, foreign investment and non-traditional exports in Colombia.

DOLE (UNI T ED STAT E S OF AMER IC A): In 2014, the U.S. multinational corporation Dole started operating a plant for salads and a product distribution center in the country.

TRANSFORMATION PROGRAM PRODUCTIVEPublic-private alliance that promotes productivity and competitiveness in sectors with high export potential, by means of more efficient coordination between the public and private sectors.