By Sebastián Valdés Lutz, President of ChileAlmonds
"Revista El Campo" magazine, "El Mercurio" newspaper, Monday, October 4, 2021
Next November 21st we will have the Chilean presidential elections, and one of the items that has been transversal to all candidates, and not only during this process, is the protection of medium and small companies mainly due to their role in providing jobs. No one could deny that “pymes” (small and medium companies) generate most of the jobs in the country, around 53% of all domestic formal jobs, and 88% specifically in agriculture. The question is if this condition is enough for authorities to prioritize the creation and development of these small and medium companies, to the loss of big companies, which represent no less than 80% of GDP.
No doubt that for the political world it is seductive to include in their programs actions to support the “pyme” development. As for public opinion, in a market with companies of different sizes, it’s impossible not to empathize with David in his uneven fight the powerful Goliath, therefor being favorable to any measure that will equalize the forces of both combatants. The problem in this is, different to the Philistines from the Old Testament, big Chilean companies don’t only have a small and skinny Israelite competitor, but powerful and well-prepared companies from all over the world. Debilitating big companies will also damage Chilean competitiveness.
The success of large companies abroad is in the opening of new markets, giving access to a much wider universe of consumers with purchasing power, acquiring the value which allows the expansion of the sector, including huge benefits in jobs, contracts for product and services suppliers, tax reduction and private, social, and environmental cost effectiveness, among others.
Our Peruvian neighbors understood this very well towards the end of the last century, as they didn’t have their horticultural export industry developed, they made a bet on huge investments in hydric highways like those of Chira in Piura and Chavimochic in La Libertad, ultimately adding close to 70.000 hectares of irrigation, and improving another 190.000, promoting the birth of great agro-export groups which in few years transformed Peru in a world leader in asparagus, avocado, grapes and blueberry. Peruvians understood they needed the powerful Goliaths to compete and win internationally.
On the verge of knowing the figures of a new agricultural census in Chile, the one from 2007 identified only 175 agricultural endeavors with annual sales the same as, or over UF100.000, from a total universe of 269.315, in other words, 0,1% of the whole could be considered a “big” agricultural company. We can see a similar case with the export companies in every agricultural area, also showing a handful of dominant “big” companies. It seems we have a surplus of David’s descendants in Chile, or our politicians have been focused on making better slingshots and shortening the size and width of the swords of the Goliaths of the agricultural sector.
The importance of promoting development of the “pymes” is not in question, as they are the seed of innovation, fundamental base for future big companies, as well as the web of related product and services suppliers, but not as a model to empower Chilean agricultural competitiveness worldwide. Outside our borders, you compete with scales, continuous quality, brands, after sales service, cutting edge technology, food safety, efficient logistics and financial support. When these attributes are not available it risks not only the export company’s prestige, but that of our country as well.
On the 21st of November we will have presidential elections in Chile. It would be good to see in the programs some measures to strengthen, rather than weaken the competitiveness of the Chilean agricultural sector. Public investment in hydric resources, port infrastructure and highways, the guarantee that free commercial treaties will be maintained, to subsidize all investments that allow adding technology and information to agribusiness, legislation that will efficiently regulate food safety of everything that leaves Chile into the world and competitive international taxations. It is time someone gave the powerful Goliath his importance so that he can go conquer markets for Chile.