South America: A Growing Export Destination for Iowa
Submitted by: Luis Doménech, MILA, Iowa’s Latin America Representative
Most American companies that decide to become international target the Canadian and Mexican markets first. Trade integration between the USMCA partners continues growing and in 2022 closed with $1.6 billion. Iowa exporters who have benefited from trading within North America are generally ready to take the next step and look further south. IEDA Latin American representation can help tap into opportunities in Mexico, Brazil, Colombia, Chile and Peru. Learn more about those markets:
Exporters selling to Mexico have learned the country is large and diverse with nearly 130 million people. It is a largely price sensitive market, but high quality and diversified products usually find their niche. Mexico has become the 6th largest vehicle producer, and other fast-growing industries include medical devices, processed foods and aerospace.
Iowa is a large exporter of agricultural products and technologies to Mexico, but also a large exporter of automotive parts and components, medical devices, plastic products and manufactured goods. Besides the traditional exports, Mexican industries have the export potential for food ingredients, processed foods, animal feed, medical supplies, tubes, pipes and fittings.
Brazil presents an attractive export destination for Iowa-based enterprises. It boasts a large and expanding economy with a population of 213 million and a GDP surpassing $2 trillion, making it the ninth largest economy globally. Its diversified economy, with a strong agricultural sector, aligns well with Iowa's strengths in agribusiness. Brazil's manufacturing industry is also growing rapidly, affording vast opportunities to supply machinery and inputs.
Brazil has a strategic geographic location in South America. It offers easy access to neighboring countries such as Argentina, Uruguay and Paraguay, as well as other nations in the region. Its well-developed infrastructure, which includes a robust network of roads, ports, and airports, facilitates product transportation and local partner connectivity.
Colombia has the 4th largest economy and 3rd largest population (51.1 million) in Latin America, and it also recorded an impressive 7.5% growth in GDP in 2022. Last year, the U.S. and Colombia celebrated 200 years of diplomatic relations and 10 years since the Trade Promotion Agreement (CTPA/FTA) entered into force, which offers easy and tariff-free access for most products. The U.S. was the country’s main trading partner with 29.6% of the import market share in 2022, and was also the main destination of Colombian exports (crude oil, coffee, flowers, aluminum structures, etc.).
Colombia’s important and growing industries include: food and beverages, fabrics, and chemicals. The automotive sector is also growing (vehicles and motorcycles) in 2021, ranking 4th in Latin America with 44,150 produced units. The white protein sector is also thriving.
Iowa exports to Colombia vary widely and include agricultural goods like corn and frozen swine meat, chemicals (fungicides, insecticides, dextrin), medical devices, construction machinery and pet food. These products account for almost 80% of Iowa’s exports to Colombia. Colombia is the 2nd largest importer of processed food in South America. The market also offers opportunities for health foods, organic products, soybeans, medical supplies and devices, and aerospace and defense.
Chilean imports reached $104.4 billion in 2022, a 13% increase from 2021. U.S. exports to Chile accounted for $20.5 billion, representing a 38% growth. With 20 million people and well-developed infrastructure, Chile is increasingly becoming an attractive destination for U.S. exports.
Chile is a large importer for U.S. agricultural and consumer-oriented agricultural products with $886 million in imports. The top U.S. agricultural exports to Chile are beer, dairy products, pork, poultry, beef and wheat. Chile is a large importer of agri-food machinery from the U.S. and a large buyer of premium consumer-oriented products including beer, distilled spirits, pork and pork products, cheese and specialty beef cuts, all of which hold potential for growth in the Chilean retail and HORECA (hotel, restaurant, catering) industries.
Peru offers a population of 33.7 million, a favorable business climate, clear trade rules and a pro-business environment. The country has experienced consistent economic expansion with sectors such as mining, agriculture and tourism as the main drivers, leading to a rising middle class and higher consumer expenditure. Strong sectors for Iowa that will find demand in Peru include agriculture, renewable energy and information/communication technologies
Peru's strong agricultural sector accounts for 7% of GDP and employs 25% of the population; it is an excellent match for Iowa’s exports. The sector has experienced significant growth over the past two decades, which has contributed to the steady decline in the number of Peruvians living in poverty. Peru offers excellent potential for renewable energies from a variety of sources, including sun, wind, geothermal and biomass with only 5% of its electric power originating from these sources.
The United States-Peru Free Trade Agreement eliminates tariffs and removes trade barriers, providing a secure, predictable legal framework for investors and strengthening protection for intellectual property, workers, and the environment. This will create opportunities for the U.S. agricultural industry to export to Peru, especially since all tariffs will be eliminated by 2026.
IEDA is available to assist Iowa companies
For help tapping into opportunities in these markets, finding specific information and connecting with adequate business partners, contact Andrea Smith (IEDA’s International Marketing Manager) at email@example.com.