Sep. 17, 2015


Alfredo Zeller

Ecuador

Alfredo Zeller

President, Provefrut

TBY talks to Alfredo Zeller, President of Provefrut, on the EU-Ecuador trade agreement, Provefrut's international presence, and diversifying into the organic market.

BIO

Alfredo Zeller graduated with a degree in Business Administration from the University of Michigan. He also holds an International Business Administration degree from Schule Fuer Kaufmann in Gross und Ausenhandel, Hamburg, Germany. He started his career at Empresa Técnica Comercial C.A. ETECO, a trading and representational company, eventually becoming CEO for 25 years. From 2002 onwards he became President of Provefrut S. A.. He has also been involved in various construction projects with different governmental agencies of Ecuador in fields such as: water treatment plants, hospitals, oil and water pipelines, and urban development.

The company was created in 1989. How have you diversified and generated added value in your production?

We began by solely selling our broccoli in bulk packaging to the industry so that at the final destination it would be repackaged, or combined with other products. Today, we are packing it directly for the end-user, depending on the requirements that each client asks us to fulfill. A key step involved diversifying into the organic market, and today all the new products are directed to this market, and we are not only growing organic broccoli, but also spinach, kale, Swiss chard, and quinoa; today, around 35% of our total volume is organic. This is a big step, because it implies that our fields have to be organically managed and have to be certified under sustainable agricultural standards.

How strong is your international presence?

We export 100% of our production. Our exports are divided as followed: 35% to Europe, 35% to 40% to the US, and 20% to Japan. Our original market was Europe—we have had a presence there for 26 years. We have had a relationship with the Japanese market for 20 years, having worked closely with very few, though prestigious, Japanese importers. In the US the story is similar, but we have also introduced our new organic products, and so we have had to find more clients who are specialized in this line, and that is something that has worked very well, now it is more of a problem of supply than demand.

How do you think the EU-Ecuador trade agreement will affect the Ecuadorian broccoli industry?

On paper it is going to help us maintain a competitive edge because we will not be paying any duty; the duty for broccoli is high around the world, both in Europe and the US it is almost 15%. If there is no Free Trade Agreement with Europe we would be 15% more expensive, which is not doable for broccoli; it is a commodity, it is a vegetable, and the margins are not that big. With the Free Trade Agreement we will be able to continue business as usual, and we will be on the same level playing field with our global competitors, which are essentially Mexico, Guatemala Spain, Portugal, Poland, and China. Ecuador has also recently been included by the US for the extension of the Generalized System of Preferences, which will immediately boost Ecuadorian exports for around 3,000 products, as all import duties will be eliminated

What will be Provefrut's biggest investment this year?

We diversified in bioorganic quinoa, a healthy food segment. That was finished last year and came into production this year, in our new production facility called Proquinua. The investment was over $1 million. In total, we invest around $1.5 to $2 million annually, and we have been doing so for the past six to eight years. Where we normally want to invest is either in replacing older equipment for more efficient ones and production capacity growth at our 3 production plants.

What is Provefrut's prospect for the year ahead?

We are expecting 5-7% growth this year. This year we will come close to over $50 million in sales, and I would say the gross income will be around 8-10%. We ship about 35 to 40 reefer containers per week, which is a lot of volume and logistics. Last year we saw growth of around 15%.