FIELD STUDIES

Panama 2014 | AGRICULTURE | REVIEW: AGRICULTURE

Panama's coffee growers are keen to establish a robust international brand for their bean, while livestock producers have been certifying their animals with an eye on exports to the EU.

According to the latest statistics from the United Nation's Food and Agriculture Organization, Panama's agriculture sector is comprised of roughly 2.27 million hectares of land. In terms of land use, over 2.5% of the country's total area is used for permanent crops, 20.7% for permanent meadows and pastures, and an additional 7.3% is classified as arable land. Of the country's 3.8 million people, 250,000 are directly employed in the agriculture sector. Although the annual growth rate of the general labor force is around 1.9%, the agricultural labor force is actually shrinking at a rate of 0.78%. In 2012, crop production per hectare yielded an average of $561.

Panama is also reliant on food imports to meet local demand, particularly for cereals, which annually total over 540 thousand tons. The top three countries exporting agricultural products to Panama are the US, Costa Rica, and Argentina.

Panama's main attractions for foreign investment in the sector include its dollar-based economy, liberal policies on foreign ownership and exchange controls, favorable climate for agriculture, as well as its being one of the fastest growing economies in Latin America. On the negative side, land prices tend to be higher than in competitors such as Brazil or Colombia.

The primary crops for Panama's agriculture sector include bananas, which are the country's most exported commodity, as well as cocoa beans, coffee, coconuts, corn, potatoes, rice, soybeans, and sugar cane. In terms of production tonnage, the top three commodities are sugar cane (2.26 million tons), bananas (335 thousand tons) and rice (221 thousand tons), for 2013. In terms of value, the top three commodities produced are cattle ($237 million), chicken ($193 million), and bananas ($90 million).

BANANAS

Thanks to free trade agreements with the EU, Panama's already robust banana sector made significant gains according to the latest numbers from 2013. By the end of that year, total banana exports were 14.3 million boxes with a YoY increase of 8.63%. Most of this growth was seen specifically in banana exports to the European market, which was responsible for 14.1 million of those boxes.

At 45.4% of Panama's global banana exports, Germany was the primary destination in Europe, with Belgium coming in second place with a share of roughly 15%.

Currently, the banana industry is dominated by major international companies. The US-based Chiriquí Land Company (Chiquita) is one of Panama's largest landowners, as well as its largest banana exporter.

COFFEE

The Free Trade Agreements (FTA) that have benefited Panama's banana exports were also a boon for its growing coffee industry. What it does not have in quantity is made up for in its quality, as evidenced by the rise in the global demand for Panamanian beans. From July 2013 to June 2014, Panama exported 4.4 million pounds of green coffee beans. In terms of output it still lags behind considerably when compared to some of its neighboring coffee powerhouses, but locally grown varieties such as the Geisha coffee bean have been established as international Panamanian brands on par with the world's finest.

The country's coffee beans are primarily grown in the mountainous Chiriquí province, roughly seven hours to the west of Panama City. Blessed by volcanically enriched soil and ideal climate conditions, a variety of coffee bean plants are grown in the area, such as the aforementioned Geisha, as well as the Caturra and Catuai varieties.

Hoping to utilize the country's natural advantages for coffee production, the Ministry of Agricultural Development recently started an initiative to form an Agrifood Coffee Chain that would include the sector's producers, traders, and stakeholders. Through technical assistance and cooperation programs, the goal of the initiative would be to further strengthen the promotion of Panamanian coffee domestically and abroad.

However, optimism surrounding the coffee industry is partially negated by the reemergence of the fungus colloquially known as Coffee Rust. The spread of the fungus encompasses the south of Mexico and has continued all the way to Peru, but the coffee industries in Honduras, Costa Rica and Nicaragua bore the brunt of the damage. The Panamanian government has enacted an emergency plan in 2014 to renovate 410 hectares of coffee plantations, but experts are forecasting that the epidemic could take up to two to three years to be fully overcome.

LIVESTOCK

Panama's primary livestock products are chickens—with the highest per capita chicken consumption in Latin America—along with beef, pork, and veal. According to the latest World Bank livestock production index (which includes livestock products and dairy products), Panama had a rating of 133.4, good for 34th globally.

In 2013, Panama exported 4,013 head of cattle at an average of 465 dollars per unit, with Costa Rica being the main destination. However, after an overall solid year, climate factors affecting the sector forced Panama to import around 1,700 head of cattle in the first half of 2014.

In late 2013 and early 2014, the National Livestock Traceability Program was introduced. Under the program, farmers were required to register their animals via a radio device planted in the ear. Previously, the lack of certification or registration barred Panamanian livestock from reaching any EU export markets. In 2013, Panama had an estimated total of 1.8 million animals, with 25% being slaughtered yearly and 6% exported. In early 2014, the National Cattlemen's Association (Anagan) began negotiations with Agrobanco in Peru for a deal to annually export 1,500 head of cattle. If successful, this deal alone would raise total cattle exports by roughly 40% from the country's 2013 total.

AGRITOURISM

Whether at the picturesque coffee plantations in the northern highlands of Chiriqui, or on the Azuero Peninsula to the south, agritourism has just begun to boom in recent years throughout the country. In 2014, 65 farms designated for agritourists were running, or under construction. Realizing the potential of the sub-sector, the Ministry of Agricultural Development (MIDA) has begun promoting agritourism, while also trying to ensure that it remains sustainable and beneficial for the local community. The small scale farms can handle up to 20 people at a time, allowing tourists to witness first hand the farming life and culture of Panama's diverse rural communities. Thus far, it is estimated that 10% of such tourists are foreign.