4.2.6.- Panama

Panama is still a small player in the agricultural world but this situation tends to be changing. The economy is on the move and initiatives need to be taken to develop rural areas in order to reduce migration to Panama City and to level the income per capita. Social stability (and safety) is of increasing importance to maintain Foreign Direct Investment which has increased with large figures during the last 3 years. Besides that, Panama’s economy is strongly based on the financial sector and on service sectors directly or indirectly related to the Panama Canal. It would create more economic stability if the agricultural sector could play a more important role as an economic pillar.

The most obvious sector to be further developed in Panama is the fruit sector. Melons and watermelon are already big export products and are likely to increase even more. Pineapple is still small but on the rise. Banana is the biggest export product but less likely to increase due to world wide competition from countries with lower costs.

If this report shall be re-written in 5 years from now, it is likely that more focus will be given to the ornamental sector which is now only exporting leather leaf. Plant production could become an interesting opportunity for Panama but it is too early to define it as a realistic opportunity in this report. Vegetable production for export markets like North America is less likely because of transport related issues and the lack of an existing sector.   

Figure 4.8 Business Ideavelopment Chart Panama
*Tomato, cucumber, pepper and eggplant

4.2.6.1.- Melon and watermelon

There is certain doubt on the correctness of statistical data from the Worldbank (trademap) for both melon and watermelon. Figures could not be verified with SIECA as Panama is not included in SIECA stats. Melon is supposed to be responsible for over 30% of Central American exports which is doubtful. Nevertheless, melon is rapidly growing in Panama and strongly stimulated by the national government. Due to the lower costs compared to ‘big neighbour’ Costa Rica, Panama is taking a bigger share.
Watermelon has become the strongest growing export product from Panama in recent years. Watermelon is relatively ‘easy’ compared to melon and therefore a logical first product within the group of non-traditional products. It is likely that this product will grow even more and take over a larger part of, most of all, Costa Rica.
A recent development that can be seen in Panama is the production of the ‘personal watermelon’, a small size watermelon. This shows the innovative character of the growers in Panama in comparison to their colleagues in Central America.
The climate is slightly different in Panama compared to Costa Rica making the harvest season in Panama a little less attractive than the Costa Rican season. Water is no problem in Panama and quality is good. The further development of Panama’s melon and watermelon sector will strongly depend on the actions to be taken in Costa Rica on a country level (DR CAFTA) and on a sector level (reduction of costs, production of specialties).

Opportunities

4.2.6.2.- Banana

Banana is a big crop in Panama compared to other crops but still of minor significance on a Central American level (around 10%). It is not likely that banana will further expand in Panama due to world wide competition. The main activity of banana production is dominated by Chiquita Brands in the North east Caribbean coast of the country. Nevertheless, transport costs are increasing world wide and Panama (in fact, all of Central America) has a favorable strategic position towards sales markets like Europe and North America. It is hard to predict for banana what the future will look like in Panama. However, for Dutch companies banana is not a very interesting sector as it is very extensive and few Dutch supply companies offer services or products which are useful for banana producers. 

Opportunities

4.2.6.3.- Pineapple

Panama is still a small player in pineapple but knocking on the international door. Pineapple is a year round crop and conditions in Panama are very similar to Costa Rica. Growth of pineapple is big and it is hard to predict in which directions it will go. Much will depend on the big players like Del Monte and Dole. Another factor which will influence the future of Panama for pineapple (but also the short term development of other non-traditional fruits) is whether or not DR-CAFTA will be ratified in Costa Rica. It is expected that, in case DR-CAFTA will be opposed, import barriers in the United States will decrease production of non-traditional fruits in Costa Rica substantially although Europe is still the biggest market. If this scenario becomes reality, Panama’s position is strong having access to both Europe and the United States and having (South East) Asia as a new potential market.

Opportunities  

4.2.6.4.- Processed fruits and potencial crops

As fruits is an upcoming sector and capital starts to become available, processed fruits could turn into an attractive new industry. On top of that, it is likely that the government will play a pro-active role to stimulate it. Other potential crops might be smaller fruits like passion fruit.

Opportunities:

4.2.6.5.- Foliage

For many years, Panama has been exporting foliage but it never has taken over a significant of Costa Rican exports. It is only in the region Chirqui where leather leaf can be produced. It is very unlikely that this sector will further expand and therefore, no realistic opportunities can be defined.

4.2.6.6.- Vegetables, cut flowers and mango

All above mentioned sectors show no presence (as an export crop) or no opportunities for Dutch horticultural companies in Panama. Mango does show opportunities but as it is a small crop and it will take years to expand, it can not be considered worth mentioning as an opportunity for one of the Dutch target groups accept for investors.

4.2.6.7.- Sumary