5.2.3.- Guatemala

Guatemala has strongly increased its business competitiveness in recent years under the Berger government. The (near) future will have to prove whether these politics will be continued or not. If so, the most important barrier for foreign investments in the non-traditional agricultural sector, will be all issues related to safety. Besides that, Guatemala has an established horticultural sector, a rather stable economy, very acceptable infrastructure, available and very affordable labour and a rather well organized sector organisation. Guatemala is not outstanding in any of these issues but scores very good averages. The only issue to be mentioned which can be considered as very good, is natural resources. Various climatologic conditions are present, land is available and very affordable and water is no problem at all. It is comparable to Costa Rica except for the fact that land is much cheaper in Guatemala which makes a significant part of total investments.

Guatemala has the potential of becoming equally important as Costa Rica in non-traditional agricultural products. It has failed so far to promote itself in a proper way and the image of Costa Rica is still far more positive than the image of Guatemala; not only in terms of safety, but also in doing business and as a country to live in. Nevertheless, Guatemala has made quite some efforts to improve its image and its (business) attractiveness. Both Ministries and organizations like Agexport are making efforts to develop strategic plans aimed at creating more business and attract more foreign investment. What is generally lacking is a translation of these plans to action plans. Guatemala has to open up its doors and show itself to the outside world as an interesting alternative.

Besides that, many production companies still have a rather conservative approach on doing business. Like many other Central American companies, short term reductions of costs are preferred above middle long term investments in added value or just becoming more competitive. Collaboration with Dutch companies could create new opportunities combining the strong points of both types of companies. Many local companies, especially in the ornamental sector, already have good contacts in Holland. It is likely that such contacts will be developed in the next few years especially in non-traditional fruit crops and ornamental plants. But also in vegetables, it is likely to assume that Dutch companies, aiming at exports to the Eastern part of North America, will start seeing countries like Guatemala and Honduras as interesting alternatives.

5.2.3.1.- Pre-finished pot plans for Europe

Actual situation
The market for pot plants in Europe is big and growing. Growth is mainly the result of the expansion of the European Union creating more wealth in most of all Eastern Europe. Costs are also increasing and the value of the Euro has never been higher than nowadays. Requirements on a production level such as use of chemicals, safety on the work floor, costs of energy, etc. are all factors having on impact on the final costs of production in most prominent European pot plant producers Holland and Denmark.

On the other hand, transport is professionalizing. Sea freight is showing new opportunities these days due to developments like Controlled Atmosphere and (in the near future) illumination with LED’s. Transport time has also been reduced during the last decades and has been reduced to around 2 weeks.

Future scenario
Above mentioned developments open brand new doors for the cultivation of pre-finished pot plants which are traditionally only produced for propagation material. Focus should be first of all on pre-finished as many plants can stand container transport by sea freight nowadays but need to acclimatize at arrival in Europe. Finished pot plants are already shipped as well to Europe but quantities are still limited.

At this moment, various companies are already selling large quantities of pre-finished pot plants to Europe. It is remarkable that most of these initiatives are worked out on a joint basis between a Dutch partner and a local partner. The need for knowledge on a production level and on a market level makes a Joint Venture or a Strategic Alliance a logical step. On top of that, it will be very hard for a Dutch producer to set up local production in Guatemala (or in other Central American countries) when no local counterpart is affiliated to the project.

For Dutch companies interested in finding a Guatemalan or Central American counterpart, the market is large. Central America is the traditional main producer of propagation material of foliage plants to the European market resulting in a large number of companies having contact in Europe and broad experience with potted plants.

A local company or a Dutch company should come up with a plan to produce a certain type (or certain types) of ornamental plants to be produced for the European market. Based on these thoughts, it can strongly be recommended to find a suitable counterpart as it is unlikely to succeed with such a project without one. Most local growers lack experience with crops being grown in greenhouse conditions and have limited knowledge on the European market and its demands. For Dutch companies, it can also strongly be recommended to find a local counterpart as climatologic conditions are different but most of all, social and cultural circumstances can not be compared to Holland and a local base can therefore be regarded as a obligation.

Sales in Europe can be worked out in close collaboration with the Dutch counterpart as well as part of the financial issues. This would be another reason for collaboration with a Dutch counterpart as local banks are much more willing to invest if a Dutch counterpart takes responsibility for a part of the total investments. There are possibilities that funds can be found to support such a project.

5.2.3.2.- Mini vegetables for the European market

Actual situation
At this moment the production of mini vegetable is being characterized by exporting companies who source their produce with small (indigenous) farmers in the highlands of Guatemala for export to the United States. The main restraint for exporting to the European Union are the freight cost and than mainly by air plane from Guatemala to the airport with the connecting flight to Europe. The climatic conditions of Guatemala make it an excellent place to grow mini vegetables. Packing mini vegetables is labour intensive.

Future scenario
The current varieties of mini vegetables (or improved varieties for longer shelf life) can be grown on own plantations or by an out grower scheme like currently is being done. The vegetables are being packed in high tech packing facilities that comply with all good manufacturing protocols and certification schemes. Pre-cooling equipment is available and the mini vegetables are being packed in their final packaging that provides extra protection and therefore prolongation of the shelf life of the products. The packed products are being transported to Miami by sea container where they are being loaded on the direct flights to Europe. The main business opportunity will be for the importer who can bring together capital for the initial investments, logistics and knowledge on varieties and packaging systems. Suppliers of packing material will find a market for ‘smart’ packaging systems to better preserve the quality and shelf life of the fresh products.