The Business Year

Carlos Manuel Uribe

CEO, Flores el Capiro

Juan Carlos Murgas Dávila

General Manager, Oleoflores

Colombian exporters are growing more sophisticated by the year, but their long-term health will remain contingent on larger efforts to improve local infrastructure and maintain sustainable economies of scale.

What is your overall export strategy?

CARLOS MANUEL URIBE Currently, the North American market only accounts for 30% of our total exports because we have increased exports to other markets. Our UK market is currently larger than that of North America, but our plan is to grow our business more in the US via sea freight. This is where our focus currently lies because the cost of airfreight to the US has increased considerably. We did have a competitive rate until airfreight costs increased by 20% in 2017. Now there is less air cargo coming to places like Brazil and Colombia due to the slowdown in these economies. To remain competitive, we have to concentrate more on sea freight. We were sending one container a week to the US by sea, and will now send most of our flowers that way. There may be some opportunities in the Middle East in the future, though for now the focus is the US and eventually Germany. The German flower market, the largest in Europe, is currently dominated by Dutch growers, and we are working to open up that market.

JUAN CARLOS MURGAS DÁVILA We have different businesses within the palm oil chain where we produce the palm seeds, which are then sold. Palm trees are only planted along the equatorial latitude and cannot be planted north or south of the equator. That is our market, because Malaysia and Indonesia produce a large amount, and we cannot compete with them. We sell our plant seeds from Mexico to the north of Brazil, Peru, and Ecuador, which are also sold in Colombia to small, medium, and large planters. We also have three extraction plants and produce oil with these. Our strategy is to determine where the plants can be the most productive, thus we look at the map of Colombia to decide on optimal locations. We need a great climate with rain and sunlight so that the trees can grow well and bear enough fruit. The target is 25 tons per hectare per year, and we need to achieve that target in seven years. Once we produce the crude palm oil in the extraction plants, we need to figure out how to commercialize this product, as we need to be competitive. The second point is how far away are we from the ports and how expensive it is to transport the oil. Infrastructure in Colombia is improving, though we still have a long way to go. We locate ourselves next to ports in order to be competitive with Malaysia or Indonesia, as their production costs are extremely low due to lower labor costs. As a country and company, we must be extremely competitive in production in order to lower our production costs and be able to compete.

What are your goals for the year ahead?

CMU Our priority for now is to start targeting the US market using sea freight and to apply our strategies in European supermarkets to the US. These markets are completely different. As far as European markets go, the Netherlands is a producer, though it also imports a large amount of flowers from Colombia, Ecuador, and Africa. Colombia is as big or bigger than the Netherlands in cut flowers, and we have the most varieties. The sector will continue to grow YoY, though it is not a fast-growing sector; it only grows 3-5% per year. However, Colombia is an excellent place to grow flowers and, importantly, with more roads and better ports being constructed, we will be more competitive going forward.

JCMD Our main goal is to be competitive as a commodity business. The bulk commodity business is a large player in our portfolio, and the only way to be sustainable in the future is to work on our cost structure. We have a focused system with SAP, which we have worked with since 2011 and has changed the way we see our customers and how we lower our costs. The company has a young plantation that will produce for the next 20-25 years. The production peak of palm oil is between years seven and 10. Our plantations still have an average of eight years left in them, and we will double our production in the coming three years. Our focus will be on our cost structure and to continue positioning Oleoflores as a sustainable company, working with our partners that share our cost structure. We work not only with our costs, but also with small holders’ costs. Oleoflores will grow at an average of 20-30%. We are an agriculture company and if there is more rain, we will grow even more.



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