INVESTMENT IN THE BEEF AND LIVESTOCK SECTOR

COLOMBIA, A PRODUCTION CENTER AND OUTSTANDING LOGISTICS HUB IN THE AMERICAS

Its location in the tropics and the topographical characteristics of the various Colombian regions provide Colombia with access to pastures of excellent quality year-round, which guarantees enough food for cattle during the entire fattening process. (FEDEGAN, 2014).

Colombia’s cattle inventory reached 23 million heads in

Casanare, Cesar and Santander account for around 50% of Colombian cattle inventory. (FEDEGAN, 2014).

(OIE) provided the certification that completes Colombia’s map and establishes it as a country free of foot-and-mouth disease through vaccinations.

Of the total number of hectares dedicated to raising livestock, more than 60% are located at altitudes below 1,000 meters above sea level with temperatures that oscillate between 23ºC and 32ºC for all bovine specimens, of which at least 95% are Zebu or have Zebu genes. (Asocebu, Asociacion de criadores de ganado Cebú [Zebu Cattle Breeding Association] 2012).

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With a production of 947,000 tons of beef carcass equiva-lent¹, Colombia was the fourth largest producer of beef in Latin America in 2014. (FEDEGAN, Federación de Ganade-ros de Colombia,[Colombian Livestock Federation], 2014).

In 2014, over 4.3 million head of cattle were slaughtered in Colombia, a growth of 1.9% over 2010. (FEDEGAN, 2014).

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Source: (Bovine Census-FEDEGAN).

REGION 1 is mainly made up of the departments whose cattle

in this region are: Antioquia, Cordoba, Casanare, Meta, Cesar, Santander, Caqueta, Magdalena, Cundinamarca and Arauca. (Bovine Census-FEDEGAN, 2012).

REGION 2 on the other hand, covers the departments

departments in this region are: Bolivar, Sucre, Boyaca, Tolima, Huila, Valle del Cauca, Norte de Santander, Nariño, La Guajira, Caldas, Cauca, Vichada and Atlantico. (Bovine Census-FEDEGAN, 2012).

Finally, REGION 3 , is made up of the departments that have the lowest concentration of cattle herds in Colombia.

heads of cattle. Putumayo, Choco, Quindio, Guaviare, Risaralda, Amazonas, Guainia, San Andres and Providencia and Vaupes are the departments that make up this region. (Bovine Census-FEDEGAN, 2012).

REGIONS WITH AVAILABLERAW MATERIAL

REGION 1

REGION 2

REGION 3

companies focused on the production, transformation, and commercialization of meat products that have knowledge of consumption patterns and national distribution.

ANDEAN REGION, SANTANDER - LLANOS

North Santander: Friogan - Headquarters in NorthSantander:Meta: Friogan - Meta Plant.

COFFEE-GROWING REGIONAntioquia: Frigo - Colanta.Caldas: Friogan, Headquarters in La Dorada, Caldas.

CARIBBEAN REGIONAtlantico: Camaguey.

Cárnica.Sucre: Friogan- Headquarters in Corozal.

BUSINESS NETWORKS

IMPORTANT COMPANIES IN BEEF SECTOR INDUSTRY

Source: BPR Benchamrk [sic].

CATTLE SLAUGHTER AND BEEF PRODUCTION

are 428 companies in Colombia’s beef sector. More than a half are located in Bogota, Antioquia, Valle, Atlantico, Santander and Cundinamarca.

2010-2015 2010-2015

864 929 979 969 947 944

2010 20102011 20112012 2013 2014 2015 2012 2013 2014 2015

4.0 4.3 4.4 4.3 4.34.5

CARIBBEAN REGION

COFFEE-GROWING REGION

ANDEAN REGION, SANTANDER - LLANOS

CATTLE SLAUGHTERED IN COLOMBIA, BEEF PRODUCTION IN COLOMBIA,

(millions of animals) (thousands of tons; Beef carcass equivalent)

In 2015, over 4.3 million head of cattle were slaughtered in Colombia (a growth of 1.1% over 2011). (FEDEGAN, 2015)

BEEF CONSUMPTION IN COLOMBIA

a decrease of US $ 447 million is presented. (DANE - 2014)

Exports other than livestock (live animals) was mainly concentrated on frozen, de-boned beef, with a 55 % share of total exports, followed by de-boned and frozen fine cuts of beef.

COMMERCIAL TRADE BALANCE AND USE OF FREE TRADE AGREEMENTS

2 Includes live animals (livestock cattle), beef and edible waste products.

Source: DANE (Departamento Administrativo Nacional de Estadística [National Administrative Department of Statistics])- DIAN (Dirección de Impuestos y Aduanas Nacionales de Colombia

[National Directorate of Taxes and Customs])

COMMERCIAL TRADE BALANCE - BEEF

PRODUCTS, 2014-2015 (US $ Million FOB)

BEEF CONSUMPTION IN COLOMBIA, 2006-2014 (kg/inhabitant/year)

18.88

2006 2007 2008 2009 2010 2011 2012 2013 20 201514

17.81 17.38 17.67 18.94 20.01 20.76 19.70 1 19.109.30

2014 2015

104.6

273.6

-169.0

82.7

211.2

-128.5

EXPORTS IMPORTS COMMERCIAL TRADE BALANCE

Lebanon ranked as the largest exporter of live cattle, and Venezuela as the main destination of chilled and frozen meat without bones. (DANE-2015)

In 2015, per capita consumption beef in Colombia surpassed 19.1 kilograms per inhabitant per year. (FEDEGAN, 2015)

In 2015, exports of beef products exceeded US$82.7 million. (DANE, 2015)

Imports increased by 29.8%, going from US$210.8 million in 2014 to US$273.6 million in 2015. (DANE, 2015)

Lebanon, Russia and Peru, which contributed with purchases above US $70 millions in 2015 (DANE,2015)

Over the last 6 years, per capita consumption of beef in Colombia has grown at a compound rate of 0.3% since 2006 (when reached 18.8 Kg/hab/year).(FEDEGAN, 2015)

EXPORTS OF MEAT PRODUCTS BY DESTINATION COUNTRY, 2015 (US$ MILLIONS FOB)

that enjoy the same benefits, but to which di erent requirements apply in regard to investment and employment:

Multi-use Free Trade Zone: companies should present projects to the operator/user of the Free Trade Zone and comply, within three years following its declaration, with the following requirements for investment and employment based on the total amount of its assets.

INCENTIVES AND INVESTMENTS IN THE BEEF SECTOR

Source: DANE-DIAN.

Currently, Colombian beef products can be o cially exported to the following markets: Peru, Venezuela, Curaçao, Egypt, Russia and Angola.

Total exported

US$45.6 millonesTotal exported:

US$36.9 millones

LIVESTOCK EXPORTS, 2015. EXPORTS OF DE- BONED, FROZEN AND REFRIGERATED BEEF, 2015.

Other Countries 7%

Lebanon100%

Russia 62%

United States 3%

Curacao

Vietnam 3%

Jordan

6%Peru

12%

6%

VALLEJO PLAN: by virtue of this program, capital assets and replacement parts or raw materials and supplies can be imported under total or partial suspension of customs duties (VAT and tari s).

procedures.

Individual Business Free Trade Zone regime allows for the recognition of a Free Trade Zone in any part of the country for a new legal entity for developing investment projects of high economic and social impact. Some specific agro-industrial sub-sectors, including the beef sector, have more flexible requirements on matters of investment and employment.

Among the main benefits that Colombia o ers to promote investment in projects in the beef sector, the following stand out:

JOINT VENTURE WI T H LOC AL PARTNER S OR GREENFIELD PROJECTS: improvement of the cold chain, from refrigerators into the chains.

JOINT VENTURE WITH A LOCAL PARTNER OR GREENFIELD PROJECTS: the manufacture of products derived from the cattle industry , such as fertilizers and leather, among others.

LARGE COMPANIES HAVE CHOSEN COLOMBIA AS A PLACE TO INVEST

SUPPORT FROM PUBLIC ENTITIES FOR SECTOR DEVELOPMENT

PROCOLOMBIA: entity in charge of promoting investment, exports and tourism in Colombia.

PRODUCTIVE TRANSFORMATION PROGRAM: seeks to develop world-class sectors via the formulation and execution of sectoral business plans that favor economic growth and strengthen the national productive apparatus via public-private alliances.

ACCESS TO INTERNATIONAL MARKET: Establish refrigeration chambers close to production centers in order to obtain admissibility in international markets with high standards of quality.

PROCESSED FOODS: Joint Venture with local partners or Greenfield projects in the processed meat industry.

PRONAC A , ECUADOR:beef company that came to Colombia in 2005 with the Mr. Cook line of prepared products: breaded, marinated, pre-cooked and pre-seasoned. Additionally, it is the provider for the McDonald’s fast food restaurant chain.

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