This is a best prospect industry sector for this country. Includes a market overview and trade data.
In 2019, U.S. agriculture exports to El Salvador in the consumer-oriented product category reached a record USD $210.8 million, approximately 20% of the total market. Pork and pork products, meat products, processed vegetables, sauces and condiments, wine and beer, dairy products, tree nuts and pet food all reached record imports in 2019. The distribution of consumer-ready foods is carried out through a number of channels. Supermarkets, such as Walmart and leading local chain Super Selectos, are the principal outlets; but a fair amount is moved through wholesalers, who may be supermarket owners themselves or distributors delivering products to smaller stores. Normally, distributors handle products on an “exclusive” basis, most often as representatives for a line of products. Direct sales are common practice; however, having a local distributor facilitates operations and supports client service. Most large importers/distributors are members of the Salvadoran Distributors Associations (ADES). ADES manages the relationship of its members with local retailers, wholesalers, and supermarkets.
The Salvadoran market may be significantly larger than portrayed by U.S. export data. A high percentage of El Salvador’s imports of consumer-oriented products are actually registered as Guatemalan imports. This is because many containers from the United States come through Guatemala’s Atlantic ports and although they are in-transit to El Salvador, customs officials may tally the products as Guatemalan imports.
It is estimated that Salvadorans spend approximately 65% of their income on food (household earning is USD $400 to USD $1,500 per month). There are approximately 460,000 households in this category and, as might be expected, 60% reside in urban areas. About 1.2 million people (20% of the population) are part of the country’s middle class.
Consumers are increasingly purchasing groceries in supermarkets and moving away from the traditional open-air markets or mom-and-pop stores mainly due to larger product offerings, discounts and especially due to security concerns in open-air markets. It is estimated that approximately 40% of food sales are generated in supermarkets. The supermarket industry is dominated by Walmart, Super Selectos, and U.S. wholesaler PriceSmart.
- Confectionary: Chocolates and Cocoa Products
- Processed Foods: Processed Fruit and Vegetables, Breakfast Cereals, Pancake mixes, and Salad dressings
- Animal Feed: Pet Foods (Dog and Cat)
- Wine: White Zinfandel, Chardonnay, Cabernet Sauvignon, Pinot Noir
- Tree Nuts: Peanuts, Almonds, Walnuts, Mixed nuts
- Dairy Products: Aged Cheese, Processed Cheese, Whey Protein
- Fruit and Vegetables: Apples, Grapes, Stone Fruit (peaches, plums, cherries)
- Meats: Pork Cuts for Hotel/Restaurant/Institutional (HRI) and Retail, Beef Cuts for HRI and Retail, Mechanically Deboned Poultry Meat (for sausage manufacturing), Meat, Sausages, Processed Egg products, Poultry Meat
*Selection criteria are based on USDA/FAS Country Strategy Statement (CSS), market surveillance, and suggestions by industry players.
Most of the wheat processed by Salvadoran mills comes from the United States, which accounts for almost 100 % of total imports, although some Canadian wheat is imported when price is competitive for local wheat millers. Annual imports of U.S. wheat range from 230,000 to 295,000 metric tons. In 2019, U.S. wheat imports reached USD $62.6 million.
- Bulk Wheat – DNS, SRW and HRW varieties
Bakery consumption continues to increase, mainly due to the growth of fresh bakery centers in all major supermarket chains. Convention tourism is also helping boost consumption of bakery products at hotels due to the increase in business events. In addition, a high growth of coffee bars that serve desserts is helping to boost the growth of bakery product consumption.
Bakery manufacturers continue to be optimistic about free trade and believe that the Central America – Dominican Republic – United States Free Trade Agreement (CAFTA-DR) is providing growth opportunities. Ethnic bakery products, especially sweet cookies and cheese quesadillas exported to the United States are growing due to the high demand for these products by the Salvadoran community residing in the United States. U.S wheat has no tariffs or quotas due to the benefit of free trade under CAFTA-DR.
El Salvador is not self-sufficient in rice production and must import from other countries, especially the United States, to meet demand. Actual local demand is estimated at approximately 115,000 metric tons of rough rice, of which approximately 25% is covered by local production. Typically, El Salvador imports rough rice to keep rice mills operating throughout the year. However, small quantities of imported U.S. and South American milled rice have recently reached local supermarket chains to fulfill upscale consumer demand. El Salvador has officially abolished the use of a price-band mechanism to assess import duties for basic grains. CAFTA-DR established Tariff Rate Quotas (TRQs) for rice (see Opportunities).
Members of the Salvadoran Rice Millers Association (ASALBAR) are the distributors of both imported and locally processed rice. ASALBAR continues working with the U.S. Rice Producers Association on a marketing campaign to increase local consumption of U.S. rice through the USDA Market Access Program (MAP). U.S. rice imports reached USD $23 million in 2019.
- Rough rice
- Milled parboiled rice
Rice production continues decreasing at a fast pace, not only in El Salvador but also in the rest of the region. Under CAFTA-DR, tariffs will be eliminated and TRQ established as follows: 18-year duty phase-out, initial TRQ of 61,000 metric tons (MT) for rough rice, growing by 2% per year and initial TRQ of 5,250 MT for milled rice, growing by 375 MT per year for the first five years, 1,000 MT increase in year 6, and an annual 325 MT increase thereafter.
El Salvador is an important market for U.S. yellow corn, used almost exclusively by the poultry and animal feed industries. The snack processing industry is also a major importer of hard endosperm corn. Imports of yellow corn from the United States account for 90% of local demand, estimated at 480,000 metric tons for the 2019-20 crop year.
- Yellow corn #2 for animal feed and hard endosperm for snack manufacturing.
Snack food production is at the top of the list in the food processing sector. Yellow corn is a main ingredient in the snack manufacturing process. Products such as corn chips, salted peanuts, cheese puffs and party mixes are some of the most popular items in the local snack sector. The DIANA and Bocadeli snack brands produced in El Salvador offer respectable quality for the price and have roughly 75% of the snack market. In addition, DIANA is the largest snack producer in Central America and is already exporting products such as corn chips and nacho tortillas to ethnic markets in the United States.
The poultry, swine, and dairy sectors are also major users of yellow corn for feed mix.
CAFTA-DR provides for a yellow corn Tariff Rate Quota (TRQ) of 350,000 metric tons (MT) with 5% growth per year and a 15-year duty phase-out. A fixed part of the TRQ will be subject to a performance requirement, which will be eliminated in 2021.
White corn was also granted a TRQ of 35,000 MT under CAFTA-DR. There is also a growing market for white corn flour to make tortillas.
El Salvador does not produce soybean meal; thus, the total demand estimated at 179,000 metric tons in the 2019-2020 marketing year must be met with imports. The poultry, swine and livestock sectors use the product as feed. Commercial trade is growing quickly due to the high demand for poultry products. In 2019, soybean meal imports reached USD $76.7 million. El Salvador’s poultry industry is the most developed in the region and a large user of soybean meal.
- Soybean meal
Dairy production is increasing due to government incentives and sanitary regulations that provide protection against contraband cheese from Nicaragua and Honduras. Soybean meal is an important ingredient used in cattle and swine feed mix. CAFTA-DR provides immediate access for U.S. soybean meal with no tariffs or quotas.
More than two million Salvadorans reside in the United States and annually remit more than USD $5 billion to relatives in El Salvador, which represents approximately 20% of GDP. The remittances in turn raise the disposable income and expenditures of Salvadoran consumers. The typical consumer believes U.S. products are of superior quality and is generally willing to pay a premium price. Nevertheless, the relatively high price of U.S. products can be a constraint to increasing market share and attracting new customers.
In addition, while opportunities exist for U.S. suppliers, competition from Central America, Mexico, Chile and the European Union (EU) is strong.
In summary, there are at least 1.2 million consumers, or 20% of the population, who are buying U.S. consumer-ready products. Households are continuously searching for convenience in food preparation. The affluent segment of the population is being served by boutique style supermarkets such as Super Selectos store in upscale neighborhoods in the Greater San Salvador Metropolitan area. A younger generation joining the labor force is providing growth to retail consumption and increased use of eCommerce.
FAS Contact in El Salvador: Miguel.Herrera@usda.gov