Latin America: agricultural perspectives
- The Latin American region is an important net exporter of food and agricultural commodities, accounting for 16% of total global food and agriculture exports and 4% of total food and agriculture imports.
- The region is one of the few parts of the world with significant resources of unexploited agricultural land (concentrated in Brazil and Argentina), suggesting the region will continue to play a pivotal role in global food production and exports in the future.
- Many of the region´s countries have achieved respectable rates of agricultural productivity growth in the recent past. Nevertheless, raising productivity will be essential to meet domestic food needs or to maintain or enhance export competitiveness.
- It will be as important to the region to sustainably raise the agricultural productivity and output of smallholdings as it will be to boost the output of export powerhouses such as Brazil and Argentina.
A profile of Latin American agriculture
Latin America has long been associated with the production and export of a diverse range of agricultural commodities, whether it is coffee from Brazil and Colombia, beef from Argentina, or bananas from Ecuador. Trade data show that the region is indeed an important net exporter of agricultural commodities to the world, accounting for an estimated 16% of global food and agriculture exports between 2012 and 2014, while representing just 4% of global food and agriculture imports over the same period (Figure 1). Behind the aggregate statistics for exports is an impressive list of commodities for which the region, and South America in particular, is the leading supplier to the world market.
Latin America is therefore important for the global food and agriculture sector. Furthermore, it is equally true that food and agriculture is important for Latin America – the sector accounts for an important share of the total exports of the region´s member states (Figure 2).
Figure 3 presents more detail on the agricultural trade balance of individual countries, highlighting their respective contributions to the region´s agricultural trade. Brazil and Argentina lead the region in terms of exports and net exports, thanks to their global importance as exporters of grains and oilseeds and animal protein. Mexico features as the region´s largest importer, with net exports close to zero.
Mexico
In 2014, Mexico´s agricultural exports reached USD 26 billion, with an average annual growth of 6 percent in the past two years, making the country the third-largest exporter after Argentina and Brazil. Imports averaged USD 23.3 billion per year over the same period, meaning that the country had a minor surplus. While Mexican exports remain highly concentrated on the United States, they have found new markets such as Canada, Japan, Hong Kong and Europe. In addition, Mexico has signed new trade agreements with China and under the TPP. Mexico´s agrifood exports are mainly vegetables (23%); beverages (15%); fruits (14%); sugars and confectionery (9%); and products processed from cereals and flour (6%). Mexico is a leading exporter of fresh tomatoes, avocados, papayas, hot salsas, beer and tequila. In addition, it is an important player in coffee (organic and decaffeinated), cocoa powder, bakery products, bell peppers, livestock, strawberries, chocolate and many other products. Also, Mexican beef and pork meat exports have grown substantially to the US and Asia, as the country is able to compete in value added cuts. In 2014, the value of meat exports increased 21 percent over a year ago and we anticipate a positive growth in the years to come. Agrifood exports are expected to grow at around 6% between 2015 and 2020. Fruit and vegetable exports growth will continue to grow at this pace as they become more integrated into the US food supply chain and into other markets such as Europe. Other products such as pork and beef meat exports could potentially double by 2020 as producers continue to maximise their competitive advantage by producing value-added products. The growth in Mexican sugar exports has been challenged as a result of a US-Mexico trade dispute.
In 2014, Mexico´s imports reached over USD 25 billion. They are the largest in Latin America and crucial for many markets, particularly the US. Mexico is the second-largest importer of corn, with around 10 million tonnes and a value of USD 2.3 billion. It is also the second importer of soybeans (far behind China), with 4 million tons and a value of USD 2 billion. In addition, last year, Mexico imported around USD 4.5 billion in meat. Mexico is the second-largest importer of pork, with over 800,000 tonnes, and the third importer of poultry meat (including pastes) with over 700,000 tonnes, and the leading importer of turkey meat (including pastes), with a total of 150,000 tonnes.
Source: Rabobank