The economies of Latin America and the Caribbean (LAC) have been severely impacted by the Covid-19 pandemic, but the region’s agribusiness sector has shown great resilience. A paper commissioned by Canning House reveals that Brazil’s agricultural and livestock exports rose by 4.1% in 2020. Soya exports from Brazil, Argentina, and Paraguay are soaring. Mexico’s Bimbo, the world’s largest baker, reported its highest-ever first quarter sales in 2021. And, in a sign of long-term confidence in the sector, France’s Carrefour announced a $1.3billon takeover bid for Brazil’s Grupo BIG.
That matters for Latin America, which is the world’s largest net exporter of agricultural products. The region accounts for 8.5% of the world’s population and is highly urbanised. However, it produces 13% of global agricultural and fisheries output, and 25% of global food exports. Its dominance looks set to continue. According to a recent OECD-FAO report last, LAC agriculture and fish production will grow by 14% over the next decade, with two thirds of the increase attributed to crop production, 28% to the expansion of livestock herds, and 7% from fisheries growth.
Overall, the food and drink industry in Latin America is predicted to reach total sales of $221billion this year, up by 14.5% on the $193billion registered five years earlier in 2016.
Four farming regions
The Southern Cone countries, including Argentina and Brazil, are dominated by large, commercially owned, and export-oriented farms. Exports of soya, maize, and livestock products dominate.
Countries in the Andean region, bordering the Pacific, are mainly exporters of a diverse range of fruit and vegetables and aquaculture products.
In Mexico and Central America key exports include tropical fruits and seafood. Mexico is a significant net food importer, often from the United States. In the Central American republics, there is a big presence of small family-owned units and of subsistence farming.
The Caribbean islands have a diverse agribusiness sector with marine products, tobacco, and alcoholic beverages representing around 75% of total agri-food exports.
At a global level, despite the serious disruption caused by the pandemic, short- and medium-term indicators point to a healthy demand for food and drink, and to rising soft commodity prices. According to the World Food Price Index compiled by the UN’s Food and Agriculture Organisation (FAO) in March this year food prices hit a seven-year peak, having increased by 30% since May 2020.
Moderately rising food prices, close to international trends, could provide the agribusiness sector with incentives to further increase food production and productivity. Based on fundamentals such as population growth, the FAO and other agencies project a steady increase in LAC output. According to an Organisation for Economic Co-operation and Development (OECD)-FAO report last year, LAC agriculture and fish production will grow by 14% over the next decade, with two thirds of the increase attributed to crop production, 28% to the expansion of livestock herds, and 7% from fisheries growth.
The cultivated area will expand by an annual average of 3%, and yields will increase. The region will remain the world’s largest producer of soya beans, as well the world’s largest consumer of sugar. By 2029, LAC will account for 60% of global soybean and protein meal exports, 40% of global maize exports, 39% of sugar exports, and 35% of bovine meat and poultry meat exports. OECD-FAO expects the net value of LAC agriculture and fisheries to grow by an underlying 1.2% per annum in 2020-2029. Production of key commodities including cereals, pulses, oilseeds, meat, dairy, and fish will grow by around 1%-2% per annum, while the net value of exports will rise by 1.5% pa.
By 2029, LAC will account for 60% of global soybean and protein meal exports, 40% of global maize exports, 39% of sugar exports, and 35% of bovine meat and poultry meat exports
Of course, there are challenges, such as agriculture’s demand for resources such as land and water and its contribution to greenhouse gasses. The livestock industry is a particular cause for concern. Globally, livestock accounts for about 40% of emissions generated by agriculture. Also, globally the beef industry is responsible for 41% of tropical deforestation, with the Brazilian beef industry on its own responsible for 24%. But with its incredible amounts of freshwater and underused arable land, it seems farmers in Latin America will be better able to handle climate change than their peers elsewhere.