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Latin America: agricultural perspectives

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  • 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.

Source: UN Comtrade, FAO, Rabobank

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.

The structure of the region´s agriculture is very diverse. Although large farms account for much of the commercial agriculture that generates Brazilian and Argentinean exports, it is estimated that more than 50% of the Latin American region´s food production comes from its 14 million smallholder farmers (IDB/Global Harvest Initiative, 2014). For this reason, there is an enormous variation – in terms of the scale and sophistication of agriculture and in terms of its contribution to the economy – between Latin American countries, as illustrated in Figure 4, comparing agriculture´s share of GDP, agriculture´s share of the workforce, and the absolute value of agricultural GDP across the region.

Brazil stands out as being the regional leader in terms of absolute agricultural GDP. This may seem natural as Brazil is also by far the largest country in the region in terms of land area and in terms of mouths to feed. It is also evident that agriculture in Brazil accounts for relatively small percentages of the country´s GDP (5.7%) and workforce (11.0%), although it is worth noting that agribusiness in Brazil has a far higher share of GDP (an estimated 25%) than agriculture alone, as is also the case for Argentina (agribusiness share of GDP estimated at 25% – 30%). However, since statistics on the contribution of agriculture to the economy are available for far more countries than is the case for statistics on the contribution of agribusiness to the economy, we opt to use the former indicator in this comparison.

At the other end of the spectrum, in countries such as Bolivia, Guatemala and Paraguay, agriculture accounts for a somewhat larger share of GDP (13.3%, 11.3% and 21.6%, respectively) and a much larger share of the workforce (41%, 35% and 28%, respectively), but the absolute value of agricultural GDP is relatively small.

With regard to the structure of agricultural production, the majority of Latin American countries for which data is available (Table 1) show a significant concentration of landholding in the hands of large private owners, a legacy of the colonial period in many countries´ histories.

Naturally, the quality of land and climate in a country or region is important in determining the agricultural potential of each hectare of farmland. It is this, together with the structure of land holdings, that largely determines the agricultural profile of countries and regions.

The relatively low share of labour in agriculture combined with relatively large holdings in Argentina, Uruguay and Brazil reflects the importance in these countries´ agricultural profiles of large holdings of Savannah/cerrado/pampas land where the focus has been on (i) highly mechanised large-scale production of field crops such as grains and oilseeds and (ii) extensive livestock rearing. Elsewhere, irrigation contributes substantially to the productivity of drier land in regions of North and Central Mexico, Peru, Chile and western Argentina. In the highlands of the Andes, coffee production – predominantly on small family farms – is concentrated in valleys and on lower slopes in Colombia and Peru, but throughout the Andes, with increasing altitude land becomes progressively less productive, and poverty correspondingly more prevalent.

Source: Rabobank (see full article)



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