South American Real Estate News

The future of food in South America

image of El futuro de los alimentos

Post available in: English Español

The future of food in South America is uncertain because high-quality food will be grown anywhere in the world with the lowest input cost.

The leadership of agriculture and food exports in South America is an achievement of generations and now yields its best harvest. This continent has a most conducive climate for producing high-quality food, as well as exceptional soils, thanks to the volcanic ash of the Andes, accumulated over millennia. All these factors, coupled with hard work, the application of research from universities and the support of the governments of each country of the continent, have been necessary for success. However, this privileged position is now facing threats.

Agriculture in a controlled environment

The goal of a controlled environment for agriculture is to provide protection and maintain optimal growing conditions throughout crop development. Production is located in enclosed spaces such as greenhouses or buildings where plants can grow, often using hydroponic methods to provide adequate water and nutrients to the root zone. This type of agriculture optimizes using resources such as water, energy, space, capital and labour.

The expansion of this technology is limited by the cost of energy. The early stages of growth of fruit trees and vegetables are usually carried out in a controlled environment. These are the more expensive products sold in supermarkets and are on the shelves all year, such as lettuce and cranberries. The same applies to flowers of greater value, such as exclusive varieties of roses.

This type of agriculture aims for fresh produce to reach consumers. There are leaders in this market, such as Plantagon and AeroFarms. They are promoted as environmentally friendly because they reduce transportation costs and carbon emissions.

Energy costs

So far, the energy cost for lamps has been a significant constraint because plants receive free energy from the sun in traditional farms.

However, the gradual lowering of costs for solar panels and wind turbines, as well as energy storage, is narrowing the gap in production costs compared to traditional farms and forging a new direction for the future of food.

Traditional farms are located far from the centres of consumption, so they are always subject to the costs of transportation and energy for the conservation of products to reach consumers with quality products.

The premise is that agriculture can be undertaken without having large tracts of land. Farms would not have to use a lot of land space – a farm could be located on the floors of a building – anywhere in the world – with LED lighting technology that delivers the optimum temperature and light for plant growth.

Climate & politics

Al Gore is a fervent lobbyist for alternative energy, shown in his lectures as being very optimistic about the matter. We should, however, not forget that he advocates for the interests of certain companies, not necessarily in the interests of everyone.

An article in The Guardian shows clearly that agriculture in a controlled environment is highly energy-demanding and is not as optimistic about its application on a large scale.

windpower

Eolic turbines

Energy transport costs

These same technological advances, primarily subsidised by consumers, will eventually affect transportation. Solar energy accumulated to produce a farm-controlled environment is not exclusive to this purpose. It may also apply to ships, aircraft and other transport in the future. Thus, one of the biggest criticisms of traditional agriculture by lobbyists seeking subsidies for companies for controlled environment agriculture disappears.

Meat

We also eat meat, and as the largest consumer of meat in the world is the middle class, the demand for pasture and grain for inefficient methane-producing animals will continue to grow. More efficiency and control over effluents and CO2 is gained if animals are kept inside. A second glance tells us that meat produced roaming free in a pasture is natural and healthier. Cows choose from among the meadow grasses that are best for their growth, so their meat and/or milk is better quality and more naturally lean than that of an animal confined inside a building.

cattle-brazil

Hereford cattle on the farm, Brazil

Meat alternatives

The Economist has an article video, “The creators of meat,” about two companies with different approaches to replacing meat. One is trying to grow IVM, and the other is attempting to use plants to create a substitute for beef.

If we combine the two trends, it seems logical that someone will find a way to create a plant that can easily be converted into a substance that is very close to meat. It is a possibility to use cereals or legumes to produce artificial meat. This brings us back to agriculture.

History: Malthus

In trying to give a theoretical explanation for the problem of food availability, we can consider the ideas of Malthus.

Malthus was right, but only in a macro sense that the population increases if you have more food. He was convinced that food production is linear and always linear. Conversely, increasing the population would be exponential. But we have to consider that the same food availability produces enough intelligence to improve food production techniques and the means of transport to put on the table for consumers fresh food of excellent quality brought in from abroad. Birth control is among the other factors to be considered, population growth being linear, not exponential.

Technology Crisis

If this trend materializes with time, it will produce a major crisis in traditional agriculture in South America. Indeed, if you can produce at the exact cost or less anywhere in the world, the price of agricultural products would drop along with demand. If milk plants could eventually be produced, cattle would be limited to the beef sector. Going even further, if experimental investigations are realized, and they manage to produce meat in small spaces, this sector would also be affected.

Water

However, energy is not the only variable. Water needs to be available to produce food. Whatever the techniques used, water is scarce and is no manna from heaven, which is renewed every day. Water is limited, and any removed part will affect the affected ecosystem unfavourably.

Two trends

There are prominent observable trends: the intensive use of technology in controlled environments and organic agriculture with the application of technology that is friendly to the environment, healthier and more natural.

Energy efficiency

Undoubtedly, companies like Berkshire Hathaway Energy have won the support of many politicians. This clearly demonstrates a predominant interest in high-tech agriculture with low production costs. These groups lobby for subsidies to make this form of agriculture competitive.

Organic farming

In the opposite camp is organic farming, criticized for being inefficient. However, it requires labour, provides employment, and, above all, is healthier.

Proponents of highly efficient agriculture in a controlled environment cannot deny that organic farming is friendlier to the environment since the carbon footprint and waste are less than the chemicals used to construct buildings, power plants artificially, and the use of lamps and accumulators.

We must also focus on the final quality of food production to provide the best food in the world. We have come a long way in this direction in recent years.

Existing diversity and quality in South America

In sum, we see sustained growth in the future of food in South America because the food quality and safety of organic food is far superior to any other. The trend of producing green leafy vegetables and small fruits in controlled environments will be maintained. However, these crops do not compete with large orchards, vineyards, cereals, meat and milk produced and exported from South America.

The natural climate and large expanses of exceptional soil cannot be placed indoors, not in this century, at least.

In conclusion, the threat is that some companies and their lobbyists are seeking public subsidies and trying to convince the consumer that they must pay for them to grow as large companies, possibly monopolistic, incidentally eliminating competition from traditional farmers.

The governments of South America are well aware of these threats. They strive to make alliances and treaties to keep the world supplied with excellent quality food and attractive prices.

English Editor: Audrey van Ryn

Researcher & Translator: Mª Verónica Brain

Contact the Gateway to South America team to learn about the best investment opportunities in the region. The company is a benchmark for foreign investors wishing to invest in Argentina, Brazil, Chile, Paraguay, Peru and Uruguay, providing expert advice on property acquisition and investment tours.

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