During 2016, the vast majority of countries exporting cereals and oilseeds suffered significant decreases in their production and export levels. Contrary to this during 2016, Mexico and the Central American and Caribbean countries experienced an important recovery from the effects caused by El Niño in the production of food commodities.
Changes in climate and in the performance of some of the competing countries during 2015-2016 allowed some countries in LAC to improve their position in international markets. Mexico leadership in the explosive growth of avocado´s market, the increase participation of Central American and Andean countries in coffee markets and the recovery of the region in the cocoa market are only some of the examples.
In the short term, it is expected that South America will increase its production of cereals and oilseeds thanks to the increase in cultivated area and in yields, which will allow to be an important participant in global markets. In the long term, and despite the fact that the growth of the demand for food will slow down (compared with the previous decade), LAC will increase its share as supplier of food thanks in part to the availability of land.
Summary of: Agriculture
The fall in international prices, coupled with unfavorable weather conditions, affected the main cereal and oilseed producers and exporters, who, in 2016, experienced reductions in their production and export levels. This situation greatly contributed to reductions in the production of coarse grains and rice in South America. The decrease in corn production in Brazil was offset many times over by the increase in corn production in Argentina, the United States and Canada and wheat production in Canada, Argentina, and Brazil. On the other hand, in Mexico and most of the Central American and Caribbean countries, cereal production recovered in 2016 after being heavily impacted by El Niño in 2015 and in the first half of 2016. This phenomenon reduced the production of corn and other basic grains (rice and beans) by up to 20% in some countries of the region (Honduras and Nicaragua, for example). Although most Central American countries resorted to imports to recover from the impact of El Niño on domestic prices for staple grains, some countries failed to purchase supplies on the international markets quickly enough, which resulted in temporary shortages and pushed up prices in 2015 and during the first half of 2016.
With respect to tropical crops, changes in climatic conditions and in the performance of international competitors during 2015-2016 enabled some countries in LAC to strengthen their position in the markets. One example is avocado, whose world exports grew at an average annual rate of 15% over the past decade. Mexico has consolidated its standing as the main avocado exporter (accounting for 46% of the global market), as a result of its exports growing at an annual rate of 17%. In addition to avocado, coffee and cocoa have also recovered significantly. With respect to coffee, for instance, the recovery from coffee leaf rust and the improvement of climatic conditions enabled a number of countries including Colombia, Honduras, Peru, Guatemala, Nicaragua and Costa Rica to gain a bigger share of international coffee markets (although Brazil and Mexico experienced significant losses). A similar situation occurred with cocoa. Several LAC countries, such as Ecuador, Peru, the Dominican Republic, and Colombia, recovered lost ground in the world market for this product, thanks to the fact that regional production and export growth rates were greater than the global average (although Ivory Coast, Ghana, Nigeria and Cameroon continue to widely dominate the market). LAC countries experienced quite the opposite situation in the global banana market. Although LAC continues to be the world’s largest banana producer and exporter, continued rapid growth during 2015-2016 is increasing African countries’ share of the market.
Climate variability and the intensification of mono cropping during the 2015-2016 period created the conditions for the reappearance of plant pests and diseases in some LAC countries, which significantly reduced the region’s agricultural potential.
In the short term, the Southern subregion is expected to see increased production of its most important crops (corn and oilseeds), thanks to the combination of a larger cultivated area and higher yields resulting from favorable climatic conditions and an increase in international prices. Increased production in South America (primarily in Brazil and Argentina) would compensate for potentially lower production in North America (especially wheat production in the U.S. and Canada). This positive performance would enable South America to play a leading role in the growth of world crop exports. By recovering the world’s main consumers, South America will be able to increase its participation in global exports of cereals and oilseeds.
A reduction in the growth of the demand for cereals and oilseeds from LAC is expected in the long term, primarily due to a reduction in the population growth rate, a slowdown in the economies of the largest food consumers, and decreased use of crops for fuel, as well as any self-sufficiency policies that could be implemented by the main agricultural powers. At the same time, due to the availability of suitable land for farming, some LAC countries, such as the U.S., Canada, Brazil and Argentina, are expected to increase their participation in the production and export of crops at the global level.
Within this scenario, agricultural production and trade in LAC will face significant challenges, which will force the countries of the region to create policies geared toward increasing productivity, reducing inequity within agrifood chains, increasing resilience, and reducing the environmental impact of its production systems. These actions will play a critical role in agriculture developing its full potential to contribute to the achievement of the goals established in the 2030 Agenda.