The Outlook for Agriculture and Rural Development in the Americas: A Perspective on Latin America and the Caribbean
agrifood exports

Context of the Agricultural Sector

  • real income
    -23%
    Is the greatest drop in real income in LAC grains and oilseed exporting countries
  • logistic
    40% in LAC
    Is the cost of logistics compared to the final price (in developed countries it is 8%)
  • IoT agriculture
    < 5%
    of Internet connections in LAC are >15 Mbps, which hinders the sector’s adoption of big data
  • In 2015, 11 countries in LAC experienced significant growth in real agricultural incomes (≥5%), despite the fact that agricultural production increased only slightly. In contrast other 12 countries, primarily those exporting cereals and oilseeds, suffered decreases in real agricultural income at levels as high as 23%.

  • The efficiency of in place regulations is higher in high and middle income countries that in developing countries. Logistics costs in LAC could represent as high as 40% of final prices, compared to this cost in developed countries with is only of about 8%.

  • If countries do not facilitate the use and adoption of big data, this could become one more source of inequity for farmers and companies. Internet use in the region reaches about 55% of the population, but no more than 5% of them reach speeds higher than 15 mbps.

Summary of: Context of the Agricultural Sector

An important group of countries (including Chile, Colombia, Guyana, Peru and the Dominican Republic) has shown sustained growth in the volume of production and real agricultural income over a ten-year period. On the other hand, production rose while real income fell in the countries that are the main agro-exporters in South America (Argentina, Brazil, Bolivia, Paraguay and Uruguay), given that these countries specialize in the production of cereals and oilseeds, whose international prices collapsed in the last three years. In another group of countries (mostly in the Caribbean region, including Belize, Bahamas, Barbados, Dominica and St. Kitts and Nevis), growth rates of production volumes and real income were negative, primarily as a result of droughts, diseases and pests.

Preliminary data for 2016, when compared to 2015, suggests that agricultural production grew in several LAC countries. Agricultural value added (AVA, measured in constant local currency) increased by 10%, 7.9%, 5%, 4.5%, 4.1%, and 3% in the Dominican Republic, Saint Lucia, Costa Rica, Brazil, Mexico and Haiti, respectively. These growth percentages contrast with the decline observed in the case of Guyana (0.3%), Colombia (0.5%), and Chile (3.2%), where growth rates were lower in 2016 than in 2015. Furthermore, several Caribbean countries were affected by Hurricane Mathew and the citrus subsector by Pierce’s disease (greening).

The projections for changes in AVA in 2017 are conservative; they are estimated at roughly 4.9% for Saint Lucia, 3.5% for Chile, 3.2% for Mexico, 2.3% for Costa Rica, 2.1% for Colombia, 2% for Brazil and 1.9% for Guyana. In other countries, the expectations are less than 1.5%.

Furthermore, international commodity prices (in dollars and adjusted for inflation) are on the rise, except for cereals. Cereal prices have fallen by an average of 6.2%, annualized through February 2017. It is the first time in more than a decade that cereal prices have behaved differently from the prices of other food groups. The majority of prices that rose in constant dollars did so to a lesser degree than those in local currencies.

In 2015, global agrifood exports (chapters 1-24 of the harmonized system) fell 11.2% compared to the previous year; however, in LAC they fell by only 7.7%, which confirms that this region performed better than other parts of the world. 

Within LAC, the Central subregion recorded the smallest reduction of its exports (2.6%), partly due to the proximity of these countries to the United States, whose economy is currently recovering. Central America was followed, in descending order, by the Caribbean subregion, whose agrifood exports decreased by 6.3%; the Andean subregion, with a 6.5% rate of decrease; and lastly by the Southern subregion, whose exports decreased 10.5%, mainly as a result of the decline in exports of oilseed products. Due to the relative weight of the Southern subregion’s trade, it accounted for 93% of the fall in LAC agrifood exports.

Preliminary data for 2016 show an upturn in the growth of LAC’s agrifood exports. According to mirror data from the ITC (2017), global agrifood exports fell 3.58% in 2016. In contrast, official data for 2016 for twelve LAC countries available in the COMTRADE database at the time of writing (UN 2017), suggests that the region’s agrifood exports fell by barely 0.04%, which is insignificant compared with the fall in global agrifood exports and in LAC’s total exports of goods (-2.55%) during the same period.