Researchers have provided a study of the most up-to-date literature and consultations on a crucial topic: agri-food trade in Latin America and the Caribbean (LAC). Viewing the IDB and FAO report provides us with the most important information: what we can do to quantitatively boost exports and contribute to global food security.
According to the study, published this week, LAC is not only the origin of 15% of global agri-food exports, but is also a net exporter. Agri-food constitutes 24,4% of its foreign sales and 9,5% of its imports (data from 2021). This demonstrates its capacity to produce enough food to meet its needs and supply the world.
What the report shows. «The heterogeneity between LAC subregions is highlighted.» In this sense, South American countries - with the exception of Venezuela - are net exporters of agri-food products. Here, the largest net exporter of agricultural products is Brazil. Although Argentina, Mexico, Ecuador, Chile, Paraguay, Uruguay and Peru have positive balances, Argentina is the only country with a positive balance in all the main agricultural sectors.
Regarding agri-food exports, in 2021, 14,8% were destined for intraregional exports. Much of the intraregional food trade takes place within the framework of integration processes such as the Economic Integration Subsystem and the Latin American Integration Association (ALADI).
Additionally, LAC is the origin of 40% of the region's agri-food imports in 2021. In addition, the average level of the most-favored-nation (MFN) tariff applied by LAC economies to agricultural products is 13,9% and almost doubles that of non-agricultural products (7,2%), although there is heterogeneity between countries.
On the other hand, the liberalisation of agri-food trade has progressed unevenly in the region.
What the report found. The publication presents the main products with potential for intraregional trade expansion. At this point, cereals are the sector that offers the most opportunities in terms of market size (14 billion USD) and the third according to the number of origin-destination-product combinations. Corn, wheat and meslin, rice and barley stand out. Next in importance are food industry waste and meat.
In relation to the above, the greatest potential corresponds to possible imports of Mexico from MERCOSUR countries, mainly corn, and soybean pellets, wheat, among others. Mexico represents between 30% (Brazil) and 58% (Argentina) of the value of the potential market identified for the members of the block. "These countries are exporters of some of the most relevant commodities in LAC imports, and Argentina and Brazil are already important suppliers of various products in certain countries in the region." The study points out the relevance of the rest of South America as a potential market for MERCOSUR.
However, there are limitations to increasing intraregional agro-food exports from MERCOSUR. First, the transport infrastructure; second, the disadvantage of MERCOSUR compared to competitors is especially relevant in Mexico, Central America and the Caribbean. Third, the strategies are aimed at sales in the most dynamic extraregional markets (India, China, countries in Sub-Saharan Africa).
What needs to be done. The report recommends that governments develop a vision for their action.
In this sense, it highlights the need for cooperation to improve the network of intraregional agreements, since, for the companies surveyed, the negotiation and deepening of these trade agreements is ranked first among the actions that should be adopted by governments to promote trade between countries in the region.
Another key aspect raised by the report is improving transport and logistics costs, which stand out as determining factors in the countries with which trade takes place, and “42% of the companies surveyed highlighted the need for investments in infrastructure.”
Likewise, the next aspect mentioned is that “actions linked to the facilitation and elimination of non-tariff barriers”. In this regard, the reduction of bureaucratic obstacles at origin, the negotiation of sanitary and phytosanitary agreements, promoting the interoperability of national customs systems and advancing the mutual recognition of authorized economic operators are among the issues that should occupy a priority place on the agenda.
Another recommendation of the report is to consider small and medium-sized enterprises (SMEs) and other smaller-scale actors who find it more difficult to participate in international trade due to their lower production capacity, infrastructure and ability to sustain supply over time.
Finally, the research states that such actions “must necessarily involve the will of governments at the highest level and involve the private sector, international cooperation and technical and financial assistance. The cooperation of multilateral and regional organizations must play a key role in this regard.”
How to continue to deepen thethe topic? You can find this central report with 83 pages, 2 Annexes, 17 Tables and 11 Figures, here The version is in Spanish.
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