What is Latin America's role in strengthening food security?

In recent years, food security has become a central issue among global leaders, driven by the economic crisis resulting from the Covid-19 pandemic, geopolitical conflicts and increasingly frequent extreme weather events, which have resulted in setbacks in food security rates. hunger e malnutrition. There was an increase of more than 152 million people in a situation of food insecurity between 2019 and 2020, according to FAO estimates[1].

There is growing concern around the world about the increased frequency of these events and their impacts on food security. The economic downturn caused by the pandemic has made access to food more difficult, especially in low-income countries that are more vulnerable to food crises. Global food chains have been impacted, causing food prices to soar, aggravated by the Russian invasion of Ukraine, which has interrupted the flow of Russian and Ukrainian grains to regions with high food insecurity, such as the Middle East and North Africa (see “The Ukraine crisis and the new geopolitics of global agriculture”). Extreme weather events, such as rising temperatures and irregular water supplies, have harmed agricultural production, making it difficult to combat hunger and malnutrition. And these events are no longer isolated incidents. Therefore, this global scenario of uncertainty is expected to continue for the coming years.

In this context, international trade emerges as an important tool to mitigate these food security risks, connecting global agri-food systems and moving food from surplus to deficit regions. Efficient food trade can improve food supply, quality and diversity, softening the effects of adverse shocks such as those mentioned.

Latin America plays a crucial role in this scenario, being the world's largest net exporter of food, with US$170,6 billion exported in 2023. And the trend is for this position to strengthen in the coming years. According to the OECD-FAO Agricultural Outlook 2024-2033 report, the trade surplus of Latin American agricultural products is expected to grow by 26% by 2033. In addition, its share in exports of food products such as soybeans, corn, sugar and beef is expected to increase over the next ten years.

The region has vast natural resources. Its 34 countries account for 2 billion hectares, with 38% used for agriculture (9,5% agriculture and 28,5% livestock) and 46% covered by forests. The region also accounts for 30% of global precipitation and generates 33% of the world's water, making it a large reserve of arable land. However, for a long time, this did not translate into high food production and exports.

For most of the 1950th century, Latin America remained closed to international trade, especially in the food sector. Low agricultural productivity and limited trade liberalization prevented producers from expanding their activities. However, from the 1990s onwards, many countries in the region began to invest in public policies to encourage research and development in agriculture, adopting practices that would increase agricultural productivity, developing techniques that were better adapted to the region's natural conditions, and developing the use of genetically modified seeds and more advanced inputs. As it was later called, the “Green Revolution” in Latin America laid the foundations for the significant growth in agricultural production in recent decades. It was only in the XNUMXs, when several countries in the region implemented structural macroeconomic reforms and opened their markets to international trade, that Latin America was able to consolidate itself as the world's largest net food exporter.

This position has been strengthened mainly since the early 2000s, a period in which there was a significant increase in Chinese and Asian demand for food. The region went from a trade balance extra-bloc agricultural exports equivalent to US$26,5 billion to reach US$217,7 billion in 2023, which meant an average annual growth of 9% in this period of more than twenty years. Latin America has therefore positioned itself as a key global player in food trade, not only by promoting greater availability of food for other regions of the world, but also by contributing to price stability.

Furthermore, its large territorial coverage means a great diversity of products. Foods present in the region's export agenda include grains, oilseeds, fruits, meats and fish. The soy complex (grains, oil and bran) stands out as the most exported product since 2000, growing at a galloping rate of 8,9% per year and reaching a value of US$ 80 billion last year. Next, products such as meats (+9% per year) and fruits (+7,6% per year) represent a significant share of the food sold by Latin America. Exports of other foods, such as fish (+6,2% per year), sugar (+6,5% per year), corn (+13% per year) and coffee (+5,7% per year), also show significant growth, which reiterates the crucial role of the region in global food security.

This diversity was only possible due to the heterogeneity of food production in the region. While the Southern Cone, a subregion comprising Brazil, Argentina, Paraguay and Uruguay, has become an exporter of commodities such as soybeans, corn, wheat and meat, other subregions have focused their efforts on local specialties with high added value. These specialties include fresh and processed fruits and vegetables, and alcoholic beverages such as wine and beer, which originate in countries such as Peru, Chile, Colombia, Ecuador, Mexico and Central America.

Among the region's main food buyers, China and the US stand out. The Asian giant has emerged as one of its largest destination markets over the last twenty years, due to strong Chinese demand. Until 2023, the country's agricultural imports from Latin America grew by an average of 15% per year, reaching a value of US$ 70 billion. The US remained the region's largest food importer, increasing its purchases, mainly from Central American countries, by an average of 7% per year. However, Latin America has sought new partners in recent years, such as Vietnam, which registered an average annual growth rate of 23%, and South Korea, with 11%, which shows the region's initiative to seek diversification of its destination markets.

The importance that Latin America has gained in ensuring food security in the world is indisputable. However, the fight against hunger and malnutrition are still challenges that the region has not been able to resolve internally. According to the FAO, the prevalence of moderate or severe food insecurity in the region was 28,2%, second only to Africa, in the 2021-2023 biennium. It is almost paradoxical that one of the biggest problems in the world's largest food exporting region is food security. This is due more to restrictions on access than availability. Due to poor income distribution and high food inflation, further exacerbated by the shocks mentioned above, access to a healthy diet for the region's low-income population is still limited. In 2023, Latin America had the highest cost of a healthy diet among all regions in the world, at approximately US$4,56 (adjusted for purchasing power). This figure represents a 12% increase over the previous year.

Furthermore, the increasing concentration of food exports from Latin America is also a point of concern for the countries of the region. Between 2012 and 2023, the IICA geographic diversification index fell from 0,63 to 0,55, due to the growth in exports of products considered to have low added value (soybean, corn, wheat, sugar, among others) to a few countries, mainly China. This highlights a challenge for the region in the coming years in diversifying its products and markets to ensure the current level of food exports.

In order for the countries of the region to ensure the fight against hunger in the rest of the world and internally, it is necessary to combine the efforts that have been made to achieve a privileged position in international trade. Continuous adaptation to climate change, the implementation of more sustainable agricultural practices, increased diversification of food exports, improvements in transport and infrastructure, and economic reforms are crucial measures both for expanding Latin America's food exports and for ensuring food security internally and externally.

Read more at: “The role of international trade in promoting food security”

[1] FAO, IFAD, UNICEF, WFP and WHO. 2024. The State of Food Security and Nutrition in the World 2024 – Financing to End Hunger, Food Insecurity and Malnutrition in All Its Forms. Rome

References and Recommended Reading

OECD; FAO. OECD-FAO Agricultural Outlook 2024-2033. Paris and Rome: OECD Publishing, 2024. Accessed: 15 Oct. 2024.

FAO; IFAD; UNICEF; WFP; WHO. The State of Food Security and Nutrition in the World 2024: Financing to end hunger, food insecurity and malnutrition in all its forms. Rome: FAO, 2024. Accessed on: 15 Oct. 2024.

ARIAS, Joaquín; JANK, Marcos S.; CARDOSO, Victor M.; UMAÑA, Víctor; GILIO, Leandro. The role of international trade in promoting food security. Brasília: G20 Agriculture Working Group, 2024. Accessed on: October 15, 2024.

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