The nations of South America's MERCOSUR trade bloc are well positioned to cash in on increasing global demand for food. But they'd also do well to start planning a common approach.
BUENOS AIRES — As a major food producer, Argentina is well positioned to cash in on growing global demand. Of that there's little doubt. And yet, for all of its beef and soybean abundance, the South American country can't just rest on its laurels. Properly benefiting in the years and decades to come will require planning and integration.
"Becoming the world's supermarket is a long-term project that requires structural change and a substantial boost in investments," says Fernando Vilella, a commercial farming professor at the University of Buenos Aires and one of the scheduled speakers for AlimentAR, a food and drinks fair that took place this month in Buenos Aires's Tecnópolis complex.
Argentina has a population of roughly 40 million. But it already has the capacity to feed 10 times that many people. Its partners in the MERCOSUR trade bloc are big time growers as well. Together they supply 32% of the world's traded foodstuffs and could, it's been estimated, supply up to 50% of global demand.
Fields in Entre Rios Province, Argentina Sam Beebe/Flickr
In the last 50 years, the world's population has grown from 3 billion to more than 7 billion. Not only that, but in Asia, countless people have climbed out of poverty and altered their diets as a result. "In recent times, 20 million people have been migrating annually to Chinese cities, doubling consumption of animal proteins based mainly on soy and corn," says Vilella.
For large-scale farmers in Argentina and elsewhere, all of this spells a significant increase in demand that shows no signs of slowing in the years ahead. Gustavo Idígoras, a former EU agriculture attaché and international trade specialist, expects that in "the next 10 years in Southeast Asia, 40 million more people will likely become high-income earners, and the middle classes of China and India could increase by more than 200 million." To feed so many people, Idígoras says grains production would have to double within 20 years and meat production increase by 200 million tons.
The opportunities will be there, in other words, for producers who are able to supply that additional volume. But it will also be a challenge, and require effective cooperation between the public and private sectors, says Vilella. While MERCOSUR members Argentina, Brazil, Uruguay and Paraguay have only about 3.55% of the world's population, they export 65% of the soy and 39% of the corn China requires. They also supply the world with more than 20% of its beef, 28% of its chicken and 12% of pork. And yet, as a trade bloc their contributions are often overlooked, the University of Buenos Aires professor explains. That needs to change, and in the future, says Vilella, Argentina and its partner countries should work as a bloc when dealing with big players like China.
He also says that greater emphasis should be placed on making value-added items, and that trade in food and drinks must intensify between the neighbors. Marcelo Elizondo, a trade specialist and head of the consulting firm DNI, agrees. "We have countries with markets of an enormous size and very high consumption levels, like Brazil, the world's fifth most populated countries, and Mexico, which is 10th," he says. "Many of our firms, especially small and medium-sized businesses, will find it easier to establish ties with these countries than distant markets."
Gustavo Idígoras says that becoming a big food and drinks producer implies three challenges: Improving production and trading systems, attaining environmental standards in both production and the processing of foods to reduce the carbon footprint, and adjusting labor conditions to global patterns. Others, like Félix Peña of the ICBC, a research body, urge Argentina to adapt its foreign trading strategy to account for changing global political dynamics. U.S. President Donald Trump's attacks on the World Trade Organization are a case in point.
Argentina and its MERCOSUR partners, in other words, have their work cut out for them. But given the importance agriculture and meat production already play those countries, theirs are the kind of problems most countries would love to have. The roadmap is there. All that's needed now is the will and wisdom to follow it.