Growth of agricultural trade worldwide to come mostly from developing countries

San Jose, Costa Rica, May 9, 2012 (IICA). One of the predictions that emerged from the 2012 USDA Outlook Forum, organized by the United States Department of Agriculture (USDA), is that over the next ten years most of the growth in agricultural trade worldwide will be driven by developing countries. The implications of this finding for Latin America and the Caribbean (LAC) were discussed by specialists from the Inter-American Institute for Cooperation on Agriculture (IICA).

“The Outlook Forum, which has been held since 1923, is an event that enables not only the United States (U.S.), but also the other countries of the Americas, to make decisions regarding the future course of agriculture,” said Victor M. Villalobos, Director General of IICA.

The projections for economic growth in the developing countries, along with the growth of their populations, changes in their diet and greater price stability will lead to increased demand for agricultural products, in particular sources of protein such as beef and chicken. In addition, policies aimed at promoting greater productivity and the use of agricultural land in countries such as Argentina and Brazil will help these countries, together with Russia, India and China, to become leading players in international trade.

At present, the area under cultivation worldwide with the eight most important agricultural crops (soy, rice, wheat and other cereals) is at an all time high. This means that, for the first time in many years, enough of these crops can be produced to meet demand and replenish stocks, which, in turn, will have positive effects on the stability of international prices in the short term.

Rafael Trejos, Head of the Center for Strategic Analysis for Agriculture, noted “Considering that by 2021 the population of the developing countries will account for 82% of the world population, this record level of demand will continue to rise.”

Nonetheless, as regards exports, the countries of LAC will meet increasing competition from the U.S., which will use the depreciation of the exchange rate to make its exports more competitive. Further, in the long term, they will have to deal with higher fuel prices, which will increase the cost of agricultural inputs, especially in those countries that do not produce oil.

Family agriculture as an option

The trend toward consumption of local products in the U.S. is creating an excellent opportunity for growth in the family agriculture sector.

Some years ago in the United States, the number of farms involved in family agriculture stopped growing and, in some case, diminished. However, slight growth in that number has been reported recently, attributed in large part to an increase in what are known as “small family farms.” Within the family agriculture sector in the U.S., this category of farms contributes 15% of all national products sold on the domestic market.

The driving force behind this trend is believed to be the interest of consumers in food produced locally. “Consumers view the practice of purchasing local products as a way of contributing to the economy of their countries, and believe that such products are more nutritious, fresh and environmentally friendly,” said Daniel Rodriguez, an IICA Agribusiness specialist.

To take advantage of this trend, groups of producers have opted to create partnerships, including the agreements reached with the major supermarket chains in the United States, as a result of which seven of ten of the most important retail chains sell differentiated local products.

Other strategies include direct sales to final consumers, from farm to table, participation in family food programs, and direct sales to restaurants, which in turn include the use of national products in their recipes as a marketing strategy.

For its part, the national institutional framework is promoting the creation of cooperatives and collection centers, in the belief that, by joining forces, producers can link themselves to markets more effectively.

“These successful experiences could be adapted and replicated in Latin America and the Caribbean,” said Rodriguez.

The Outlook Forum, held this year in Arlington, Virginia, included a discussion involving Secretaries of Agriculture who have held the post at different times since 1977. In their discussions, they noted that one of the most important challenges facing agriculture is how to increase awareness of the important role agriculture plays in the development of countries, using verifiable scientific data, which means that research must be a priority on the agricultural agenda.

In addition, they confirmed the opinion that food security will be an increasingly important national security concern in the future, not only in the United States, but also the rest of the world, an opinion shared by both Democrats and Republicans.

For more information, contact: 
rafael.trejos@iica.int