Latin America’s Agricultural Challenges
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11th October 2015

By Jerry Haar
Our planet is a hungry one. By the year 2050, the world will need to produce enough food to feed more than 2 billion additional people, compared to the current 7.2 billion. To meet future food demand, agricultural production will need to increase by 50-70%, according to different estimates.
Within the Western Hemisphere, agriculture is the prime engine of economic growth for many countries. The region continues to be the breadbasket of the world with 23% of arable land, 31% of water, and 23% of the globe’s forests. It accounts for 50% of soybean production, 44% of beef exports, and 42% of chicken exports. Latin America globally represents 13% of agricultural trade.
Nevertheless, agriculture is a double-edged sword for the region. The end of the great commodity super-cycle–fueled by China’s and India’s insatiable demand for natural resources, raw materials, and agricultural products–continues to whipsaw the region. This fifth year of declining economic growth will see GDP contract 0.3% this year and bounce back to growth of only 0.7% in 2016. The devastating effects of the downturn in the Chinese economy on Latin American commodity producers should not be underestimated. Take Brazil where 25% of sugar mills are requesting relief from unpaid bills and debt. With excess capacity and a 25% drop in demand from China, insolvent mills are pumping out more sugar, causing a further decline in prices. Only big diversified mills close to ports and owned …

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