ARGENTINA-OUTLOOK: The Challenge of Feeding the World

By Marcela Valente Reprint | | Print |

Marcela Valente

BUENOS AIRES, Dec 29 1998 (IPS) - Argentina today is the world’s eighth biggest food producer and fifth exporter. Foreign sales, doubling with the eight billion dollar investments of the 90’s, made this sector the nation’s main-line into the global economy.

“The development potential of the agriculture and food sector is immense,” despite prices tumbling between 20 and 30 percent this year as a result of the Asian crisis, said three economists from the Fundacion Mediterranea, authors of the book “¿Preparados para alimentar al mundo?” (Prepared to feed the world?), published this month.

Grain production next year will be two percent down due to lower production in Europe and Asia as a result of poor weather and the financial crisis, disturbances in subSaharan Africa and the effects of hurricane Mitch in Central America, according to the latest report from the United Nations Food and Agriculture Organisation (FAO).

In Argentina, this news fed a feeling of euphoria amongst producers who went whole-heartedly into food production.

“The strategic priority today is the production of food as an instrument of inserting the country in the most advanced part of the world economy,” strategic planning minister and editor of the book “La Revolucion de los alimentos y la proyeccion internacional de Argentina” (The food revolution and the international projection of Argentina), Jorge Castro, told IPS.

The simultaneous economic growth in the 90’s of some 40 countries, the expansion of the world population, the intense process of urbanisation and changes in the agricultural policy of the United States and the European Union, tending to reduce subsidies, added to unprecedented modernisation in Argentina.

Argentina’s vice minister of food and markets, Susana Merlo, said the current 65 million tons of grain – considered a record in the country – make up barely half the volume projected for 2010.

Argentina has natural advantages which at the end of the 19th century led to it being baptised “the granary of the world.” Its damp pampa plains, in the centre of the country, make up one of the three most fertile zones of the planet, along with the US mid- west (Iowa, Illinois) and the black soils of Russia and the Ukraine.

But unlike a century ago, production has now been modernised and productivity increased. Fertilisers are used on a large scale and important developments have been made using biotechnology.

Investments of eight billion dollars in the last 10 years – 66 percent from abroad – clearly reveal the interest awoken in the sector.

One good example of food and agriculture development in Argentina and its delivery to the world is seen in the oils sector, which today accounts for 24 percent of all of the nation’s exports. Oil crops increased their share of the land dedicated to grain production from 14 to 45 percent between 1970 and 1998.

The cost of production of a hectare of soya costs more than 205 dollars in the United States and only 180 in Argentina. The transportation of a ton of soya from the northeast and the port of Rosario, which cost 60 dollars by road 20 years ago, shrank to 35 by rail, and less than 20 by river – the water highway or Hidrovia.

Works to improve river transportation will also mean almost a million hectares of extra farmlands can be brought into production in the coming years, land which had been marginalised due to insufficient transport infrastructure.

With increasing demand in Asia, Russia and Brazil, Argentina became the leading exporter of soya and sunflower oil, and the second biggest world exporter of soya bean flour, although production is still far from the possible ceiling.

“In the countries of accelerated economic growth like those of Asia, which started out from a situation of extreme poverty, the first thing they did was to increase the demand for both quantity and quality of foodstuffs, moving from consumption of grain to flour, from rice to meat and from white meat to red meat,” said Castro.

This is how countries like China increased production but saw a reduction in per person production, and that is where Argentina saw its chance.

“There are countries with food production higher than that of Argentina, but very few – including Argentina – can at the same time increase the exportation of surplus,” said Castro, stressing the nation’s need to specialise on this subject.

“In a globalised economy, the path of productive specialisation in the agricultural-food chain is the basis from which to achieve higher levels of productivity which will allow the nation to increase the speed of economic expansion and attract more investment,” he added.

Development of the food sector in Argentina was achieved through a series of incentives which allowed for a reduction in costs. Transport infrastructure was provided – the road network was extended, the ports were modernised and strong encouragement, both public and private, was given to biotechnological research.

On another front, Argentina has great potential because despite being the fifth world exporter, it is so far inserted in only three percent of the world market.

Out of a total of 350 billion dollars-worth of food marketed throughout the world in 1996 – double the amount of 10 years previously – Argentina sold 11.7 billion.

This figure shows the country must “opt decidedly and lucidly for specialisation” in food production, said the strategic planning ministry, as this is a growing market with a rumbling stomach in urgent need of filling, he concluded.