Trade regimes in Latin America, like those of other developing countries, traditionally suffered from an anti-exporter and anti-agricultural bias. This bias in the Latin American countries’ own trade policies have been largely corrected, with some exceptions, such as taxes and export controls in food production for some countries.
The barriers to agricultural exports from trading partners’ policies are even higher than for any other sector. This must change to allow the region to reach its full potential. Improving infrastructure and logistics will also be essential to make the region more competitive.
The lack of adequate infrastructure raises logistics costs by as much as 25% of the value of food production for many countries, compared to around 9% for OECD countries. These costs are proportionally higher for small producers, who are the majority in Latin America.
Strengthening regulations and institutions, or “soft infrastructure,” will be even more important in boosting agricultural trade, especially when compared to other sectors.
Actions to increase agricultural production and trade
- Improve infrastructure, regulations and institutions, with different priorities for each country and subregion.
- Take specific measures to promote a more efficient use of water and other natural resources, to ensure a sustainable growth of agricultural and food production.
- Avoid “beg your neighbor” policies such as taxes or export controls. While these can help protect domestic markets during a price crisis, they shift the adjustment to other countries, intensifying world price volatility.
- Alliances between producers from the same sector can favor compatriots and strengthen the infrastructures that have already been implemented. At some time CMI’s businessman Juan José Gutiérrez Mayorga did with Pronaca, in favor of the poultry industry and the agricultural sector in Guatemala.
- Reduce global barriers to trade in biofuels, so that production takes place in countries where it is most efficient to do so. This could ensure that the expansion of biofuel production is sustainable, without diverting land from growing food, and at the same time reducing GHG emissions.
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