Poverty
May 2, 2016

You say Bananas… Reducing Hunger Through Trade

By Kathryn Hauser

A recent report by the UN’s Food and Agriculture Organization (FAO) provides hope that developing countries can not only achieve their own food security but also feed each other and export to wealthy countries.  Trade plays an important role in these trends.

Latin America has become the largest net exporter of food. Whether it’s coffee from Colombia, soybeans from Brazil, beef from Argentina or bananas from Ecuador, Latin America has long been associated with the production and export of a diverse range of agricultural products.  Over the past decade, exports of food and agricultural products from Latin America have increased dramatically, and the region now surpasses North America as the world’s largest exporter of agriculture.

Across the board, agricultural exports make up a significant portion of total exports from the region.

 

PE 1

And the region dominates trade in several key categories of food products – bananas, sugar, soybeans, and coffee.  Latin America is one of the few regions of the world with significant resources of unexploited agricultural land (concentrated in Brazil and Argentina), suggesting the region will continue to play a pivotal role in global food production and exports in the future.

PE 2

Latin America’s success in agricultural exports is only part of the story.  Total agricultural product exports from developing countries have outpaced agricultural product exports from developed countries for the last 10 years.  In fact, since 2004, total agricultural exports from developing countries have risen nearly 200%, compared to a 135-percent rise in developed country exports.

PE 3

According to the World Trade Organization, one of the most apparent trends has been the growth in agricultural trade between developing countries or so-called “South-South trade.”  South-South trade now exceeds North-South trade in total agricultural exports.

  • Since 2009, South-South trade has grown 80 percent, compared to 66 percent for North-South trade.

PE 4

A growing share of developing country agricultural exports now go to other developing countries.  Just a decade ago, less than half (48%) of developing country agricultural exports went to other developing countries, but by 2013, 62% did.  This trend is continuing, as developing country exporters solidify market share in the markets of other developing countries and demand for these products increases.

  • Brazil ships more than three quarters of its agricultural exports, primarily feeds and livestock products, to developing countries. 

PE 5

Developing country exports to developed countries also show strength and resilience. South-North exports increased 120 percent in the past decade, with market share over the same period increasing from 49 percent to 54 percent. Breaking out developing country exports to the United States, for example, levels have grown from $25 billion in 2004 to over $55 billion in 2013 and the share of developing country agricultural exports in the U.S. market increased over the same period from 45 percent to 54 percent.  Many major developing country suppliers, including Brazil and Argentina, now enjoy a significant agricultural trade surplus with the United States.

Latin America is an important player in the global food and agriculture sector and countries have much to gain from internal reforms to foster agricultural productivity, increase demand for their products in export markets, and lower barriers to trade in both developing and developed countries.  Trade negotiators now engaged in multilateral, regional and bilateral talks need to find creative ways to tackle both high tariffs and prevalent non-tariff barriers on agricultural products and, building on the strength of developing country agricultural exports, forge new arrangements for international cooperation to improve food security.