Since 2014, the Inter-American Development Bank (IDB), through the Agrimonitor initiative, has systematically analyzed agricultural public policies in the region, using the Producer Support Estimate methodology developed by the Organization for Economic Cooperation and Development (OECD). This methodology allows for international comparisons of the different types and levels of support given to the agricultural sector.
The recently published document 2023 Agricultural Policies in Latin America and the Caribbean is the third in a series of studies on Latin America and the Caribbean within the framework of the Agrimonitor initiative. It covers a period roughly from 2009 to 2021 and analyzes the differences between the agricultural sectors of countries in the region, both in terms of performance and public policies that have supported them. It also seeks to identify common patterns among countries to outline potential future directions for their agricultural sectors.
In recent years, the sector has faced turbulence due to the COVID-19 pandemic, the Russia-Ukraine conflict, and a series of natural phenomena that have affected several countries in the region. Although, in most cases, food supply chains continued to operate, health restrictions during the pandemic severely impacted the hotel and restaurant sectors in some countries. The economic downturn resulting from the pandemic affected many families’ incomes, forcing them to change their consumption patterns, replacing more expensive foods (such as beef) with cheaper alternatives. Additionally, the Russia-Ukraine conflict, which began in February 2022, has affected international agricultural markets due to these countries’ importance in exporting fertilizers, corn, wheat, barley, sunflower products, and more.
As a result, food prices rose sharply in 2020 and 2021, reaching historical highs in May 2022. Moreover, since 2016, some countries in the Southern Cone have faced severe droughts. Argentina, for example, experienced its worst agricultural campaign in 60 years during 2022/2023. This has been compounded by phenomena such as locust plagues in Argentina and Bolivia, wildfires in Chile, and tropical storms in Central America. Consequently, between 2019 and 2021, the region’s agricultural production growth rate slowed significantly, and the volume of agricultural exports contracted while imports accelerated.
There is significant heterogeneity between the agricultural sectors of countries in the region. Brazil, Argentina, and Mexico account for approximately three-quarters of agricultural production and exports. However, when analyzing various economic performance variables, these three countries do not necessarily lead in terms of relative penetration in high-value markets or agricultural production and productivity growth. Some smaller countries stand out in different indicators. At the same time, there is a group of countries with relatively small agricultural sectors (net importers) that are less dynamic and have low productivity growth (or even significant declines).
In terms of support for their agricultural sectors, countries in the region provide lower levels compared to Canada, the United States, and European Union (EU) countries. Only a few, typically smaller countries with less dynamic agricultural sectors, offer support levels similar to or higher than those of extra-regional countries. Most of the support in Latin American and Caribbean countries is provided through market price distortions. On the other hand, agricultural budgetary spending generally represents a small fraction of the total support given to the sector. This includes investments in public services (infrastructure projects, agricultural research and development institutions, and animal and plant health services), which have proven to be efficient and effective ways to increase per capita agricultural income and reduce poverty. Additionally, all countries in the region, except Argentina, provide a negative level of consumer support, meaning that consumers transfer resources to agricultural producers through artificially high prices.
When reviewing support trends over time, a divergent pattern emerges: countries that offer relatively less support tend to reduce it, while those that offer more tend to increase it. This division largely aligns with performance distinctions: on the one hand, countries with relatively more dynamic and productive agricultural sectors that provide low levels of support; on the other hand, those with smaller, net-importing, less dynamic, and productive sectors that provide increasing levels of support. In terms of objectives, policies primarily aim to increase productivity, income, and competitiveness in the sector. However, some countries emphasize supporting small-scale or family producers or implementing programs to ensure food security for the population. There is also growing interest in promoting the sector’s environmental sustainability.
Regarding environmental sustainability, Agrimonitor data allows for analysis of the relationship between support given to specific production categories and their greenhouse gas (GHG) emissions. The conclusion is that agricultural policy does not seem to favor or disadvantage sectors with higher or lower GHG emissions, meaning the policy appears carbon-neutral. It is worth noting that the available data only covers some categories in some countries, so the analysis cannot be generalized for the entire region. Additionally, the regional result corresponds to the aggregation of all included countries, not individually. In some countries, policy favors sectors with lower GHG emissions, while in others, the opposite occurs.
The Agrimonitor database also allows for the analysis of support for the fishing and aquaculture sectors in 13 Latin American and Caribbean countries. Like agriculture, aquaculture and fishing production is highly concentrated. Almost three-quarters of marine catches are made by Peru, Chile, and Mexico, while 78% of aquaculture production is accounted for by Chile, Ecuador, and Brazil. There is also high heterogeneity within Latin America and the Caribbean in terms of aquaculture and fishing performance and support levels provided to the sector, whether as a proportion of value or production volume. Honduras, Suriname, Costa Rica, and, to a lesser extent, Brazil provide much higher support levels per production volume than the rest of the analyzed countries. Chile, Peru, Ecuador, and Mexico, on the other hand, show much lower support levels. Notably, Peru, Chile, and Ecuador—three of the leading producers (Ecuador in aquaculture)—invest at least half of the resources supporting the sector in providing general services.
Finally, the report addresses food security and its relationship with agricultural policies. This has been particularly important during the analysis period due to the sharp rise in food prices and setbacks faced by the region in terms of food security. The data suggests that this deterioration is due to the population’s economic access to food rather than a lack of food availability. In this context, mitigating the negative effects of rising prices becomes a public policy priority, potentially including agricultural policy. The relationship between rising food prices and changes in consumer support estimates is analyzed. Although few countries have recent inflation data on food products, there are indications of a possible positive relationship between higher price increases and consumer support levels. While the direction of causality is unclear, there are slight indications that countries experiencing higher price increases may have implemented policies to reduce producer support via market prices (with the consequent increase in consumer support) to alleviate the adverse effects on food security.
Support and reforms in the sector should aim to include approaches and practices with lower environmental impacts, such as agroecology, permaculture, and climate-smart agriculture. This way, an integrated approach to land and landscape management could be adopted to increase productivity, improve resilience, reduce emissions, and simultaneously achieve agricultural development and better food security.
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