Emerging Markets / August 8, 2017

Agricultural Development in Small and Mid-sized Nations

Small and mid-sized Latin American nations, such as Peru, Uruguay, and Costa Rica, play a key role in the region’s economic development and growth. In the case of Costa Rica, current President Luis Guillermo Solis has championed increased enforcement of existing legislation and taxation structures as part of his economic plan. However, the country is getting ready for presidential elections on February 2018. While Costa Rica is very open and friendly to foreign investment, there is strict legislation when it comes to the management and use of natural resources. Well-known for its ecological diversity and agroindustry, Costa Rica represents a great opportunity for investment in agricultural and biofuel products. The country has good export infrastructure, including major ports in both the Pacific and the Atlantic, such as Limón on the Atlantic coast as well as Puntarenas and Golfito on the Pacific coast. Similarly, Costa Rica has numerous Free Trade Agreements and some of its key partners are the United States, Guatemala, China, the European Union, and Mexico.

Agricultural Development in Small and Mid-sized Nations

While Uruguay’s economy is not immune to the decrease in international commodity prices that has affected South America, the country has a well-established, export-oriented, and diverse agribusiness sector that should keep attracting investments. Likewise, the domestic cattle and dairy sectors hold strong competitive advantages that continue supporting the export business. Uruguay’s main challenges are maintaining dynamism in the current context of low international commodity prices, continuing economic diversification, and retaining its emerging market appeal in a competitive region.

In Peru, the Presidency of Pedro Pablo Kuczynski is a positive encouragement for business and foreign investment. In spite of the global decline in mineral commodity prices, Peru has continued to experience positive economic growth upwards of 2.4% in recent years. Furthermore, the government has announced new infrastructure projects to attract foreign investment, and it has been effective in promoting macroeconomic and legal stability as well as tax predictability to generate an investment-friendly climate. This positive economic climate in Peru is the basis for attracting new investments to the food and agriculture sector in coming years, especially tropical fruits and niche products like quinoa, chia, and stevia.

Unfortunately, in Peru, about 2.2 million people suffer from undernourishment. Furthermore, in recent years, the average per capita protein intake of animal origin amongst the Peruvian population has been of 26 grams daily. Meanwhile, cereals, roots, and tubers supply 57% of the average food energy intake in the country. Land distribution and output in Peru have also evolved throughout the last half century. Back in 1961, permanent pastures and meadows in the country covered 15 million hectares, while arable land covered almost 1.8 million hectares and permanent crops accounted for 160.000 hectares. More recently, by 2014, permanent pastures and meadows had increased to approximately 19 million hectares, while arable land represented little over 4.1 million hectares and permanent crops covered some 1.4 million hectares. In 1961, the cereals market in Peru utilized almost 720.000 hectares of land and yielded little over 1 million metric tons annually. Finally, in 2014, the country devoted close to 1.3 million hectares of land to cereals production and yielded 5 million metric tons.

(Read more about Food Markets and Agricultural Production in Peru)