Market economies work best when the framework rules are well established and when there are no barriers to trade. This economic model allows the forces of supply and demand to benefit each country and region as they specialize in the production of goods for which they have a comparative advantage. When foreign investors participate in ventures in emerging markets, they are empowering particular sectors through capital injection and the transfer of new technologies. Such is the case in Latin America, where foreign investors provide credit that otherwise would not be available to industries that have great potential. Similarly, foreign investors guide projects and bring new ideas to the table, thus boosting overall productivity and competitiveness. Thus, in sectors such as agriculture, the export of foodstuffs from countries such as Colombia and Panama towards North American markets is very competitive. Furthermore, because of regional specialization, exports such as coconuts, pineapple, coffee, and flowers do not necessarily compete with domestic production in North America.
Best Practices and Sustainable Investments
According to international standards, responsible businesses should promote access to information, knowledge, and skills for greater development of sustainable economic and agricultural systems. Therefore, the productivity and infrastructure advantages that come from foreign investment ultimately benefit all consumers at grocery stores worldwide. Likewise, food and agriculture investment overseas allows world markets to have year-round access to crops that would otherwise be seasonal. By supporting small and medium-sized enterprises, investors are betting on the advances of farm automation, precision farming solutions, crop protection systems, and other cutting edge technologies to help boost yields. Furthermore, foreign direct investment (FDI) in the food and agriculture industry also helps optimize the use of water and fertilizers through technology, ultimately lowering costs for growers.
A major advantage of overseas investments in agriculture is that such ventures serve to import resources that might not be readily available in the home country. For instance, agricultural investors in Arizona or California, where water is a precious and scare resource, can produce water intensive crops abroad and have the goods imported to their states. Thus, the investors are getting the products and benefits that they want, without depleting a precious or inaccessible resource in their home states. Similarly, a variety of economic externalities can be exported through foreign investment. Currently, the main challenges preventing the wide spread adoption of more sustainable techniques within the sector, such as agroforestry, are unfamiliarity with technologies and a lack of training, funding, and awareness regarding their success. Therefore, there are numerous opportunities for agricultural technologies to be exchanged and adopted around the world. Over the medium term, however, many more such solutions will need to be made simpler and more affordable in order to be accessible to growers in developing markets. It is in this struggle that international investors can play a vital and compelling role. By funding initiatives such as drip irrigation and agroforestry, investors not only generate profits but also help build momentum for the sustainable food and agriculture movement.