In this Global Platform video, Salvador Sánchez, lead partner of agri-business industry, Deloitte México, and Juan José López Forastier, lead partner of agri-business industry, Deloitte Argentina, talk about the importance of global agriculture and the effect of agri-business on the environment. Latin America has a number of competitive advantages in the agri-food sector, such as location, beneficial trade agreements with Canadian and US consumer markets, large land mass and important water reserves. Quality food standards and ethical production will be of growing importance going forward, and effective use of technology will help establish the necessary infrastructure to address these matters.
The importance of global agriculture is obvious. In the year 2050 we need, as a planet, to feed approximately 10bn people. That cannot be done with the scheme we currently have. We cannot continue to cultivate and expand the cultivation area, as we are currently doing across the planet, because that is affecting climate change in a significant way. So, we need the collaboration of companies, governments and society itself, to begin to be aware of how we eat, in what way we eat, and how much we are eating these foods.
When you look at the economies of the region and of Latin America, it can be seen that in Mexico, agri-business represents between 6% and 7% of GDP. In Argentina it is around 16% of GDP. In Colombia the number is between 11% and 10 %. So, that is, the weight of agriculture in the region's GDP is really very significant.
I consider that Latin America has extremely important competitive advantages in the agri-food sector. One is that we are located, as a region, in two hemispheres. That gives us some advantages, because in certain seasons we can grow in the southern hemisphere when conditions are favourable, and when they reverse, we can do so in the northern hemisphere. I believe that gives us a great competitive advantage.
Another competitive advantage is that we are close to an extremely important consumer market which are the Canadian and the US, with which Mexico has a signed a treaty that facilitates the exchange of goods, including agricultural issues.
Mexico has a significant amount of trade agreements.
I believe that South America, the Southern Cone and the Andean region should try to replicate that and explore options to be able to sign trade agreements that help to sell the agricultural products they are growing.
Another of the advantages that I see are the expanses of land that we have in the region. We have a fair amount of land that, as we all know, helps crop efficiency. In addition to that, we have extremely important water reserves, which are a critical input for agriculture, and gives us a great competitive advantage.
The challenges facing agri-business regarding the generation of quality and reliable food to feed the population, have a lot to do with the development of a model that allows the producer to maintain traceability in their products.
Clearly, the food consumer of today will not only want to know that their food, 73 was made with quality standards, but also that it was ethically produced.
I believe that the biggest challenge will be in having the adequate infrastructure to make food accessible.
In technology, from the point of view of being able to have information regarding how this food was produced, I believe that the global trend will be to accompany this change. Technology will probably occupy a very important niche, because in order to show, maintain and have traceability, it will be necessary to be able to work hard on improving information.
Climate change has clearly had consequences in Latin American agriculture. if you look at the effect of the drought in 2018, it was about a 5-6% drop in Argentina's GDP. And to talk about 5% in a country’s GDP, of course it has an important influence.
Clearly, the strongest example is observed in Brazil, where deforestation has been very substantial to the detriment of soybean production, and thus Brazil has become the second-largest soybean exporter in the world.
At the end of the day, what we have to think about is that all this needs to have the awareness of both the small producer and the large producer, as well as the population and governments.
What would the opportunity be?
That governments should seek environmental policies and seek that the producer commits seriously to the environment to improve environment protection.
