FAO Regional Office for Latin America and the Caribbean

OECD/FAO forecasts 17% increase in agricultural and fisheries production in Latin America and the Caribbean by 2027

Total agricultural land use in the region will expand by 11 million hectares. Soybean will account for over 62% of the region’s area expansion, says Agricultural Outlook.

The region will remain the world’s largest consumer of sugar in per capita terms.

July 3rd 2018, Santiago, Chile – Agricultural and fisheries production in Latin America and Caribbean is projected to expand by 17% over the next ten years, says a new report published today by the Organisation for Economic Cooperation and Development and the UN's Food and Agriculture Organization.

More than half of this growth (53%) can be attributed to an increase in crop production, about 39% is due to the livestock sector, and the remaining 8% originates from the expansion of fisheries output.

According to the Agricultural Outlook, total crop production in the region is projected to grow by 1.8% per year till 2027. About 60% of this growth will be due to yield improvements, which will rise across the region over the coming decade by 11% on average, with the most important changes expected for the cereals and oilseeds sectors. The remainder of the expansion of crop production will be due to an expansion in area harvested.

Total agricultural land use in the region will expand by about 11 million hectares, with approximately half representing an expansion of land for crop production. Soybean cultivation will account for the vast majority (ca. 62%) of the region’s area expansion.

Globally, the OECD-FAO Agricultural Outlook 2018-2027 sees weakening growth in demand for agricultural commodities and food, while anticipating continuing productivity improvements in the sector. As a result prices of main agricultural commodities are expected to remain low for the coming decade.

Soybean will lead the region’s area expansion

The OECD/FAO reports states that while Paraguay is expected to significantly expand its cultivation area of soybean, Brazil will increase the multi-cropping of soybean and maize. The expansion of soybean cultivation is motivated by the domestic demand for protein meal and rising global demand for soybeans.

While close to 46% of the region’s soybean production will be exported, mostly to China, about 54% of total soybean output will be processed within the region into meal and oil. China’s import demand is expected to wane, which will have repercussions for major suppliers such as Brazil.

Brazil is singled out by the Outlook as one of the countries that will play a pivotal role as key suppliers of food across the globe, along with the Russian Federation, India, China, Western Europe and the United States.

Meat production in the region will expand by 19%

Meat production in the region will expand by 19%, to meet strong growth in global and domestic demand. While domestic meat consumption is set to rise by about 8 million tonnes or 17% by 2027, regional production will become increasingly export oriented.

Meat exports from the region will expand by nearly 3 million tonnes by 2027, representing 31% growth from the 2015-17 base period, or an expansion four times that of the past ten years. Three-quarters of this export growth will come from Brazil.

The dairy sector is also expected to grow in importance; however, most production will be consumed domestically. By 2027, total consumption of dairy products will rise by 18%, with fresh dairy products accounting for the bulk of the additional demand. As a result, the growth of regional production of butter, cheese and skim milk powder is expected to slow down over the coming years.

Region’s sweet tooth and obesity

The region will remain the world’s largest consumer of sugar in per capita terms. Sugar and vegetable oil consumption will continue growing in per capita terms and at a faster rate than over the previous decade. About 18% of the expected rise in total per capita calorie availability will come from these commodities. As a result, the high levels of obesity in the region are expected to persist.

World’s second largest producer of aquaculture

A major expansion of aquaculture production is anticipated in Brazil and Chile, with total output growth of 43%, such that the region will remain the world’s second largest producer of aquaculture following Asia.

Most of this expansion will serve to meet growing regional demand for fish, as per capita food consumption is expected to expand by 13% over the coming decade. Should China fully implement the fisheries provisions of the 13th Five Year Plan, its exports of captured fish and aquaculture products would substantially diminish, opening new market opportunities for Latin America.

An important global supplier of agricultural commodities

The region is expected to remain an important global supplier of various food commodities, accounting for 56-59% of global trade of soybeans and sugar and 30% of global meat trade by 2027.

Current trade policies in Argentina, such as the removal of export taxes on maize and wheat, should encourage export-oriented production of those goods. With the US classifying cane ethanol as an Advanced Renewable Fuel, encouraging imports from Brazil, the region’s position as net exporter of ethanol will strengthen over the outlook period, the value of net trade expanding by 11% per annum.