The agribusiness sector faces challenges all along the value chain, from input suppliers to farmers, processors and brokers.
Farmers and food companies need financing to become more productive and better prepared to help meet the nutritional demands of a growing global population while advancing rural development. Agribusiness must become more innovative to be more efficient; more inclusive, diverse and fair to attract a capable workforce; and more environmentally sustainable to, among other things, manage the risks posed by a changing climate.
With the global population expected to exceed 9 billion by 2050, the pressure to increase agricultural output to meet the world’s food, fuel, fiber and industrial needs will intensify. Latin America has the potential to play a growing role in meeting those needs in the coming years, thanks to some of its natural advantages.
An IDB report (The Next Global Breadbasket: How Latin America Can Feed the World) explains that the region has a third of the world’s freshwater resources—the most per capita of any developing region—and 25 percent of the world’s potentially suitable land for rainfed cultivation. It also has enormous biodiversity. According to the World Bank, the region is home to 34 percent of the world's plant species and 27 percent of mammals, which makes it a biodiversity “superpower” and lays the groundwork for advancements in medicine and agricultural science.
Yet the region still faces many challenges to achieve sustainable growth in agricultural, animal protein, dairy or intensive crops’ production.
Climate change is the most overwhelming of these. The region’s farmers are already seeing some of the effects, in the form of changing rainfall and temperature patterns, more intense storms, decreasing soil humidity and crop blights.
Lack of sufficient technology, training and financing can also stand in the way of productive, efficient and sustainable agribusiness operations. Gaps in rural infrastructure and policies that inhibit trade are among other negative factors in some countries.
Solving these issues will be challenging and will require major investment by both the public and private sector. This is critical to regional and global food security and critical to rural development.
Poverty remains stubbornly high in rural areas. A report by the United Nations Economic Commission for Latin America and the Caribbean found that the average rural poverty rate for 18 countries in the region was nearly 49 percent in 2016, compared with an urban poverty rate of 27 percent. Extreme poverty was three times higher in rural areas than in cities.
With the right combination of policies, innovation and investment, the agribusiness sector can not only do well but do good, by helping to create jobs and ease rural poverty.