Status and Prospects of Agribusiness in Latin America

The vast agricultural resources and the particular economic dynamics of Latin America offer multiple investment opportunities. For instance, in the case of Argentina, the price drop of agricultural commodities and crude oil has negatively affected national economic performance. However, cattle operations are benefitting from a positive domestic and regional market environment. Likewise, the business-friendly government of President Mauricio Macri is working to redress the country’s economic troubles and ensure sustained growth.

Status and Prospects of Agribusiness in Latin America

In the case of Brazil, the national economy remains fragile as political instability prevails and will likely continue until the General election in 2018. Furthermore, the global drop in agricultural and mineral commodity prices is affecting the profitability of domestic industries; an increase in international commodity prices would relaunch the national economy. The local sugar cane and ethanol markets remain protected by subsidies and are one of the most buoyant local markets. Similarly, Brazil is likely to review the Southern Common Market (Mercosur) framework to increase flexibility in negotiating preferential trade and investment accords with the EU, NAFTA, and the Pacific Alliance.

Meanwhile, Bolivia’s economy continues to perform very satisfactory under the Presidency of Evo Morales. However, the global drop in mineral commodity prices means that sustaining high growth going forward requires the country to diversify to other economic sectors and attract foreign investment. Likewise, an increase in international commodity prices would substantially boost the national economy. The agriculture sector in the country has the ability to contribute to economic diversification and to improve local food security. Simultaneously, farmland expansion in the region of Santa Cruz de la Sierra has continued, targeting cattle and crop production even when land ownership remains a source of tension.

Chile is preparing for an election in November and December of 2017, which will likely bring back former right-wing and pro-business President Sebastian Piñera. However, the global drop in mineral commodity prices, particularly copper, means that sustaining high growth going forward will require the country to diversify into other economic sectors, strengthen value added manufacturing, and continue attracting foreign investment. Similarly, an increase in international copper prices would substantially boost Chilean exports in particular and the national economy as a whole. Chile remains an attractive market as it relates to investments in agribusiness, with products such as cattle, fruits, and even wine.

In the case of Colombia, the Peace Accords being implemented by President Juan Manuel Santos are moving forward favorably. Nevertheless, the upcoming year will be dominated by the 2018 Presidential election and could lead to harsh rhetoric. The global drop in mineral commodity prices and the subsequent depreciation of the local currency keeps adding economic pressure in the short term. However, the depreciation of the Colombian Peso may help boost exports in the manufacturing and agricultural sectors as well as present a unique opportunity for foreign investment. Furthermore, despite moderate growth expectations, the country remains one of the preferred destinations in Latin America for foreign investment. Agribusiness is a priority sector for investment in Colombia, with aims to modernize production (tropical fruits, cattle, palm & vegetable oils, etc.), scale up operations with mechanized technology, and improve ailing infrastructure. Finally, the Pacific Alliance Market and the Free Trade Agreement between Colombia and the United States support expectations for increasing investments in agriculture and food production.

(Read more about Trade and Macroeconomics in the United States)