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TRENDS AND CHALLENGESIN LATIN AMERICAN AND CARIBBEAN
AGRICULTURE, FORESTRY AND FISHERIES
2004
The designation employed and the presentation of material do not imply theexpression of any opinion whatsoever on the part of the Food and AgricultureOrganization of the United Nations concerning the legal status of any country, cityor area, or of its authorities, or concerning the delimitation of its frontiers orboundaries. In some tables, the designations "developed countries" and "developingcountries" are intented for statiscal convenience and do not necessarily reflecta judgment of the stage reached by a particular country or area in the developmentprocess.
FOOD AND AGRICULTURE ORGANIZATION
OF THE UNITED NATIONS
TRENDS AND CHALLENGESIN LATIN AMERICAN AND CARIBBEAN
AGRICULTURE, FORESTRY AND FISHERIES
2004
FAO Regional Office for Latin America and the Caribbean
PREFACE
Every two years, the FAO Regional Office for Latin America and the Caribbean (FAO/RLC) prepares
a report entitled Trends and Challenges in Latin American and Caribbean Agriculture, Forestry and
Fisheries, to support the deliberations of the FAO Regional Conference. This exercise has been done
for the last four regional conferences held in 1998, 2000, 2002 and 2004.
In preparing this edition of the report, interaction with member countries has resulted in the
fact that the current document addresses two main orientations: firstly, to give a comprehensive
account of the variables that affect agricultural development and food security, considering
technical, economic and social aspects, and including an analysis of the international setting;
and secondly, to evaluate each country in relation to others and within the regional setting,
while also examining regional trends.
These two orientations—the broader range of topics to be analysed and the more detailed
treatment needed to take account of data at the country and subregional levels—entailed work
on a larger scale and required organization and management of information from a wide variety
of sources in addition to FAOSTAT, such as UNDP, WTO, IMF, UNCTAD, ECLAC and OECD.
This volume analyses trends and emerging issues in four main areas: (i) international context;
(ii) macroeconomic framework; (iii) development of the agricultural sector; and (iv) international
trade of agricultural products. A fifth chapter discusses policy orientations, and this is followed
by a statistical appendix.
Chapter I outlines the key transformations that have taken place in the international setting,
explaining changes in medium- and long-term trends and expectations for the next few years,
and comparing development patterns in Latin America and the Caribbean with those of other
parts of the world. It also identifies obstacles for the development and international participation
of the region—in particular, the protection and support given to agriculture in industrialized
countries.
Chapter II analyses the evolution of the macroeconomic framework and social conditions in
Latin American and Caribbean countries, characterizing the economic growth of the last few
decades and the forces driving it. It explains the behaviour of the main variables influencing
the external balance, and identifies structural problems affecting the region’s economies. Lastly,
it discusses trends in a number of social indicators, particularly those relating to poverty and
food security.
Chapter III describes agricultural trends in the region, in terms of regional averages and
differences between countries. It explains the trend of sectoral output, its participation in the
global economy, and the evolution of sectoral compared to overall productivity. The chapter
then goes on to examine the behaviour of agricultural output, making individual analyses of
crop-growing, livestock production, fishing, and forestry production. It then examines production
trends and attempts to explain the changes identified. It also highlights the differences in
trends between the main product groups and changes in their geographic distribution within
the region.6
Chapter IV analyses international trade of agricultural products, discussing trends in the balance
in Latin American and Caribbean countries, and the share of each productive subsector in exports,
imports, and the trade balance. It also estimates their share in the overall merchandise trade
balance, and analyses changes in the geographic distribution of exports and imports. The chapter
makes separate analyses of crops and livestock, fishery, and forestry products.
Chapter V depicts on the trends and challenges analysed in the four preceding chapters, in order
to draw lessons and propose policy orientations. It identifies the components of the economic
and social development strategy, and the role of agricultural and rural development in the
region’s development challenges; and it explains the characteristics of the new approach to
agricultural and rural development strategy. The chapter highlights the crucial role played in
this strategy by institution building—in the broad sense of the term—and the development of
social capital. It also gives several examples of new policy instruments in different areas, such
as: the construction of a new international framework; the development of markets, and
redefinition of property rights; the broad diversity of agricultural development programmes
and support for trade through pro-market instruments; the characteristics of new crop-livestock
technology systems, and possibilities for direct support. Lastly, it analyses institutional
requirements for implementing the new policy instruments.
In preparing this report, a database had to be developed in RLC which provides detailed,
comprehensive and consistent information about the 33 countries that comprise the Latin
American and Caribbean region. This consolidated database selects variables and cross-references
them for analytical purposes; it also specifies consistent conditions for their joint use, and
prepares time series or cross-section analyses. A CD containing a statistical appendix developed
from this database is included in this volume.
This work is a collective effort, coordinated in the Regional Office by the Policy Assistance
Branch under the leadership of Luis Gómez Oliver, with the collaboration of Carolina Lennon,
María José Montero and Patricia Morales. The various drafts and updates have been enhanced
by contributions from several specialists at the Regional Office as well as from FAO headquarters
in Rome. It has also been discussed, by electronic conference, with other experts, academics,
government representatives and social organizations of the countries of the region.
We hope this volume will contribute to collective reflection on the policy orientations needed
to foster agricultural and rural development in Latin American and Caribbean countries and
promote food security among their populations. In the ongoing process of enhancing policy
analysis and debate, your comments will be greatly appreciated.
7
PR
EFA
CE
Gustavo Gordillo de Anda Mafa ChipetaDeputy Director-General of FAO, and DirectorRegional Representative for Latin Policy Assistance DivisionAmerica and the Caribbean
CONTENTS
Pages
Initials 10
Executive Summary 13
I. International setting 31
A. The new conditions in the world economy 32
B. The current economic situation and prospects for the next few years 35
C. Participation in production and trade 39
D. The development gap 42
E. Obstacles to development and trade participation 45
F. Protection and support for agriculture in developed countries 47
G. The costs of underdevelopment 52
II. Macroeconomic framework 57
A. GDP trends 58
B. Incidence of capital flows 62
C. External debt 70
D. Balance of payments 78
E. Inflation 82
F. Income distribution 83
G. Poverty 93
H. Food security 102
III. Agricultural sector development 113
A. Trend of sectoral GDP 114
B. Crop and livestock production 133
C. Crop production 138
D. Livestock production 165
E. Fishery production 189
F. Forestry production 212
IV. International trade in agricultural products 233
A. International trade in agriculture 234
B. Crop-producing subsector 245
C. Livestock sector 270
D. International trade of fishery products 289
E. International trade of forestry products 296
V. Conclusions and policy orientations 313
Bibliography 337
CD Statistical Annex CD
10
INITIALS
AIDS Acquired immunodeficiency syndrome
ANT Antigua and Barbuda
ARG Argentina
BAR Barbados
BHA Bahamas
BOL Bolivia
BRA Brazil
BZE Belize
CARICOM Caribbean Community and Common Market
CHI Chile
COL Colombia
COS Costa Rica
CUB Cuba
DMI Dominican Republic
DOM Dominica
EAP Economically Active Population
EAP (AGR) Economically Active Agricultural Population
ECLAC Economic Commission for Latin America and the Caribbean
ECU Ecuador
ELS El Salvador
EU European Union
FAO Food and Agriculture Organization of the United Nations
FAO/RLC FAO Regional Office for Latin America and the Caribbean
FAOSTAT FAO Statistical Databases
FDI Foreign Direct Investment
FISHSTAT FAO Fishing Statistical Database
GDP Gross Domestic Product
GDP (AGR) Agricultural Gross Domestic Product
GDPN Nominal Gross Domestic Product
GRN Grenada
GSSE General Services Estimate
GUA Guatemala
GUY Guyana
HAI Haiti
HIV Human immunodeficiency virus
OCDE Organización para la Cooperación y el Desarrollo Económico
OMC Organización Mundial del Comercio
ONG Organismo No Gubernamental
ONU Organización de las Naciones Unidas
PAN Panamá
PAR Paraguay
PEA (AGR) Población Económicamente Activa en la Agricultura
PEA Población Económicamente Activa
PER Perú
PIB Producto Interno Bruto
PIB (AGR) Producto Interno Bruto Agrícola
PIBN Producto Interno Bruto Nominal
PNUD Programa de Naciones Unidas para el Desarrollo
PPP Paridad de Poder de Compra
PROCAMPO Programa de Apoyos Directos al Campo
PSE Ayuda Estimada al Productor
RLCP Subdirección de Asistencia para las Políticas de FAO
SARS Neumonía Asiática
SIDA Síndrome de Inmuno Deficiencia Adquirida
SNTA Sistemas Nacionales de Tecnología Agropecuaria
SOFI El estado de la inseguridad alimentaria en el mundo
STK San Kitts y Nevis
STL Santa Lucía
STV San Vicente y las Granadinas
TCA División de Asistencia en Políticas
TIC Tecnologías de informática y comunicaciones
TNR Transferencia Neta de Recursos
TRI Trinidad y Tabago
TSE Ayuda Agrícola Total
UE Unión Europea
UNCTAD Conferencia de las Naciones Unidas sobre Comercio y Desarrollo
URU Uruguay
VEN Venezuela
WEO World Economic Outlook
11
EXECUTIVE SUMMARY
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The countries of Latin America and the Caribbean face major challenges as they strive for
food security and agricultural and rural development. In recent years, those challenges have
extended far beyond issues such as the relative scarcity of natural resources or vagaries of
climate, the difficulties facing small-scale producers, or the technical problems of primary
agricultural production.
Food insecurity in the region is not just a matter of production levels; it is also caused by
obstacles that prevent a large part of the population from gaining access to the food that is
available. These problems are originated mainly by poverty and exclusion. Both conditions affect
rural areas more than proportionally.
The basic components of any analysis of food security in the region therefore include the pace
and characteristics of economic growth, income distribution (both family and regional), the
fight against poverty, and a deliberate strategy of agricultural and rural development.
The increasing interdependence of national economic processes is reflected in business cycles
of global compass, involving major fluctuations in international capital flows and changing
conditions on international markets. Such disturbances increasingly affect the profitability of
productive activities, economic growth, and the financing conditions faced by developing
countries. Their impact on the potential for progress in Latin America and the Caribbean is
particularly significant.
Progress in agriculture, rural development, possibilities for poverty reduction and greater food
security in the region also depend on significant inter-relationships in the national development
framework .
Agricultural and rural development responds not only to variables within agriculture;
macroeconomic policy, the availability of infrastructure, access to services, the quality of
institutions and administrative efficiency, all have a decisive influence on possibilities for
progress in the rural domain.
Development of the sector depends not only on raising productivity in primary production; trading
conditions, production and consumption are also decisive factors in the profitability of agricultural
activity. The competitiveness that matters encompasses the whole production chain.
Rural development is not confined to agricultural production. In Latin America and the Caribbean
non-farm economic activities in the rural sector account for a large and growing share of
employment and generate nearly half of all income earned by the rural population. Farming and
non-farming rural activities are not mutually exclusive but positively related, since progress in
one favours development in the other.
Rural development requires a territorialy-based approach that encompasses all productive
possibilities in the various types of activities, and takes account of the synergies existing
between them, including urban-rural relations.
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Changes in the economic system
International trade currently accounts for 25% of world production; and the proportion is set
to increase further in the years to come.
Economic processes increasingly transcend national borders. World trade today no longer implies
buyers and sellers that are wholly separate; there is close transnational coordination of productive,
commercial and consumption processes, and also of their financing. In practice, competition
on international markets nowadays takes place between economic chains and systems, rather
than between factories or firms.
Competitiveness increasingly depends on partnerships based on the development and exploitation
of technological know-how. Intellectual capital is increasingly important and intangible; but
while it is also becoming more transferable, gaining access to it depends on the availability of
knowledge and human and social capital. This generates a cumulative dynamic in which
developing countries face major disadvantages.
The development gap
An increasingly homogeneous economic system does not mean lesser difference capacities and
living standards; the development gap is not narrowing but continues to widen. Per capita
income in developing countries is not converging, even slowly, on developed country levels; on
the contrary, the differences are becoming larger. In 1980, per capita income in Latin America
and the Caribbean was just over half of the developed countries average; today it is barely one
third. If current trends persist, this growing polarization will become even more accentuated
in the future.
Developing countries face enormous disadvantages in participating in the current global
economic dynamic. As well as lower productive and financing capacities, the region suffers from
major shortcomings in infrastructure, transport, communications, health, services and
institutional development.
Specific features of Latin America and the Caribbean
The early over-borrowing by Latin American countries has caused external debt conditions much
more onerous than in other regions. In the last five years, Latin America and the Caribbean, as
a whole, has spent 41% of its total export earnings on servicing external debt; in Argentina and
Brazil the figure amounted to over 70%.
Despite the economic liberalization and trade openness of the last few years, the economies of
Latin America and the Caribbean have the lowest coefficients of outward orientation: exports
represent just 21% of GDP, compared to 30% or 40% in other regions. The region also has the
largest inflow of foreign direct investment (FDI) in relation to GDP. These two features make
Latin America and the Caribbean the most vulnerable region in the world to changes in external
financing flows.
It is also the only developing region with a substantial surplus in agricultural trade. The fact
that agriculture, including agribusiness, is a strategic component of the region’s economic
development makes it more sensitive to changes in international agricultural markets, and more
affected by distortions in those markets.
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Subsidies and other forms of agricultural support provided in OECD countries are the main
cause of distortions on international markets for agricultural products. The global value of such
support exceeds US$ 320 billion. On average, farmers in OECD countries obtain 31% of their
total income from support (the figure is over 60% in Korea, Iceland, Japan, Norway and
Switzerland); and the domestic prices of agricultural products are 31% higher than prices on
the border (over 75% higher in the case of rice, sugar and milk).
Economic growth
The regional economy grew by 5.5% in 2004, the highest rate in 25 years, and international
conditions played a decisive role in this rapid progress. The world economy also expanded faster
than at any time in recent decades. International demand and commodity prices grew strongly,
driven by imports into the United States and China, thereby benefiting the region’s exporting
countries. On the other hand, several countries that have deficits in these goods, including a
number from Central America, endured severe difficulties this year.
The presence of a number of positive features in the region’s economies suggests the current
expansion could prove more durable than in previous growth cycles—in particular the healthier
macroeconomic framework prevailing in most countries, and the unprecedented current-account
surplus recorded for the second year running. From a medium and long-term standpoint, however,
the growth process in Latin America and the Caribbean over the last 25 years has been
characterized by weakness, instability, vulnerability, and a high degree of concentration.
Recurrent economic crises in Latin America and the Caribbean have generally been associated
with international upheavals: external debt in 1983, adjustment and hyperinflation in the late
1980s, the “tequila” crisis in 1994, the Asian crisis in 1997, and the stockmarket crash at the
turn of the millennium.
International financial conditions are beyond the control of the region’s countries, and the
most likely scenario for the future is that new international economic crises will continue to
occur. But the level of a country’s vulnerability and the intensity of the negative effects are
also influenced by domestic conditions and policies. In the next few years the countries of
the region will need to establish policies to improve a number of fundamentals: the current
account balance, the degree to which domestic saving finances development, the fiscal balance,
the quality of the financial system and bank supervision, the legal and juridical framework,
external debt conditions, macroeconomic stability, predictable exchange-rate policies and
clear regulations governing capital movements.
Equity
One of the most worrying features of the current economic paradigm, with negative effects on
both economic growth and equity, is the fact that a large part of the population is excluded from
development processes. While globalization eliminates borders and fosters multiple linkages
in economic growth, the region’s structural heterogeneity breaks these processes up, blocking
and distorting the use of resources and preventing numerous agents from participating in
economic circuits. Ultimately, this excludes a large part of the population from current streams
of progress.
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Latin America is the most unequal region in the world; and in recent decades, far from improving,
the region’s income distribution concentration has actually worsened. The prevailing growth
model is not leading Latin American countries towards the more equitably shaped income
distributions seen in developed countries; on the contrary, high levels of concentration in the
distribution of family income are being perpetuated and are spreading in the vast majority of
the region’s countries.
Economic heterogeneity and intergenerational transmission of poverty—since children in poor
families have less access to opportunities in terms of education, training and healthcare, and
they grow up in depressed economic environments, lacking in infrastructure and services—are
the main difficulties in overcoming the structural problems of underdevelopment and ensuring
widespread access for the population at large to minimum acceptable levels of well-being. It is
essential to achieve a development model that eliminates exclusion and generates employment
and income opportunities for the large mass of the population that lives in poverty, in order to
reverse the trend towards exclusion. This does not mean aiming at a homogeneous society,
which is totally unrealistic, but certainly much greater equality of opportunity than that which
prevails today.
Bottlenecks in human resources, and in physical and service infrastructure, cause heterogeneity
in production, economic polarization, environmental deterioration and social exclusion, with
the result that much of the population is excluded from the progress that economic growth
brings in its wake. Such constraints also hinder efficient exploitation of national resources,
prevent domestic saving from playing a larger role in the financing of development, and heighten
social tensions—thereby also generating a climate of political instability, social violence and
problems of governance, which undermine the potential for sustained economic growth.
From a medium- and long-term perspective, achieving greater equity is not negatively related
to the pace of economic growth; in fact the two processes are mutually stimulating. When
differences in access to assets, education, health, services, consumption and citizenship are
perpetuated from one generation to another, the economic growth process produces a polarizing
dynamic that diverges from equal opportunities and continuously widens economic and social
differences, thereby undermining the growth base.
Lasting economic progress requires sustainable use of resources and efficient participation by
the population through democratic institutional arrangements. Moreover, political democracy
needs to be sustained by social democracy; and this, in turn, is only possible in a solidarity-
based society, where equal opportunities contribute to social mobility and coexistence amidst
inevitable inequalities.
Far from being mutually exclusive, economic growth and equity reinforce each other. Resource
allocation alternatives that are exclusive in the short run are less important than complementarity
in the long term.
Poverty
Poverty is the main cause of food insecurity in Latin America and the Caribbean.
The absolute number of people living in poverty in the region has been growing continuously;
from a level of 110 million in 1960, the figure had risen to 136 million in 1980 and currently
stands at 226 million. The proportion of the total population who are poor has remained broadly
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unchanged, however, with just under half (44%) of the Latin American population currently
living below the poverty line.
In absolute terms, poverty is mostly an urban phenomenon, with urban areas accounting for
nearly two thirds of the total, and over half in the case of indigence. In relative terms, however,
poverty and indigence are both much more prevalent in the countryside: 62% of the rural population
is poor, and 38% indigent—proportions that have remained virtually static since 1990. On the
contrary the corresponding figures in the cities are 38% and 14%.
Broadly speaking, the rural area functions as a mechanism that absorbs unemployment and
underemployment, by providing modes of subsistence to population groups that are excluded
from the main dynamics of the current model of development. It thus serves as a stabilization
factor combining productive activities within the family unit and community life, allowing
adequate survival strategies based on very low monetary incomes.
The fragmentation of urban-rural development has been accompanied by gender segmentation.
Rural women suffer segregation in labour markets, in terms of systematically lower payment, and
they also face discrimination in access to credit and landownership.
Poverty is particularly severe among indigenous peoples; and the fact that such population
groups are also subject to exclusion to an even greater degree has rendered several traditional
communities economically unviable. As the ways of life and modes of organization of indigenous
communities are closely linked to the rural domain, poverty relief that continues to rely mainly
on migration to the cities is likely to entail the loss of cultural and social heritage among such
communities, and the vast diversity of ways of life in the Latin American and Caribbean
countryside will be diminished.
Deteriorating employment conditions are one of the major causes of poverty, which always
spreads in periods of crisis or recession. As poverty increases in the absence of viable strategies
to counteract the negative effects of economic downswings. Sustained economic growth is
necessary, though insufficient for reducing poverty.
A more equal income distribution is also essential for poverty reduction, and there are some population
groups that form nuclei of core poverty resulting from their exclusion from economic processes;
addressing such situations requires specially targeted measures.
Crop production
Viewed from a long-term perspective, the region’s agriculture has been growing slowly, mainly
because of low levels of sectoral investment stemming from lack of profitability. Since 1994,
however, growth has been stronger thanks to renewed expansion of harvested areas, which
probably reflects a revival of investment in response to higher returns.
Agricultural output growth is heavily concentrated in a few product lines and a small number
of countries. This basically reflects the explosive growth of soybean production in Argentina
and Brazil, based on a highly efficient economic model involving technological progress and
modern management methods responding to a very dynamic demand and soaring international
prices. Other crops are progressing much more slowly.
There are many reasons for the generally low profitability of regional agriculture, many of
which fall outside the bounds of primary production. These include failings throughout
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productive chains, falling prices and the high transaction costs faced by the vast majority of
farmers. Prices remain relatively low on domestic markets because of sluggish growth and
the concentration of income, which do nothing to stimulate higher consumption among the
population at large. Further more, major distortions on international markets also help to
keep prices low.
Livestock production
Within the prevailing patterns of market integration and ever greater competition, livestock production
displays increasing differentiation and specialization, and this will probably tend to accentuate
in the coming years. In some product sectors, particularly poultry, the development of new
technologies has fuelled strong growth; other products, in contrast, have stagnated or declined.
The development and dissemination of more efficient technologies needs to embrace not only
production but also the processing and marketing stages. Health, quality control and safety
issues are also very important here.
International cooperation will be essential for progress in terms of animal health and better-
functioning markets.
Stronger economic growth is likely to generate greater demand along with more strict quality
requirements, which will pose major challenges both for producers and for systemic quality.
Fishery production
The fish catch has increased beyond the limits of resource sustainability, particularly in the
1980s; and weather patterns have also had a major impact on the development of this activity.
The future of fishery production is thus facing major challenges. It will be essential to develop
institutional forms (agents, mechanisms and market stimuli) that promote efficient and
sustainable activity.
The structure of fishery production in the region has changed significantly as a result of the
production of diadromous and freshwater fish in Chile. Over the last two decades, this country
has introduced and developed a productive process that has made it the world’s leading salmon
producer. Processes of this type, within a framework of environmental sustainability and respect
for biological diversity, need to be replicated over the next few years to respond efficiently to
current challenges.
Despite recent progress, aquaculture in Latin America and the Caribbean accounts for just 6.4%
of the world total and is a very small part of the region’s fishery production. Better technological
models need to be developed for this sector over the next few years.
Forestry production
Although Latin America and the Caribbean contain one quarter of all the world’s forests (956
million hectares), the region only has 12 million hectares of plantation forest—just 6% of the
world total.
The structure of forestry production in the region reveals its low level of development. Fuel
wood and logs continue to be the most heavily exploited products, whereas developed countries
tend to specialize in products such as pulp and fibres, along with paper and paperboard.
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The development of forestry resources and their sustainable exploitation require progress to
be made in the institutional and technological framework over the next few years, to promote
investment and sustainable patterns of exploitation.
Trade in forestry, crop, livestock and fishery products
Latin America and the Caribbean is the only developing region with a surplus in its agricultural
trade. This is essentially due to crop growing and fishery activities. Livestock and forestry
products generate very small trade balance (either positive or negative): a surplus in the bovine
meat and poultry segments is offset by a deficit in dairy products; while the deficit in paper
and paperboard far outweighs the surplus in other forestry products.
Forestry and fishing are the subsectors where trade is growing fastest, albeit on the basis of
absolute quantities that are smaller than crop and livestock trade. Crop exports are greatly
influenced by the behaviour of prices in a market that has great capacity to respond to price
stimuli. In the livestock sector, improvements in health conditions are likely to play a key role
in the future.
The fact that Brazil and Argentina are the region’s main exporters, with rapidly growing shares,
underscores the importance of developing specific niches for other countries of the region.
Brazil is the leading exporter of livestock products (48%); and together with the Southern Cone
countries, it accounts for over 80% of total regional exports. The leading importer is Mexico
(58% of total regional imports).
As much as 80% of forestry exports come from Brazil and Chile, while the region’s other countries
mostly run deficits.
Components of development policy
Simultaneous pursuit of the recovery of sustained economic growth and improvements in equity
require a complex strategy that includes the following: an economic policy designed to promote
inclusive development; a full range of social policies to reach universal coverage of basic services;
explicit incorporation of environmental sustainability criteria; human capital support programmes;
institutional development and strengthening of social capital; reduction of peoples exclusion;
and targeted support to address the most urgent and pressing needs.
The first requirement is to restore rapid and sustained economic growth, because without this,
there is no viable way to meet the region’s major development challenges and overcome the
poverty and exclusion that afflict much of the population.
Although rapid and sustained economic growth is necessary to reduce poverty and exclusion,
it is not sufficient. The current model is highly polarizing and causes income to become
increasingly concentrated in the economically most privileged segment of the population. In
such conditions, it is hard for corrective mechanisms, such as targeted public expenditure, to
offset the polarizing effects of income concentration from outside the economic process.
Government mechanisms to promote equity are futile if the production and distribution process
constantly intensifies concentration, and societies reproduce and strengthen polarization. One
priority component in the development strategy is therefore an economic policy design that
takes explicit account of variables affecting investment and employment.
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In addition to an economic policy which promotes inclusion, complementary social policies are
needed to reduce exclusion. Investments to improve education, health, training and the conditions
of social participation among population groups living in poverty (considering the family unit
as a whole in its community surroundings) are unquestionable priorities in such policies, along
with the development of programmes to expand coverage of social services. People living in
conditions of poverty also need assistance to broaden their access to productive resources.
Overcoming the challenges currently facing the region necessarily requires a long-term
perspective that encompasses conservation and expansion of the natural resource base and
preservation of the environment, within a sustainable development process. Development policy
should contain explicit guidelines on environmental sustainability.
Efficiency in policy design and implementation entails reorganizing productive and distributive
processes, to adapt them to the new development conditions. New types of stakeholder need to
be developed—both public and private—along with new forms of relationship and a better
regulatory framework. This institutional development means more efficient modalities for
gaining access to and using natural resources, markets, financing, and both formal and informal
standards.
Direct, targeted, temporary and transparent support can be provided to respond to current
urgencies, resolve the most serious deficiencies, and avoid cumulative deterioration among
poor families.
As development programmes (particularly consumption subsidies and programmes to alleviate
poverty through direct support) are inevitably temporary, programmes to develop productive
capacities need to be implemented to offer marginalized population groups an exit from social
support programmes.
The marginality suffered by low-income population groups is often more than economic; as well
as exclusion from goods and labour markets, such groups also tend to be excluded from social
programmes and suffer from a variety of other problems that prevent them from participating
normally in social life. Accordingly, citizenship rescue programmes are needed to help this
population group participate more fully in social policy decision making.
The agricultural and rural development policy approach
Although the task of rural development reaches far beyond the sphere of agricultural production,
agricultural policy nonetheless plays a fundamental role in any strategy. While rural development
implies a diversification of employment sources and greater vertical integration among economic
activities in rural areas, there is a direct relation—a positive dynamic—between agricultural and
non-farm rural incomes. Although the need persists to reallocate very low-productivity human
resources currently located in the rural area, the simplistic idea of expecting industry to generate
job opportunities and incomes has been superseded by an approach which, rather than seeing the
different sectors as antagonistic, stresses their links. The competitiveness that matters encompasses
the whole production-processing-trade-consumption chain. Such global systemic competitiveness
largely depends on the macroeconomic setting and degree of intersectoral coordination; it is not
a question of seeking relative advantages for isolated products. What is essential is to construct
and develop the competitiveness of the system as a whole, including various forms of intersectoral
integration and territorial coordination.
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The competitive capacity of agriculture, and the profitability of sectoral activities, do not depend
on indices of rural productivity alone. Agronomic progress is always desirable, and it is essential
to exploit the wide-ranging potential for returns if available technologies were to become more
widespread. But to achieve rapid and sustainable agricultural growth, it is essential to address
elements that fall outside the remit of agricultural technology and farmers’ capacities, such as
those caused by changes in the international setting and in the macroeconomic framework, or
shortcomings in infrastructure and services, among others.
Recently, rural development has once again been attracting the attention of national authorities
and international organizations, but for reasons other than the traditional arguments in defence
of agriculture that adduce the importance of certain specific products, or paternalistic arguments
relating to small-scale producers. The current emphasis on productivity and competitiveness,
reduction of the State’s field of action and the new international setting, have shifted the axes
of potential agricultural policy towards the creation of conditions to absorb technical and
productive capital, and the promotion of an urban-rural development process that aims to reduce
poverty by creating jobs and generating local incomes.
The new argument in favour of agricultural and rural development differs from earlier demands
on behalf of the rural sector and farming families—which at times were little more than rhetoric—
in two key respects: the scope of the new approach, and the role assigned to it within economic
and social development.
The new approach has several key dimensions:
(i) It supersedes the narrow sectoral view that was confined to primary agricultural production
alone, highlighting instead the importance of intersectoral coordination and the concept of the
agribusiness sector, emphasizing productive chains and product systems.
(ii) Rural development is no longer seen as depending on agricultural progress alone and; non-
farm economic activities have a key role to play. Rural development policy embraces all dimensions
of people’s lives and their subsistence strategy in a multiple livelihood approach.
(iii) Various forms of linkage between the rural and urban economies are highlighted.
(iv) The three elements mentioned above mean that policy agents and instruments will also be
different.
The way the role of agriculture is conceived has changed radically; instead of a narrow sectoral
view, inter-sectoral coordination and multifunctionality are now given the priority. The
performance of agriculture has effects that reach beyond sensitive product markets; in the
reality of the production chains prevailing in most of the region’s countries, agriculture is an
essential element in building systemic competitiveness and enhancing trade and agribusiness
integration. It also affects natural resources as the environmental basis of development, beyond
their directly productive potential; and it plays a major role in overcoming regional imbalances
and in the territorial organization of development. Agriculture is also fundamental in terms of
opportunities for progress among broad swathes of the population living in rural areas, and in
exploiting programmes to alleviate rural poverty.
The new approach highlights the influence of agriculture on important issues such as:
(i) Food supply and food security in addition to the key dimension of food availability, lower prices
benefit poor population groups in particular, since most of their spending goes on such goods.
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(ii) Real incomes, through food prices; and overall systemic competitiveness, through better
exploitation of the natural resource base, and its effect on wage and raw materials costs.
(iii) Job creation and income generation among population groups that tend to be excluded from
modern commercial circuits.
(iv) Poverty reduction, achievement of greater equity and progress towards more equal
opportunities.
(v) Incorporation of extensive zones that are currently excluded from the economic growth
process; overcoming regional imbalances and the territorial management of development.
(vi) Improvements in environmental sustainability and sustainable exploitation of natural
resources. Erosion, desertification, deforestation and loss of genetic wealth are closely linked
to poverty and exclusion in rural areas, and to the technological orientations of the corresponding
productive processes.
(vii) Recovery of cultural wealth, and its relation to the preservation of natural environments.
Institutional requirements for policy implementation
To respond to the new development orientations, agricultural policy needs to be highly
participatory and neutral with respect to relative prices. It should not be reduced merely to
promoting primary production, but should respond to market demand and the linkages and
ties with agribusiness and agricultural trade processes. Particular emphasis needs to be placed
on investment in human capital, reducing transaction costs for small-scale producers and
encouraging their participation in the rural (or urban-rural) development strategy, and on
addressing important differential needs. The complementary aspects of development also need
to be considered from the standpoint of the national-global dynamic. In particular, the new
approach highlights the building of new rural institutions (in the broad sense of the term), as
part of the process of strengthening social capital to underpin a new agricultural and rural
growth cycle.
New policy instruments represent significant institutional development in themselves. The
concept of institutional development is not limited to organizational changes in the public
sector, or to a mere shifting of responsibilities towards the private sector; it also encompasses
the rules and mechanisms of interaction that determine how social stakeholders interact.
The establishment of policies—and the laws and mechanisms that give them validity and
make them operational—thus represent a clear example of institution development.
Allocation of productive resources through market mechanisms, the new role of the State in
development and progress in administrative decentralization all require agricultural and rural
development policy to be highly participatory. The tasks of policy design, implementation and
evaluation need to be addressed jointly by public-sector bodies and private stakeholders.
The new instruments tend to involve highly participatory programmes, executed with a
decentralized perspective, consistent with the constraints of the macroeconomic framework
and the requirements of international participation, and with other efforts to achieve greater
inter-sectoral integration; they also provide a complementary basis of support for rural poverty
reduction programmes.
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Nonetheless, these new policy instruments also require specific institutional modalities and
developments, differing radically from those of traditional agricultural policy, which are very
important for achieving policy objectives. Just as important as obtaining funding for the new
instruments is the need to design mechanisms that attract widespread support and participation
from the various stakeholders involved, and which can reach the target population, while
respecting the established regulations and operating with low administrative costs.
Policy areas and instruments
The thesis of the State subsidiarity recognizes that there are important areas where State action
is irreplaceable; but it also argues that the State should only intervene in cases where the market
fails—public goods, externalities, natural monopolies, asymmetric information, economies of
scale, and so forth. In the last few years, this negative definition of the areas of State intervention—
by its exclusion from situations that the market can resolve on its own—has been enhanced by
a positive list of State activities that can help the market become more efficient. This has led
to the realization that areas of action exist where a proactive policy that is compatible and
consistent with market mechanisms—and not contrary to them—can achieve positive results.
The current approach, which has superseded the false State vs. market dichotomy, recognizes
the usefulness of the State in developing markets and making them more efficient. This is a
question of promoting development among the different agents and enriching the modes and
mechanisms in which they interrelate, through better rules and organizational forms.
Where the participation of economic agents is highly unequal, such as in the rural sector,
markets lose their competitiveness and their efficiency and capacity to resolve productive
problems; and they become mechanisms that increase polarization, requiring complementary
interventions to keep their outcomes within acceptable levels of equity. Recognition of the huge
inequality of opportunities endured by the rural population justifies a set of differential policies
to correct this situation.
An important area of agricultural and rural development policy for Latin American and Caribbean
countries concerns international agreements and multilateral negotiations to achieve more
favourable trading rules. There is a burgeoning agenda of priority agriculture and food issues that
transcend national boundaries, such as trade negotiations, agreements on investment, animal
health, plant protection, food safety and quality, and environmental sustainability. Systems of
rules and regulations need to be modified in a wide variety of areas, to bring them into line with
international standards and create coordination mechanisms at the corresponding levels. Political
and technical improvements for the elimination or meaningful reduction of subsidies and
commercial protection mechanisms in developing countries are also of prime importance.
Special efforts are also needed to develop analytical instruments for ex-ante and ex-post
estimation of the effects of economic and trade integration agreements. Such instruments would
make it possible to design programmes to exploit new opportunities, by lifting the various
barriers that restrict export potential. It would also make it possible to formulate policies and
programmes to minimize the economic and social costs of productive restructuring stemming
from trade openness.
At the national level, an initial sphere of action involves the development of markets for the
main factors of production: land, natural resources, labour, capital and technology—including
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steps to establish a clear framework of property rights over land, water, biodiversity, forests,
technological patents, and so forth. Conditions also need to be established to foster the
development of rural financial markets, and to regulate the rural labour market, since both
display special characteristics. The efficiency of these markets largely depends on institutional
development.
Recognition of the role of microeconomic policies assumes that the domain of productive
activities is the market economy—not defined by the theoretical paradigm of pure and perfect
competition, but understood as an objective reality, and as the most efficient mechanism for
allocating productive resources.
It also acknowledges that the role of the State is not only to fulfil non-economic functions and
take responsibility for the macroeconomic framework. The spontaneous effects of changes in
relative prices on agricultural production can be severely hampered by market failures and by the
unfavourable “climate” that persists in many of the region’s economies. The opportunity provided
by higher prices in several productive sectors is occurring at a time of serious economic difficulties
for producers, severe financing constraints and significant distortions in market operations. To
maximize the positive effects of trade liberalization and economic integration, it is essential to
develop an agricultural policy which assures that better prices are actually perceived by farmers,
and that these have capacity for productive response.
Agricultural policy—with the collaboration of all agents involved—thus needs to overcome the
bottlenecks that persist in credit, marketing, infrastructure, services, phytosanitary and
zoosanitary requirements, quality standards, management systems, market information, technical
assistance and input supply. Only within such a policy producers can profit from better relative
prices and harness the stimulus thus provided to raise productivity and increase production.
The reduction of public investment channelled into agriculture following crises and adjustment
processes, seriously impaired sectoral development. The impact was felt particularly in the rural
domain because public investment—in communications, electrification, basic services, and so
forth—also acted as a major stimulus to private investment. The simultaneous reduction in the
availability of public services compounded by financing difficulties discouraged investments
still further. In some areas, such as irrigation, the systems for operating and managing existing
infrastructure were also drastically altered. In Latin American and Caribbean countries the
State has traditionally played a key role in the development of productive infrastructure, for
example in irrigation, and in transport, communications and marketing infrastructure. Such
development does not necessarily have to be financed exclusively with public funds; but State
action is crucial in terms of stimulus, organization and financial support for these activities.
To promote the capitalization of agriculture, programmes could be designed for investments
that are co-financed between the State and farmers, in order to raise investment levels in targeted
areas. Generally speaking, this is a matter of establishing the possibility of subsidies or bonuses
within guidelines that are consistent with sector development priorities. A wide range of potential
new policy instruments exists in this area, consistent with the macroeconomic framework and
with the exigencies of international participation.
Even though the international setting and macroeconomic rules impose constraints on market
intervention, there is still considerable room for programmes that stimulate production, using
market-friendly, transparent and participatory mechanisms that enhance resource use and
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favour productivity growth. There are plenty of examples in the region of public funds being
used to stimulate private investment in a whole range of areas, including investments in
irrigation, reforestation programs, mechanization, genetic enhancement, promotion of priority
crops or payment for environmental services.
One of the most serious unresolved problems in the region’s agricultural development policy
concerns financing. The stabilization and adjustment policies of the 1990s undermined the
traditional mechanisms of agricultural credit operated by official development banks, which
were based on rediscount lines at negative interest rates, large nonperforming portfolios, and
frequent debt forgiveness. These mechanisms entailed heavy fiscal costs and had major negative
effects on efficiency, equity and transparency. A large percentage of rural producers were reliant
on informal sources of finance.
Many rural producers still continue to obtain financing through a variety of informal sources;
credit from suppliers has been growing rapidly, along with financing provided by agribusiness
and crop and livestock product dealers, remittances sent home by migrant workers, and other
sources. In several countries microfinancing systems have been developed, with operations
supported by NGOs.
Difficulties in developing efficient credit mechanisms are targeting the search on flexible
solutions that combine formalization of existing financing sources with a new regulatory
framework that supports efficiency and transparency, and incentives for microcredit and
complementary actions by development banks. More than an agricultural credit mechanism,
the aim is to develop rural financial systems that encompass credit, insurance and saving. The
inclusion of mechanisms to capture savings could open up better alternatives for channelling
remittances into productive investment, and would also allow for broader financial coverage
and better knowledge of customers. This, in turn, could reduce transaction costs and information
asymmetries, thereby increasing synergy in the different activities of the system. Progress in
the construction of such systems basically depends on institutional development that promotes
participatory mechanisms subject to clear regulations, with government support to foster the
necessary trust.
Progress in terms of the recognition and stability of property rights over land, subject to principles
of efficiency and equity in land tenure, are also important mechanisms for expanding access
to credit and developing rural financial markets.
Another major issue in agricultural policies concerns the basic design of crop and livestock
technology transfer and research systems, which require considerable institutional development.
The objectives here are as follows: open systems, where universities participate along with other
public- or private-sector bodies, either national or international, involved in agricultural research
and technology transfer; competitive systems, funded by the State and other financing agencies
(multilateral banks, regional research funds, international cooperation) on the basis of results
and achievement; dynamic systems, with capacity to respond to the challenges of domestic and
external competition; environmentally sustainable systems, i.e. with technological proposals
that help to stop the deterioration of natural resources; and decentralized systems that ensure
participation from producers and other private stakeholders and provide opportunities for them
to contribute to the financing and orientation of activities.
Moreover, to enable the rural poor population to access such services on a more widespread
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basis, specific modalities of rural technical assistance will be needed that differ significantly
from traditional agricultural extension activities. In general this population group lacks a
profitable and competitive agricultural project, and does not have the means to adopt pre-existing
technology packages. Moreover, peasant farming economies have very diverse forms of interaction
with the market, combining commercial production with self-consumption activities, together
with income generated outside the family farm. Although agricultural activities are a major
pillar of the system, their coexistence with numerous non-farm activities means that it is the
overall set of activities that gives the rationale to the survival strategy. Instead of trying to make
farmers aware of efficient technology that is already validated and available in the technology-
generation system, in the case of the low-income rural populations it is a matter of providing
technical assistance to enhance productivity in the various income-generating activities that
farming families and communities already engage in.
The development of rural extension modalities that are accessible to poor rural populations
requires support from the demand side of technical assistance; i.e. help for communities to
translate their knowledge of problems and assistance needs into specific technical assistance
demands. It also entails helping them to develop the means to finance such demands. On the
supply side, it is essential to strengthen capacities, in order to overcome the inertia that tends
to direct support towards agricultural technologies and neglect other possibilities. Technical
assistance capacity needs to match the diversity that exists in demand. Moreover, technical
support for agricultural production should not be restricted to primary production activities,
but should also emphasize marketing, value-added and management, among other aspects.
Consideration should also be given to demands for technical support in non-farm activities
(including linkages with activities outside the community that play a part in the population’s
survival strategy through remittances or services).
A priority requirement in operating technical assistance in this modality is community control,
which basically means that the beneficiaries themselves decide about the payment of the service.
The resources available to farming families often need to be complemented with subsidy
mechanisms (which should be partial, temporary and transparent). The community should have
decision-making power over how resources as a whole, including subsidies, are used.
Lastly, the emphasis on policy neutrality favours the use of direct transfers. The underlying justification
for direct support to agricultural producers is its capacity to promote income growth, sometimes on
a cumulative basis, while recognizing that the country-city polarization remains an expression of
unequal opportunities and a fundamental mechanism for intergenerational transmission of poverty.
Perhaps the best example in the region is the PROCAMPO programme (Programa de Apoyo Directos
al Campo) , in Mexico, which has channelled direct support amounting to some US$ 1 billion to around
3 million producers per year. There are also several important direct transfer programmes in Brazil.
Direct support has the advantage of raising living standards according to the exclusive criteria
of the beneficiaries themselves. Results achieved in terms of improving the family’s human
capital, capitalizing the family farm, or making some immediate productive use of the funds
received, stem from autonomous decisions.
These transfers do not distort trade; the amount of the support is not tied to production or to changes
in market prices, and they are fully funded from fiscal resources, without any transfer from consumers.
Accordingly, they comply fully with international commitments.
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The subsidies are targeted and transparent, and the fact that they are established with a known
time-limit allows decision making to take this into account.
The targeting of support requires a beneficiary register to be created, which raises the problem
of discrimination between different population groups and runs the risk of political cronyism.
The new policy instruments described above entail new requirements for institutional development.
The establishment of decentralized and participatory policy instruments, operating in support
of the market, clearly represents a major step forward from previous policies that tended to be
vertical, narrow, paternalistic, bureaucratic and inefficient. Although these new instruments no
longer spawn bureaucratic growth, they naturally require agent relationships that allow for
effective deconcentration of decision-making and genuine participation. Elimination of the
bureaucratic entity that embodied traditional policy thus forces the new policies to address the
social dimension and rebuild rural institutions.
In traditional agricultural policy a crucial role in policy implementation was usually played by
a government agency. These were specialized by field of action, type of support, or even branch
of production; and often exclusively oriented towards productive development. Their mode of
operation was essentially vertical—from the government body down to the beneficiaries. In such
circumstances, the internal regulations of the entity in question, and its administrative
procedures, resulted in policy decisions being made through a specialized technical team.
Efficiency in implementation, and consistency with other policies, was also the responsibility
of the government agency—a task that was made easier by its relatively narrow sectoral viewpoint.
In the new agricultural policy orientations, with instruments that are intended to enhance the
functioning of the market, policy goals are firmly anchored in economic relations themselves.
This requires policy to be designed on analytically very sound foundations, and shared with the
various stakeholders involved in policy implementation: central government, decentralized
government bodies, producer organizations, NGOs, etc. This setting, and the rationale of the policy
itself, requires a broader view of objectives that takes into account the inter-sectoral linkages
and consistency within the economic rationale of the various stakeholders. The need for governance
capacity on the part of the State is therefore much greater.
The fact that participatory programmes naturally tend to be highly decentralized requires
communication and dissemination systems, support for beneficiary organizations, administrative
rules and procedures governing interaction between the various categories of stakeholder and modes
of coordination that ensure policy consistency in the national domain.
By replacing policies that were based on paternalism and an overblown bureaucracy, the new
policy orientations allow the democratization of decision making and far more efficient resource
use. Nonetheless, elimination of the simple vertical relation between central government
institutions and passive beneficiaries, and its replacement by decentralized participatory
policies, no longer allows solutions that are merely administrative, but places heavy demands
on institutional development in the rural domain.
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I. INTERNATIONAL SETTING
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A. THE NEW CONDITIONS IN THE WORLD ECONOMY
The major global changes that occurred at the end of the last century have significantly increased
the influence of international conditions on the economic and social development of individual
nations. During these first few years of the new millennium, the countries of Latin America and
the Caribbean are striving to construct a style of development according with the new dynamic
conditions of the world economy, to take advantage of new opportunities and mitigate negative
impacts.
The tremendous progress achieved in information technology, new modes and possibilities in
telecommunications, technical developments in transport, greater control over natural resources,
achieved through biotechnology, genetic engineering and other significant technical advances that
have helped to pave the way for a spectacular reduction in the cost of international exchange, and
have encouraged greater standardization in products and processes.
This extraordinary progress has also spawned far-reaching institutional reforms to keep up the
pace with technical changes. A new institutional framework has been developed for world trade and
international economic relations, aimed at more effectively exploiting today’s technological
possibilities and facilitating the international movement of information, ideas, capital, goods,
services and people. Every year during the last decade, many countries amended their standards or
legislation in order to attract foreign direct investment (FDI). In 2001 alone, 71 countries introduced
208 legal amendments on foreign investment, of which 194 were intended to promote or facilitate
it. In addition, no less than 2,099 bilateral treaties on investments had been signed by 20011.
A process of renewal is currently unfolding among economic agents and their mechanisms of
relationship. Transboundary mergers between large firms have proliferated, especially in the
financial and telecom sectors, and these represent the apex of a global system that exerts
powerful feedback on the globalization of production and trade in all productive sectors. The
international socio-political framework is also tending toward greater standardization, under
a single pole of political and military hegemony and growing interdependence among the main
economic powers.
Productive processes increasingly ignore the constraints of national borders, as economic
globalization becomes ever deeper. The proliferation of international financial and technical links
strengthens the transnationalization of production-processing-consumption chains; and intra-
firm trade is particularly dynamic. International capital flows have fuelled exceptional growth in
physical investment and financial exchange; and transnational corporations (TNCs) are rapidly
expanding their share of world production and trade, both directly and through outsourcing.
According to estimates quoted recently by UNCTAD2, at the present time there are 65,000
transnational firms operating across the world, with some 850,000 foreign branches employing
54 million workers. The expansion of the TNC economy has been explosive; over the last two
1UNCTAD, World Investment Report 2002, “Transnational Corporations and Export Competitiveness” p. 23.http://www.unctad.org/sp/docs/wir2002overview_sp.pdf
2 UNCTAD, World Investment Report 2002 “Transnational Corporations and Export Competitiveness”
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decades (1982-2001) sales by foreign subsidiaries grew from US$ 2,541 billion to US$ 18,517
billion, and estimated output expanded from US$ 594 billion to US$ 3,495 billion, to account
for roughly one tenth of world GDP. In 2001, TNC exports reached a level of US$ 2,600 billion,
representing one third of the world total. If the activities of transnational enterprises that are
not linked by ownership but operate through licensing or subcontracting agreements are
included, then total TNC participation in the world economy is even greater (see table 1).
Transnational enterprises themselves are highly concentrated economic systems. More than
half of all sales in 2000, and over 50% of the workers employed during that year, were concentrated
in the 100 largest non-financial TNCs alone.
The cumulative world stock of FDI has multiplied tenfold since 1980, and currently amounts to
US$ 8,245 billion. Annual FDI flows, which at the beginning of the 1980s totalled US$ 55 billion,
had grown to over US$ 200 billion by 1990 and reached US$ 1,387 billion in 2000. Total FDI in
that year alone doubled the cumulative total up to 1980 (US$ 692 billion). In the last few years,
between 2001 and 2003, the stock market crisis and world economic recession cut the volume of
flows by more than half. Although recovery is possible in the next few years, FDI flows are unlikely
to regain the exceptional levels seen in 1999 and 2000 (see table 2).
THE ECONOMICS OF TRANSNATIONAL ENTERPRISESTable 1
Indicators of subsidiaries abroad 1982 1990 2001
(Billions of dollars)
Sales of subsidiaries abroad 2,541 5,479 18,517
Gross product of subsidiaries abroad 594 1,423 3,495
Total assets of subsidiaries abroad 1,959 5,759 24,952
Exports of subsidiaries abroad 670 1,169 2,600
World GDP (at current prices) 10,805 21,672 31,900
World exports 2,081 4,375 7,430
SOURCE: FAO/RLC based on UNCTAD 2004.
FDI FLOWS AND STOCK (Millions of dollars)Table 2
Region 1970 1980 1982 1990 1998 1999 2000 2001 2002 2003
World FDI inflows 13,032 54,986 59,304 208,646 690,905 1,086.750 1,387.953 817,574 678,751 559,576
FDI inward stock - 692,714 796,070 1,950.303 4,278.736 5,113.857 6,089.884 6,541.037 7,371.554 8,2450.74
Developed countries FDI inflows 9,477 46,530 32,031 171,109 472,545 828,352 1,107.987 571,483 489,907 366,573
FDI inward stock - 390,740 444,512 1,399.509 2,812.484 3,260.017 4,011.686 4,299.494 5,049.786 5,701.633
Developing regions FDI inflows 3,555 8,421 27,259 36,897 1,940.55 231,880 252,459 219,721 157,612 172,033
FDI inward stock - 301,974 351,558 547,965 1,371.887 1,745.553 1,939.926 2,071.979 2,093.569 2,280.171
Latin American and FDI inflows 1,681 7,494 8,295 9,615 82,491 107,406 97,537 88,139 51,358 49,722
Caribbean FDI inward stock - 50,412 64,239 116,866 374,626 441,706 512,455 608,694 581,939 647,678
Central and Eastern FDI inflows 0 35 14 640 24,305 26,518 27,508 26,371 31,232 20,970
Europe FDI inward stock - 0 0 2,828 94,365 108,287 138,271 169,564 228,199 263,270
SOURCE: UNCTAD 2004.
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Although the growth of international investment flows implies a rapid expansion of the
transnationalized economy, the true magnitude and scope of TNC economic systems are not
just a matter of increased investment. The rapid growth of capital flows has been accompanied
by an extraordinary development of supplier networks and a variety of non-equity linkages,
such as productive outsourcing or subcontracting, which involve large numbers of agents in a
wide variety of activities, including low-technology production, all incorporated into
transnationalized systems3.
Economic globalization, together with the establishment of large economic groupings worldwide,
subregional integration processes, rapid capital flows and the pace of technological development,
have all combined to alter deeply the structure and functioning of the international trading
system. They have also significantly increased their influence and effect on economic and social
development. The world trading system is now much more than an exchange of goods between
utterly different buyers and sellers. There is growing coordination between production and
processing activities and international trade, as well closer ties between financial and product
markets. The cycles of financial capital and productive processes unfold across national borders
and much of the international division of labour occurs within the transnational enterprise.
Competition on world markets nowadays takes place between whole production systems, rather
than between individual factories or firms. What is important is the competitiveness of the
system. Management strategy entails much more than the administration of production or
marketing processes in the conventional sense, but embraces a series of inter-enterprise
partnerships and relations between suppliers, producers and sellers that remain formally
independent but are connected to the system through franchises, licences, common technical
standards, subcontracting, marketing contracts, and business relations based on mutual
knowledge and trust.
These are the systems that generate the world value chain, which encompasses technological
development through to final distribution, with intermediate stages and relations that transcend
national borders. In many of these systems, TNCs tend to concentrate on the least tangible and
most knowledge-intensive functions, such as product and brand definition, innovation, research
and development activities, or marketing; while the productive process itself is contracted out
to numerous manufacturers. Moreover, partnerships to develop innovations are increasingly
being forged with universities and research laboratories, and even with competitors. Ownership
relations are thus enriched by cooperation networks and coordination or control structures
within the logic of the transnational system.
Productive capital itself is becoming less tangible, since it is increasingly founded on technological
knowledge. Unlike industrial technology, where capital is embodied in a machine, technology
nowadays tends to be easily transferable. Nonetheless, access to capital, and its ownership and
control, essentially require accumulated knowledge and intellectual and human capital. While
still important, previous comparative advantages based on cheap labour or abundant availability
of natural resources are giving way to the development of knowledge and intellectual capacities.
This poses a huge challenge for developing countries, which are forced to expand their human
capital rapidly to avoid becoming laggards in the onward march of global technological progress.
Human capital development and an emphasis on education, basic labour skills and technical
training, are likely to be key pillars of the development strategy over the next few years.3 UNCTAD, World Investment Report 2002 “Transnational Corporations and Export Competitiveness”.
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B. THE CURRENT ECONOMIC SITUATION AND PROSPECTS FOR THENEXT FEW YEARS
The evolution towards a globalized economy has been anything but a linear process. Within the
investment and business cycles that characterize contemporary economic growth, both productive
progress and global integration have fluctuated sharply. Successive crises in major economic
hubs, compounded by political or military conflicts and insecurity in stemming from situations
of violence, generate uncertainty and major turbulence in the evolution of the world’s economies.
The fact that capital flows have tended to behave procyclically has aggravated local problems,
making crises deeper than they otherwise would be and spreading their effects.
One manifestation of this cumulative logic is the fact that the factors driving growth in the
contemporary economy are themselves closely implicated in recent collapses. The key factors
explaining the slowdown in world output and trade between 2001 and 2003 include the
stockmarket collapse that followed the bursting of the financial bubble in the information and
communications technology (ICT) sector; erosion of confidence and credibility caused by the
accounting frauds detected in several large corporations; a retrenchment of investment by
many firms in developed countries—especially in the ICT sector, which had powered the expansion
of trade in manufactured goods since the second half of the 1990s and the boom in high-
technology investments; repercussions of the anti-terrorist campaign, particularly on businesses
involved in transport, tourism, insurance and finance; uncertainty surrounding the international
economy, stemming from the military conflict in Iraq and confusions surrounding the postwar
period; and, temporarily for a number of Asian countries, the impact of Asian pneumonia (SARS).
These factors, and their interaction with the cumulative conditions acting on macroeconomic
equilibria among world’s leading economies, caused a slowdown of activity in developed
countries, retrenchment in fixed capital investment in the real sector of the economy, curtailment
of investments in technology, and a fall in the prices of manufactured goods, especially those
produced by the ICT sector. The latter had enjoyed a spectacular boom during the closing years
of the last century, involving major technological innovations in fibre-optic connections,
computer software, Internet access and development of the mobile phone. Alongside a new
regulatory framework, there was exceptional growth in the demand for new services, which
attracted burgeoning investment and fuelled a wave of mergers and acquisitions at prices that
were subsequently shown to be excessive, especially in Europe. The backlash saw a curtailment
of investment flows and large projects with high levels of fixed assets that were proving
unprofitable, thereby triggering major financial imbalances. At the turn of the century, the ICT
boom gave way to a crisis that reversed the process of booming asset prices and speculation,
causing a stockmarket collapse of very major proportions. Between its peak in early 2000 and
the subsequent trough in late 2002, the stockmarket index for this subsector in the United
States shed 78% of its value.
In the medium term, however, the demand for telecom and information technology services
seems set to continue its rapid expansion, so once excess in-store capacity has been reabsorbed
and financial balances restored, investment growth is likely to resume. Technological innovation
has also remained extremely dynamic. Both the demand for ICT services and technological
developments in these products represent medium- and long-term forces, so these markets are
bound to recover.
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Although the crisis in this sector was very deep, its small weight in the economy as a whole
(accounting for between 2% and 4% of output) meant that its global impact was relatively limited.
Nonetheless, backward linkages and coordination with other agents, especially equipment
suppliers and high-technology enterprises, are very significant.
One of the clearest expressions of the 2001-2002 crisis was the sudden stop of international
capital flows, following their exponential growth of the late 1990s. During the 1970s and first
half of the 1980s, the size of annual FDI inflows grew slowly, but expanded vigorously every
year thereafter. In the 1990s there was a major acceleration that culminated in the extraordinary
growth of FDI flows in 1999 and 2000, when annual inflows were doubled, from just under
US$ 700 billion in 1998 to US$ 1,387 billion in 2000. In 2002, with the world’s leading
economies in recession and a 50% decline in transboundary merger and acquisition activity,
FDI flows retreated to their earlier levels of US$ 678 billion, dropping to US$ 559 billion in
2003 (see figure 1).
The crisis in 2001-2002 also caused a major slowdown in international trade. World trade had grown
faster than output over the last few decades, thereby significantly increasing its relative size; exports
had already been growing at roughly twice the pace of GDP, but in the 1990s they grew nearly three
times as fast. In the 1970s, international trade represented just 14% of world output; in the 1980s
it grew to one fifth of the total and today international trade, in goods and services, accounts for one
quarter of global economic output (see figure 2).
Prior to the problems mentioned above, world trade had been expanding faster than output
(except in 1998), posting average annual growth of over 7% since 1993. In 2001, however, it
shrank by 0.5% in volume and by nearly 4% in value terms. The rebound in 2002 merely made
up for that, allowing a return to the levels of two years earlier.
INWARD FOREIGN DIRECT INVESTMENT 1970-2003 (Percentage)Figure 1
1970
Mill
ion
s of
do
llars
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
SOURCE: UNCTAD
World Developed countries Developing regions Latin America and Caribbean Central and Eastern Europe
37
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In 2003 there was a sharp upturn in the value of world exports (15.8%), mainly reflecting the
combination of recovery in the United States economy and explosive growth in the Chinese
economy, which served to reactivate markets and boost commodity prices. In volume terms,
worldwide exports expanded by 4.5% (see table 3).
EXPORTS, GDP AND SHARE OF EXPORTS IN WORLD OUTPUT (1970-2005)Figure 2S
har
e (P
erce
nta
ge)
2000
2002
2003
2004
2005
197019
7119
7219
7319
7419
7519
7619
7719
7819
7919
8019
8119
8219
8319
8419
8519
8619
8719
8819
8919
9019
9119
9219
9319
9419
9519
9619
9719
9819
9920
010
5.0
10.0
15.0
20.0
25.0
30.0
Index of GDP at current prices. Index of exports
Ind
ex o
f ex
po
rts
and
GD
P
SOURCE: FAO/RLC based on IMF, WEO, september 2004.
0
50
100
150
200
250
300
Share of exports in world output.
WORLDWIDE MERCHANDISE EXPORTS AND PRODUCTION, AND GROSS DOMESTICPRODUCT, 1950-03 (Annual percentage variation)
Table 3
SOURCE: WTOa/ Includes unspecified products.b/ Worldwide merchandise production differs from world GDP because it excludes services and construction.
a
Value Volume
World exports World exports Production World GDP
Total Total
1950-1960 7.8 7.7 5.1 4.5
1960-1970 9.2 8.6 6.0 5.4
1970-1980 20.4 5.2 3.8 4.0
1980-1990 5.4 4.0 2.5 3.2
1990 12.9 3.8 1.3 2.5
1991 1.5 3.7 0.4 0.8
1992 6.4 4.5 0.2 1.1
1993 -0.2 4.2 0.0 0.9
1994 13.6 9.2 2.7 2.2
1995 19.4 7.4 4.1 2.3
1996 4.3 4.9 3.6 3.2
1997 3.4 10.1 4.9 3.5
1998 -1.3 4.7 2.2 2.2
1999 3.9 4.6 3.2 2.9
2000 12.8 10.5 5.1 4.0
2001 -3.8 0.4 0.7 1.2
2002 4.5 3.1 0.8 1.17
2003 15.8 4.5 2.8 2.3
ab
38
The mix of factors prevailing in 2001-2002 slowed the pace of economic progress in those years.
In 2001, world GDP grew by just 1.2%, thereby bringing to an end the latest cycle of high growth
rates (of between 2.2% and 4.1%) that had been achieved during the second half of the 1990s.
This cycle was shorter, and growth was weaker, than in the previous case (1983-1990), when
annual rates of expansion ranged between 2.8% and 4.6%. Growth rates were also well below
the levels of around 5% per year achieved throughout the 1960s (see figure 3).
Following a second year of weak expansion in 2002 (1.7%), global economic growth recovered
slightly in 2003 (2.3%), but was unable to make up for the stagnation of the two years preceding
the crisis. Nonetheless, the acceleration of growth in the United States economy in 2004 (4.4%),
together with the sustained pace of expansion in China (above 9% per year until the third quarter)
mean that world economic growth in 2004 is likely to be the highest of recent years (around 4%).
Growth forecasts for the next few years are more cautious, however, especially given the
uncertainty arising from the major imbalances displayed by the United States economy, where
the fiscal deficit is estimated at around 4% of GDP, and the current-account deficit is equivalent
to 5.7% of GDP. This is largely being financed by capital flows from Asia (Japan and countries
from Southeast Asia), which are trying to prevent their currencies from appreciating4.
Just as the 2001-2002 recession affected the vast majority of countries—with the notable exception
of China and a few others—the recovery in 2003 and rapid growth in 2004 have also been very
widespread, albeit with significant differences, especially in the case of the European Union.
Growth of the United States economy is estimated at 4.4% (3.1% in 2003); in Japan, following
more than a decade of stagnation, the economy grew by 2.5% in 2003, and the rate is expected
to be above 4% in 2004. The European economy grew by just 0.8% in 2003, and the 2004 figure
REAL GDP GROWTH AND VOLUME OF EXPORTS (1951-2003)Figure 3
SOURCE: WTO.
195
119
52
195
319
54
195
519
56
195
719
58
195
919
60
196
119
62
196
319
64
196
519
66
196
719
68
196
919
70
197
119
72
197
319
7419
75
1976
197
719
7819
79
198
019
81
198
219
83
198
419
85
198
619
87
198
819
89
199
019
91
199
219
93
199
419
95
199
619
97
199
819
99
20
00
20
01
20
02
20
03
0
-5
-10
5
10
15
Gro
wth
%
Merchandise exports volume Real GDP
4 ECLAC, Preliminary Overview of the Economies of Latin America and the Caribbean, December 2004.
39
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is set to be only modestly higher, at around 2.3%. Depreciation of the dollar against the euro,
and to a lesser extent against the yen—which at least partly reflects the external imbalance in
the United States economy—is reducing its capacity to galvanize other economies and pull them
along in its wake. The recovery of the United States economy is unlikely to be transmitted with
equal vigour to its external demand or to world economic growth; and under the new prevailing
conditions it may be unable to provide sufficient stimulus for the rest of the world’s economies.
Developing countries also felt the effects of weak demand and dwindling capital flows in 2001-2002,
which slowed their economic growth to a rate barely above 2%. When demographic variables are
taken into account, this means virtually no growth in per capita terms, and negative in many countries.
The most notable exception to this generally gloomy panorama is the Chinese economy, as mentioned
above. The transition economies also recorded relatively better results.
The negative impact of the 2001-2002 crisis affected developing countries more than
industrialized ones. According to the United Nations World Economic and Social Survey 20035,
of 24 developed countries considered, output per capita shrank in 2002 in just four cases (17%);
whereas in the developing world output per capita contracted in 33 countries out of 95 (35%).
Latin America was the worst hit region: of 24 countries considered, output per capita declined
in 14 cases (58%). The reasons for the relatively greater vulnerability of Latin America and the
Caribbean to external shocks will be analysed in chapter II.
The start of a new cycle of relatively faster growth starting in 2004, is tempered by fragility and
risks stemming from the imbalances prevailing in the United States economy. Moreover, the
countercyclical public policies that have helped cushion recessionary shocks have also left less
room for manoeuvre to expand government investment in the world’s leading economies, which
are currently constrained by fiscal deficits.
C. PARTICIPATION IN PRODUCTION AND TRADE
Despite the increasing homogeneity of the market economy system and the globalization of
economic processes, the gaps between individual economies are not narrowing. Although
national borders are increasingly permeable to economic forces, the productive capacities of
individual countries have generally not been converging.
The only region of the developing world to grow significantly faster than the industrialized
economies is Asia, thanks largely to the extraordinary sustained growth achieved by China. The
Middle Eastern economies display lower growth rates but still above those of developed countries.
In the economies of Africa and Latin America, GDP growth rates are generally no faster than
in developed economies, which means the output gap is being perpetuated (see figure 4).
To make the share of individual countries in world economic output more comparable, the
International Monetary Fund (IMF) publishes GDP data weighted by purchasing power6. In its
estimation of world growth shares, using purchasing power parity (PPP) rather than the market
exchange rate, differences between rich and poor countries are reduced somewhat because the
general level of prices tends to be lower in the latter countries.
World output shares based on GDP measured in purchasing power parity (PPP) terms have
changed significantly over the last two decades. In particular, the share of the Chinese economy
5 United Nations, World Economic and Social Survey 2003. Chapter I, p. 8.http://www.un.org/esa/analysis/wess/wess2003chap1.pdf
6 World Economic Outlook “Advancing Structural Reforms” April 2004.
40
has more than quadrupled, from under 3.2% in 1980 to nearly 13% in 2003. The other countries
of developing Asia also increased their share of world GDP, albeit at a much more modest pace,
rising from 7.3% to 11%. The countries of the Middle East are broadly maintaining their share
at around 4%; while the economies of Africa and Latin America have seen their decline, in the
first case from 3.8% to 3.2%, and in the case of Latin America, from 9.8% to 7.6%. There has also
been a sharp reduction in the share of world output produced by economies in transition.
Developed economies accounted for 61% of world GDP in 1980, and over two decades later, in
2003, they still contributed 56% (see figure 5).
INDEX OF REAL GDP GROWTH (1990=100)Figure 4
SOURCE: FAO/RLC based on IMF, WEO april 2004.
20
60
100
140
180
220
260
300
340
380
1980 1983 1986 1989 1992 1995 1998 2001 2004
China
Developing Asia(INCLUDE CHINA)
Middle East
World
Africa
Developingeconomies
Latin Americaand Caribbean
SHARE OF WORLD GDP (Percentage)Figure 5
SOURCE: IMF, WEO april 2004.GDP measured in PPP terms.
DevelopedEconomies
61%
Transitioncountries 11%
Latin Americaand Caribbean 10%
Middle Eastand Turkey 4%
Africa 4%
Developing Asiawithout China 7%
China 3%
1980
DevelopedEconomies
60%
Transitioncountries 10%
Latin Americaand Caribbean 8%
Middle Eastand Turkey 4%
China 6%
Developing Asiawithout China 9%
Africa 3% 1990
DevelopedEconomies
55%
Transitioncountries 6%
Latin Americaand Caribbean 8%
Middle Eastand Turkey 4%
China 13%
Developing Asiawithout China 11%
Africa 3%
2003
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Within the trends discussed above, there has also been a significant change in the shares of the
different developing regions in global GDP. Two decades ago, Asia’s share, estimated in PPP terms,
was similar to that of Latin America, while Africa and the Middle East between them accounted
for roughly another third of the developing world’s share. In purchasing power terms, the output
of the Latin American countries was more than three times that of the Chinese economy. In 2003,
however, the situation is very different; the share of the Asian economies far outweighs that of
all other developing countries combined, and is more than three times that of Latin America. The
combined share of the Latin American economies in world output is now equivalent to just 60%
of the share of the Chinese economy (see figure 6).
World trade is even more concentrated than GDP. Exports from developed countries account for
over 70% of the world total (in 1990 the figure was nearly 80%), and there is no discernible trend
suggesting greater participation by the developing world, except in the case of Asia. Following
a slump in exports from the Middle East and the transition economies at different times during
the 1980s, only Asia (mainly China) increased its share of world trade during the 1990s, while
exports from Africa are becoming increasingly marginal, and those from other regions are
barely holding their own—which represents a situation of relative stagnation considering their
small share (see figure 7).
Transition countries 6%
COMPOSITION OF WORLD OUTPUT 2003 (Percentage)Figure 6
SOURCE: IMF, WEO april 2004.
DevelopedEconomies56%
Developingcountries37%
China 13%
Middle Eastand Turkey 4%
Latin Americaand Caribbean8%
Asia withoutChina 11%
Africa 3%
42
D. THE DEVELOPMENT GAP
The trends discussed above do not paint a very optimistic picture in terms of the progress made
by developing countries in obtaining a more equitable share of world output, which would afford
them living standards more in line with the possibilities offered by present-day modernity.
Nonetheless, when demographic data and absolute levels of GDP per capita are considered, the
comparison reveals a dramatic process of polarization between the progress enjoyed by the
inhabitants of developed countries and that achieved by the rest of the world’s population.
Figures 8, 9 and 10 illustrate the rapid widening of the GDP-per capita gap between the developed
countries and developing regions as a whole (even when measured in PPP terms). In this case,
even the progress resulting from the vigorous growth of the Chinese economy seems totally
inadequate to catch up with industrialized countries. High percentage growth rates in Asia are
achieved on an extremely low initial base in per capita terms, whereas the smaller percentage
increases achieved in developed countries translate into very much larger increases in absolute
terms (see figures 8 through 10).
SOURCE: OMC.
SHARE IN WORLD EXPORTS (Percentage)Figure 7
Developedcountries
68%
Transitioncountries 7%
Latin Americaand Caribbean 5%
Middle Eastand Turkey 11%
China 1%
Developing Asiaexcluding China 3% Developing
Africa 5% 1980
Developedcountries
79%
Transitioncountries 3%
Latin Americaand Caribbean 4% Middle East
and Turkey 5%
China 2%Developing Asiaexcluding China 4%
DevelopingAfrica 3%
1990Developedcountries
71%
Transitioncountries 6%
Latin Americaand Caribbean 5%Middle East
and Turkey 4%
China 6%
DevelopingAsia excluding
China 6%
DevelopingAfrica 2%
2003
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SOURCE: FAO/RLC based on IMF, WEO april 2003.
GROWTH OF GDP PER CÁPITA MEASURES IN PPP (Dollars)Figure 8
0
4,000
8,000
12,000
16,000
20,00019
80
198
1
198
2
198
3
198
4
198
5
198
6
198
7
198
8
198
9
199
0
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
200
0
200
1
Africa
Developing Asia
Middle East and Turkey
Latin America and Caribbean
Developing economies
SOURCE: FAO/RLC based on IMF, WEO september 2003.
GDP PÉR CÁPITA (PPP) IN THE REGIONS OF THE WORLD (Dollars)Figure 9
AfricaDeveloping AsiaDevelopnig Economies Middle East and TurkeyLatin America and Caribbean
0
5,000
10,000
15,000
20,0001980
1985
19901995
2000
44
Figure 10, showing the trend of GDP per capita measured in PPP terms, also eloquently illustrates
the widening gaps in per capita GDP between developed countries and the rest of the world. As
mentioned above, only in Asia is GDP per capita (weighted by purchasing power) growing in
relation to the average of industrial countries, the ratio between the two having risen from 8.2%
in 1980 to 14.8% in 2001. In the other developing regions, however, the ratio is falling dramatically.
In 1980, Africa had a GDP per capita that was already very low in comparison to industrialized
countries (equivalent to just 16%); nonetheless, by 2001, far from having risen, it was now just
9.2% of the developed country average. In 1980, GDP per capita in the Middle East was equivalent
to one third (33.0%) of the average for developed countries, but by 2001 it was barely over one
fifth (21.3%). GDP per capita in Latin America was slightly over one half (53.3%) of the developed-
country average in 1980; but by 2001, it had declined to just over one third (36.4%). The fact
that this comparison is based on purchasing power parity, renders the acute economic polarization
that has obviously accompanied the globalization process (see figure 4 and table 10).
0
22,000
20,000
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
1980 1990 2001
6,539
3,483
2,158
1,046533
12,573
4,948
3,065
1483
1,280
19,893
7,232
4,237
2,948
1,835
SOURCE: FAO/RLC based on IMF, WEO september 2003.
TRENDS OF GDP PER CÁPITA, MEASURED IN PPP TERMS (Dollars)Figure 10
Developing economies Latin America and Caribbean Middle East and Turkey Africa Developing Asia
GROSS DOMESTIC PRODUCT PER CÁPITA, MEASURED IN PPP TERMS (Dollars)Table 4
Country 1980 1985 1990 1995 2000 2001
World 2,909 3,964 5,103 6,003 7,361 7,599
Developed economies 6,539 9,274 12,573 15,406 19,333 19,893
Developing countries 1,110 1,524 1,987 2,715 3,475 3,635
Africa 1,046 1,290 1,483 1,551 1,775 1,835
Developing Asia 533 860 1,280 2,022 2,766 2,948
Middle East and Turkey 2,158 2,687 3,065 3,458 4,172 4,237
Latin America and the Caribbean 3,483 4,195 4,948 6,113 7,128 7,232
Transition economies 4,212 5,980 7,478 5,423 6,529 7,032
SOURCE: GDP, IMF, WEO september 2003/ Population FAOSTAT.
45
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Acute economic polarization is also prevalent inside developing countries, where a large
proportion of income is concentrated in the hands of the few. The combined result of concentration
among countries and among population groups within developing countries, generates a vast
chasm separating them from people living in the developed world, and a small minority of the
inhabitants of developing countries who enjoy income and living standards that are far higher
and radically different from the daily grind of poverty faced by the vast majority of the world’s
population.
At the same time, the globalization process and the development of telecommunications are
causing lifestyles to become more similar, thereby making the contrasting capacities for
consumption and progress increasingly evident.
Given the near universal acceptance of the market economy as the only viable economic system
available, and the enormous effect that international, productive, commercial and financial
inter-relationships have on national economies, developing countries need to find solutions to
reverse this growing polarization. The lack of other alternatives shows that is not a matter of
more or less integration into the international economy, but of specific forms of relationship
in the inevitable deepening of their involvement. It is essential to make faster progress in
developing capacities to take advantage of opportunities and reduce the negative effects of
globalization, and to promote structural changes aimed at fostering greater national integration,
less exclusion and greater equity.
E. OBSTACLES TO DEVELOPMENT AND TRADE PARTICIPATION
The process of international relations is dominated by conditions prevailing in the developed
economies, both because of the importance of those economies in driving world demand and
because of their share in international capital flows. Currently there are major distortions in
both aspects that obstruct mechanisms of coordination with the world economy and the potential
for harnessing this to achieve greater economic and social development.
Firstly, financial flows to developed countries have reversed direction in the last few years, with
capital outflows related to earlier inflows now outweighing the inflow of new capital to developing
countries. This means that developing countries have to generate trade surpluses to finance the
capital outflow; so, notwithstanding their small share in world economic output, domestic absorption
in these countries needs to be below the income generated by their GDP.
The year 2003 marked the completion of seven consecutive years of net resource transfers from
developing to developed countries, with the outflow attaining a record level of US$ 247.5 billion
in that year. Apart from representing a reversal of the efficient flow that would direct capital
towards countries where it is lacking, in order to exploit their natural resources and abundant
labour supply, this financial transfer has exacerbated the difficulties that developing countries
have to face as a result of the problematic international setting. To make matters worse, total
development assistance flows shrank from US$ 53 billion in 1990 to US$ 51.3 billion in 2000,
declining from 0.33% to 0.22% of developed-country GDP (see table 5).
46
In addition, over the last few years, developing countries have had to set aside roughly one fifth of
their total export earnings simply to meet interest and amortization payments on their external
debt; yet the amounts destined for debt service and the debt itself both continue to rise. As will be
seen in the following chapter, this issue is particularly important in Latin America (see table 6).
Developing countries face major difficulties in participating on international markets. Generally
speaking, the structural conditions that represent the starting point for exploiting the
opportunities opened up by trade liberalization—and for meeting the concomitant competitive
challenges—are heavily biased against developing countries. Major differences exist in productive
capacities as well as in sanitary conditions and quality standards. Developing countries also
suffer from serious shortcomings in transport and communications infrastructure, which raise
production costs in large areas of the world; in contrast, these deficiencies have relatively less
effect on imports that reach the main cities and consumption centres. Developing countries
also often face higher financial costs, both as a result of their borrowing levels and difficult
access to external credit, and because of inflationary pressures and major rigidity in public
expenditure requirements, stemming from accumulated social deficits. This results in interest
rates that are substantially higher than those prevailing in developed countries. Less developed
institutions, public administration, services, domestic trade channels and regional markets
also imply lower levels of efficiency and competitiveness. The limited capacity of developing
countries to invest in research and development is another key factor worsening the competitive
asymmetry.
These differences in themselves pose a major challenge for developing countries to overcome
their structural disadvantages and compete on international markets. Yet they are compounded
NET TRANSFER OF FINANCIAL RESOURCES TO DEVELOPING AND TRANSITIONECONOMIES 1995-2003 (Billions of dollars)
Table 5
1995 1996 1997 1998 1999 2000 2001 2002 2003a
Developing economies 43.6 21.2 -3.4 -36.8 -122.8 -183.3 -151.3 -203.5 -247.5
Africa 6.6 -5.0 -4.31 15.9 6.0 -23.9 -11.8 -3.4 -15.8
Sub-Sahara (excluding Nigeria and South Africa) 7.7 5.7 7.6 12.2 9.0 3.2 8.3 6.6 6.6
East and South Asia 26.2 23.8 -28.7 -130.2 -134.1 -108.2 -107.9 -138.6 -144.6
Western Asia 11.9 0.4 4.7 31.3 -6.6 -51.0 -37.2 -30.3 -36.1
Latin America and the Caribbean -1.1 2.0 24.8 46.1 11.8 -0.2 5.5 -31.1 -51.1
Transition economies 3.3 0.7 17.2 16.8 -5.9 -32.6 -20.0 -17.6 -27.8
Heavily indebted poor countries 6.9 7.3 7.8 9.6 10.0 6.5 8.3 8.7 11
SOURCE: World Economic and Social Survey 2004 (United Nations publication).a/ Preliminarily estimated.
DEVELOPING COUNTRIES: EXTERNAL DEBT, DEBT SERVICE AND INDICATORS(Average 2001-2005)
Table 6
Region External Debt Interest Debt/ Service/ Debt/ Service/ Interest/
debt service GDP GDP Exp Exp Exp(Billions of US$) (Porcentage)
Developing countries 2,154.1 334.6 98.0 35.9 5.6 116.2 18.1 5.3
Latin American and Caribbean 742.8 156.9 47.2 40.7 8.6 195.5 41.4 12.5
Africa 269.5 27.4 9.8 51.2 5.3 151.1 15.6 5.6
Developing Asia 701.6 104.6 28.0 25.9 3.9 76.2 11.4 3.0
Middle East and Turkey 440.2 45.8 13.0 47.4 4.9 118.1 12.2 3.5
SOURCE: FAO/RLC based on IMF, WEO april 2004.
47
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by asymmetries that have been a prominent feature of multilateral trade liberalization in recent
decades. The differential treatment of sectors such as agriculture or textiles has imposed large
losses on developing countries. Another relevant issue concerns current arrangements in relation
to intellectual property rights.
Protectionist measures imposed by developed countries in the form of tariffs or non-tariff
barriers, together with policies that lead to the accumulation of surpluses and distort international
markets, further impede developing-country participation. Despite progress made on trade
liberalization following several multilateral negotiating rounds, the effects of industrial-country
policies continue to obstruct developing countries’ access to international markets.
F. PROTECTION AND SUPPORT FOR AGRICULTURE IN DEVELOPED COUNTRIES
The average bound tariff for non-agricultural products entering the European Union and the
United States is very low and would not represent a significant entry barrier to those markets.
Nonetheless, the tariff structures maintained by those countries are extremely heterogeneous,
including specific duties per physical unit and mixed tariffs, supported by seasonal quotas and
special regimes for several products. The maintenance of significant tariff peaks and a high degree
of escalation as a product’s processing level increases, undermines the effectiveness of efforts
made by developing countries to diversify their exports. Import requirements and formalities in
developed countries are also complex, involving compliance with demanding regulations on health
protection, safety and the environment, in addition to regulations on certification, labelling,
misleading publicity and consumer protection7.
However agricultural policies pursued by developed countries cause major distortions which
seriously hinder market access for developing countries. Progress made in reducing protection
in developed countries, and greater efforts to ensure international markets function efficiently
have been insufficient. The support provided to farmers is currently less than in the 1980s,
particularly when measured as a percentage of GDP; subsidy mechanisms have also been
reoriented towards less distorting policies. Nonetheless, overall levels of assistance to agriculture
continue unabated, averaging US$ 324 billion per year in 2001-2003 (US$ 304 billion per year
in 1986-1988). Producer support continues in the range of US$ 240 billion per year, most of
which (76%) continues to be linked to production levels, price support, payments per product
or input subsidies (see table 7).
AGRICULTURAL SUPPORT IN OECD COUNTRIESTable 7
1986-88 2001-2003
Total agricultural support (TSE) (millions of dollars) 303,720 324,053
Producer support (PSE) a 241,077 238,310
General services (GSSE) 40,946 57,849
Fiscal transfers to consumers 21,697 27,894
PSE (percentage) 37.2 31.2
Producer NPC 1.56 1.31
PSE per farmer 10 11b
PSE per hectare 183 182b
SOURCE: OECD, Agricultural Policies in OECD Countries, 2003.a/ Includes, among other things, subsidies granted on the basis of production level, planted area, number of animals, levels of inputs used, incomesand landownership titles.b/ 2000-2002.
7 ECLAC, Latin America and the Caribbean in the World Economy, 2001-2002.
48
The proportion of farmers’ incomes obtained from support measures varies from under 5% in
Australia and New Zealand to over 60% in Korea, Iceland, Japan, Norway and Switzerland. The price
supplements8 received by farmers over and above border prices also varies widely. In Australia and
New Zealand, producers receive border prices only; in most OECD countries the prices received by
farmers are between 10% and 20% above border prices; in the European Union the supplement reaches
as high as 33%; in Iceland and Japan, the prices received by farmers are more than double the level of
border prices; and in Korea, Norway and Switzerland nearly triple.
The average support provided to each farmer is under US$ 5,000 per year in eight countries
(Australia, Czech Republic, Hungary, New Zealand, Mexico, Slovakia and Poland); between US$
10,000 and US$ 30,000 per year in Canada, the United States, Iceland and Japan; and more than
US$ 30,000 per year in Switzerland and Norway.
The support provided per hectare of agricultural land is under US$ 100 per in Australia, Canada,
Iceland, Mexico and New Zealand; between US$ 100 and US$ 200 per hectare in the Czech
Republic, the United States, Hungary, Poland, Slovakia and Turkey; US$ 670 per hectare in the
European Union; over US$ 2,000 per hectare in Switzerland and Norway; and roughly US$
10,000 per year per hectare in Japan and Korea (see table 8).
8 Measured as the producer’s nominal protection coefficient (NPC) calculated by the OECD.
SOURCE: OECD.
AGRICULTURAL SUPPORT IN OECD COUNTRIESFigure 11
Others 14%Otros 12%
European Union37%
European Union36%
United States24%
United States29%
Japan 20%
Korea 6%Korea 5%
1986-1988Total support estimate for OECD
countries as a groupU$ 303,720 Millions
2001-2003Total support estimate for OECD
countries as a groupU$ 324,053 Millions
Japan17%
In 2001-2003 producer support accounted for 31% of farmers’ incomes in OECD countries (37% in
1986-1988), with farmers in those countries receiving prices that were 31% higher than border prices
(56% in 1986-1988). There are also major differences both between countries and between products.
The European Union and Korea have broadly maintained their 1980s share of agricultural
subsidies, in terms of both total assistance and producer support. In contrast, Australia, New
Zealand, Canada and Japan, among others, now account for a smaller share, whereas United
States’ share has increased (see figure 11).
49
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Over half of these subsidies continue to be channelled towards producers of milk, bovine meat
and cereals (rice, wheat and maize). Nonetheless, large and growing subsidies are also paid to
producers of pig meat and chicken (see table 9).
AGRICULTURAL SUPPORT BY COUNTRY 2001-2003Table 8
OECD 324,053 238,310 11 182 31 1.31
Australia 1,282 1,552 2 2 4 1.00
Canada 6,331 7,002 10 57 19 1.12
Korea 20,253 21,465 23 9,307 66 2.78
Czech Republic 1,091 32,058 5 196 23 1.17
United States 95,128 44,239 19 112 21 1.13
Hungary 1,846 391,932 5 205 24 1.15
Iceland 164 12,741 27 65 63 2.33
Japan 56,489 5,359 23 9,828 59 2.37
Mexico 8,050 72,005 1 71 22 1.21
New Zealand 221 221 1 5 1 1.01
Norway 2,857 20,741 38 2,254 68 2.70
Poland 2,129 7,379 1 114 15 1.17
Slovakia 389 14,005 3 127 21 1.12
Switzerland 5,483 7,586 30 2,958 73 2.91
Turkey 7,618 8,001.477 n.c. 125 18 1.19
European Union 114,720 102,708 15 670 35 1.33
PSE per full-time
farmer equivalent
(Thousands of dollars)
PSE per hectare of
agricultural land
(Dollars)
Total support
estimate
(Millions of dollars)
Producer
NPC
(%)PSE
(%)
Producer
support
(Millions of dollars)
SOURCE: OECD Agricultural Policies in OECD Countries, 2004.a/ Based on data OECD, Agricultural Policies in OECD Countries, 2003.
PERCENTAGE SUPPORT FOR AGRICULTURE BY PRODUCT (OECD countries)Table 9
Percentage PSE 2001-2003 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003a
Rice 77.8 82.0 81.7 78.5 76.8 78.3 77.5 80.5 82.9 79.2 81.5 75.6 72.6 74.2 78.9 82.1 80.8 78.2 74.3
Sugar 51.3 57.5 57.0 46.8 37.6 41.3 51.9 55.9 50.9 40.2 48.0 43.0 44.5 51.1 59.9 51.2 47.0 51.0 55.8
Milk 47.7 65.6 59.5 51.0 49.6 61.0 58.0 57.0 56.8 55.1 49.5 48.5 48.8 57.2 53.1 44.8 45.8 48.4 48.9
Other grains 40.9 56.9 59.1 38.5 32.6 45.2 47.6 46.0 53.2 54.5 41.8 33.8 37.9 53.4 52.4 42.8 40.5 41.3 40.9
Sheep meat 38.1 50.4 55.4 58.9 57.5 57.5 57.5 55.2 45.4 49.3 55.3 44.2 37.8 45.4 46.3 39.2 39.8 32.0 42.4
Wheat 36.8 49.8 52.3 39.8 25.0 37.2 49.6 38.7 42.5 40.6 28.5 26.7 29.6 40.4 45.7 39.9 36.7 36.3 37.5
Bovine meat 32.8 36.0 30.7 28.0 27.9 29.7 33.1 31.0 27.8 28.1 31.8 33.3 34.9 34.7 33.6 29.3 29.7 33.6 35
Others 25.7 30.4 29.4 26.9 25.5 26.5 30 28.8 30.1 28.9 26.6 24.6 23.3 26.3 27.8 26.4 24.9 25.5 26.7
Maize 24.3 43.0 44.5 31.8 24.9 28.0 27.4 30.2 28.7 23.3 15.2 13.8 18.2 28.8 34.3 34.9 28.0 23.4 21.4
Oilseeds 23.6 28.0 26.4 25.1 27.9 29.7 29.7 25.7 24.7 19.9 19.5 18.6 15.7 22.0 26.3 30.6 29.6 19.1 21.9
Pig meat 21.0 18.8 11.6 25.0 16.4 10.4 15.1 7.7 18.2 21.4 18.6 16.9 15.7 19.8 29.9 20.9 19.1 22.8 21.2
Poultry 17.0 15.5 23.8 19.6 18.1 21.0 20.3 23.0 21.5 22.1 22.4 20.0 16.8 15.0 16.4 17.1 15.3 19.1 16.6
Eggs 7.6 16.9 15.0 18.5 18.9 12.1 12.2 16.9 15.3 13.4 16.8 11.7 10.6 13.4 13.7 10.0 9.0 8.4 5.37
Wool 5.4 8.9 7.2 4.1 4.5 19.0 17.8 17.9 17.6 9.7 10.7 8.5 7.7 7.2 6.3 5.3 5.0 5.5 5.55
SOURCE: Agricultural Policies in OECD Countries, 2004.a/ Provisional data.
50
On average, farmers in OECD countries obtain a large percentage of their income in the form
of support. In some products, the proportion is relatively lower—roughly 5% of total income in
the case of wool and eggs, and between 16% and 26% for chicken, pork, maize and oilseeds. In
some products support varies between 35% and 40% (wheat, and bovine meat); in milk and
sugar it is roughly half; and in the case of rice producers, as much as 75% of their income comes
from support (see table 10 and figure 12).
PRODUCER SUPPORT BY PRODUCT (PSE) (Millions of dollars)Table 10
Product 1986-88 2001-2003
Total 241,077 238,310
Bovine meat 22,230 27,513
Eggs 2,638 1,377
Maize 12,693 9,694
Milk 48,107 43,393
Oil seeds 5,387 6,680
Other grains 11,197 8,208
Pigmeat 8,762 10,624
Poultry 4,893 6,514
Rice 26,932 22,254
Sheepmeat 4,677 3,842
Sugar 5,777 6,127
Wheat 18,664 15,173
Wool 287 113
Other 68,833 76,800
SOURCE: OECD, Agricultural Policies in OECD Countries, 2004
SOURCE: OECD, Agricultural Policies in OECD Countries, 2004.
OECD COUNTRIES: AGRICULTURAL SUPPORT BY PRODUCT (Average 2001-2003)Figure 12
Ric
e
Su
gar
Milk
Oth
er g
rain
s
Sh
eep
Mea
t
Wh
eat
Bov
ine
mea
t
Oth
ers
Mai
ze
Oils
eed
s
Pig
mea
t
Po
ult
ry
Eg
gs
Wo
ol
100
90
80
70
60
50
40
30
20
10
0
(Per
cen
tag
e)
P S E
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The difference between the average price received by farmers in OECD countries and the corresponding
border price also varies greatly from product to product. Wool producers receive the border price only;
in the cases of wheat, maize, eggs and sheep meat, income received is about 10% above the border price;
for producers of sheep and pig meat, chicken, and bovine meat, it is 20%. The largest differences are
in milk (80%), sugar (110%) and rice (333%) (see table 11 and figure 13).
As in the case of external debt, the negative impact of the asymmetries related to negotiations on
trade of agricultural products affect particularly Latin American countries severely (see chapter II).
PRODUCER NPC IN OECD COUNTRIES (Percentage)Table 11
Product 1986-88 2001-2003
Total 156.0 130.9
Rice 490.8 433.4
Sugar 233.1 211.5
Milk 269.9 182.4
Other 139.3 126.6
Bovine meat 141.0 126.4
Pigmeat 130.5 122.2
Sheepmeat 187.2 119.4
Poultry 133.2 116.9
Oilseeds 127.2 109.1
Wheat 169.5 107.2
Other grains 197.2 106.8
Maize 129.8 105.8
Eggs 122.3 105.7
Wool 100.9 101.1
SOURCE: OECD, Agricultural Policies in OECD Countries, 2004
SOURCE: OECD, Agricultural Policies in OECD Countries, 2004.
PRODUCER NPC IN OECD COUNTRIESFigure 13
Ric
e
Su
gar
Milk
Oth
ers
Bov
ine
mea
t
Pig
mea
t
Sh
eep
mea
t
Po
ult
ry
Oils
eed
s
Wh
eat
Oth
er g
rain
s
Mai
ze
Eg
gs
Wo
ol
500%
450%
400%
350%
300%
250%
200%
150%
100%
50%
0%
1986-88 2001-2003 100%
52
One out of every six adults living in developing countries is illiterate. There are also 115 million
children who are not receiving any educational programme. At current rates of progress, only
Latin America and the Caribbean in the developing world will achieve the goal of universal
primary education by 2015.
Two thirds of illiterate people are women, and three fifths of children without education are girls.
The Millennium Development Goals also propose closing the gender gap in education by 2015.
SOURCE: LAC update of FAO/RLC based on SOFI 2002.
PATH TOWARDS THE GOAL OF THE WORLD FOOD SUMMIT (Number of countries)Figure 14
Hunger increasing Progress too s low Progress suff ic ient
-35 -30 -25 -20 -15 -10 -5 0 5 10
Asia and the Pacific
Latin America and Caribbean
Near East andNorth Africa
Subsaharan Africa
783
7125
574
6239
Loosing ground Progress
G. THE COSTS OF UNDERDEVELOPMENT
The difficulties facing developing countries in achieving a level of participation in the
international economy that would allow sustained economic growth, serve to perpetuate living
conditions which are totally at odds with the possibilities generated by technological progress
and the living standards generally attained in developed countries. Much of the world’s population
continues to suffer on a daily basis from the effects of poverty, hunger, disease, illiteracy,
environmental degradation and multiple forms of discrimination.
According to the conclusions of the United Nations Millennium Summit, 1.101 billion people are currently
living on less than a dollar day and 2.733 billion live on less than two dollars a day. Up to 29% of the
population of low- and middle-income countries are living in poverty. The Millennium Development
Goals proposed halving this proportion (14.5%) by 2015. A recent World Bank study claims that for this
to actually happen, developing countries need to grow at an average rate of 3.6% per year. Yet, as noted
above, annual growth in the 1990s has been below 2.0%.
There are 852 million undernourished people in the world, of whom 96% live in developing countries.
The numbers of undernourished persons and underfed children in middle- and low-income countries
have both diminished during the past decade; but there are still 815 million undernourished people
in those countries, including 150 million children. Furthermore, the pace of progress has been
slowing, and, if current rates persist, it will be impossible to achieve the target of halving the number
of undernourished people by 2015 (see figure 14).
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Roughly 100 children out of every thousand live births in developing countries die before their
fifth birthday; and more than 10 million children die each year from preventable diseases. At the
present rate of progress, only Latin America and the Caribbean in the developing world look likely
to achieve the target of reducing the infant mortality rate by two thirds.
Over 500,000 women die during pregnancy or in childbirth every year; as much as 99% of maternal
mortality occurs in developing countries, and the vast majority of such deaths are the result of
infections, haemorrhaging or inadequately attended abortions. The target of reducing maternal
mortality by three quarters by 2015 is seen as feasible for Latin America and the Caribbean, but
progress in other regions of the world falls far short of the rate needed.
There are currently 42 million people in the world suffering from AIDS, of whom 39 million live
in developing countries (nearly 29 million in Africa). This pandemic has already caused 60
million deaths (13 million in Africa); 3.1 million people died from this cause in 2002 (2.4 million
in Africa). Nonetheless, the success achieved by Brazil and other countries, such as Senegal,
Thailand and Uganda, shows that it is possible to detain the spread of HIV and bring the epidemic
under control. Tuberculosis causes over 2 million deaths per year, mostly in Asia; malaria is an
endemic disease in over 100 countries, and infects 300 million people causing 1 million deaths
annually. The Millennium Development Goals propose to halt the growth and start reducing
propagation of the main infectious diseases by 2015.
Over 1 billion people in developing countries lack access to potable water, and 2.4 billion do not
have adequate sanitation services. The target of halving the percentage of people lacking drinking
water seems achievable for the world at large, except for Sub-Saharan Africa. In contrast, on
current trends, the goal of adequate sanitation for 100 million people is unlikely to be achieved
until after 2015 in most regions of the developing world.
Eradication of hunger and poverty, and sustained progress in terms of the quality of life for
most of the world’s population represents a huge challenge both for the economic-growth
strategies of developing countries and for the global institutional framework. The Millennium
Development Goals include an eighth goal: to create a global partnership for development, with
targets relating to assistance, trade, and debt relief (see figure 15).
SOURCE: UN Statistic Division 2004.
OFFICIAL DEVELOPMENT ASSISTANCE (Billions of dollars)Figure 15
1990 2001
60
50
40
30
20
10
0
To developing countries To least developed countries
53.0 52.3
14.411.8
54
MILLENNIUM GOAL N° 8. DEVELOP A GLOBAL PARTNERSHIP FOR DEVELOPMENTTable 12
GOALS
Target 12: Develop further an open trading and financial system that is rule-based, predictable and non-
discriminatory. Includes a commitment to good governance, development and poverty reduction—nationally
and internationally.
Target 13: Address the least developed countries’ special needs. This includes tariff- and quota-free access for
their exports; enhanced debt relief for heavily indebted poor countries; cancellation of official bilateral debt;
and more generous offic ial development assistance for countries committed to poverty reduction.
Target 14: Address the special needs of landlocked and small island developing States (through the Programme
of Action for the Sustainable Development of Small Developing Island States and the results of the Twenty-
Second Special Session of the United Nations General Assembly).
Target 15: Deal comprehensively with developing countries’ debt problems through national and international
measures to make debt sustainable in the long term.
Target 16: In cooperation with the developing countries, develop decent and productive work for youth.
Target 17: In cooperation with pharmaceutical companies, provide access to affordable essential drugs in
developing countries.
Target 18: In cooperation with the private sector, make available the benefits of new technologies—especially
information and communications technologies.
In a world order that is increasingly globalized and interdependent, it is essential to achieve
coordinated international action on priorities that have global scope. This has been clearly
acknowledged in several domains, and recently has been forcefully verified in the fight against
terrorism. Yet, compared to terrorism, poverty is responsible for many more deaths and has a
much larger health impact ; it generates greater difficulties for economic and social progress,
and provokes a form of violence which, albeit less spectacular, is no less serious in terms of
human cost. Reducing the number of poor people in the world requires coordinated global action
in the fight against poverty. Achievement of Goal 8 to create a global partnership for development
should be a key priority for the international community, in order to make progress in terms of
social justice, and lay more solid foundations for consolidating peace, in an ever more closely
knit and interactive form of coexistence (see table 12).
SOURCE: UN 2004.
55
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3
II. MACROECONOMIC FRAMEWORK
A. GDP TRENDS
Economic growth in Latin America and the Caribbean is estimated at 5.5 percent in 2004, the
highest rate in the last 25 years. Internacional conditions played a decisive role in this rapid
progress. The world economy also grew faster than at any time in the last few decades, mainly
driven by imports to the United States and China, wich boosted demand and pushed up commodity
prices, to the benefit of the region s exporting countries. On the other hand, the strong growth
rate reflects economic recovery in a number of Latin American countries after the 2001-2002
recession. Such progress, together with favourable though uncertain conditions in 2005, allows
for some optimism regarding the severe problems facing economic growth in the region.
From a medium and long-term standpoint, the stagnation of the Latin American and Caribbean
economies in 2001 and 2002, which continued during the first half of 2003, served to confirmed
three seriously negative features of the regional economic growth process over last few
decades: growth has been weak, unstable and highly vulnerable. A fourth characteristic, its
concentration, analysed below completes the troublesome panorama of recent economic
development in the region.
The recovery that began in the second half of 2003 and generated exceptional growth in 2004,
represents the start of the regional fifth economic growth cycle in the last 20 years. The drop
in the regional GDP registered in 2001, had cut short the fourth cycle of economic recovery after
a single year of relatively satisfactory growth (3.8% in 2000). Latin America and the Caribbean
did not manage to regain sustained economic progress since the external debt crisis of the early
1980s (see figure 16).
58
LAC: GROWTH OF GROSS DOMESTIC PRODUCT, CONSTANT PRICES 1970-2005(Annual growth rate)
Figure 16
0.0
-1.0
-2.0
1.0
2.0
3.0
4.0
5.0
6.0
-2.5
70s
SOURCE: FAO/RLC based on ECLAC.
198
4
198
5
198
6
198
7
198
8
198
9
199
0
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
20
00
20
01
20
02
20
03
197
0-8
0
198
1
198
2
198
3
20
04
20
05
MA
CR
OE
CO
NO
MIC
FR
AM
EW
OR
K
The short-lived growth phase midway through that decade (1984-1987) was brought to an abrupt
halt by an episode of uncontrolled inflation affecting Argentina, Brazil, Nicaragua, Peru, among
other countries (representing the culmination of adjustment periods following the debt crisis),
which resulted in zero or negative growth between 1988 and 1990. The resumption of regional
economic growth in the first half of the 1990s was interrupted by the Mexican “tequila crisis”
of December 1994; after which the Asian crisis and the Russian moratorium resulted in falling
commodity prices and dwindling capital flows to the region, which in turn led to regional
economic stagnation in 1998 and 1999. Most recently, the growth alluded to in 2000 was
frustrated by the stock market crisis of 2001-2002.
The new period of regional economic growth that began in 2004 is set to continue in 2005,
possibly at a slower rate of around 4%. There are several grounds for hoping that this new cycle
of progress will be more sustained, including: the healthy macroeconomic framework prevailing
in most countries of the region; the current account surplus that should make it possible to
maintain growth without generating major tensions on external accounts; and a backlog of
consumer demand repressed by the most recent recession, the recovery of which could underpin
domestic demand over the next few years9.
Nonetheless, economic progress in Latin America and the Caribbean remains highly dependent
on trends in the international economy, where the recovery of the United States economy
plays a key role and several major risks persist. Imbalances in the United States economy are
greater than at any time in the last few decades. The fiscal deficit is thought to exceed 4%
of GDP, and the current account deficit is equivalent to 5.7% of GDP. Financing this deficit
relies mainly on official flows, since private capital flows are still relatively weak following
their surge in 2000. Transfers mainly stem from the Governments of Japan and other Asian
countries as they try to prevent their local currencies from appreciating. The depreciation
of the dollar against the euro and to a lesser extent against the yen, and the possibility that
the United States may have to tighten fiscal policy, which could take the momentum out of
the growth process, raises doubts about the extent to which the United Sates economy will
be able to continue stimulating world growth.
The overall medium-term results achieved by the Latin American and Caribbean economy, depicts
extremely weak progress that has now lasted for a quarter of a century. The stagnation of the
1980s (the “lost decade”), when GDP grew by just 1.1% per year, was followed by a period of modest
expansion between 1991 and 1997 (3.4% per year). Since then the annual rate has fallen back to
just 1.6%. Thus the average rate of growth over the last 25 years is just 2.2% — way below the levels
of 5.7% or higher that were recorded in earlier decades.
In addition to the slow pace of progress, its instability has significant negative effects, mainly
because job losses in bad years are not fully restored in good ones, so the effects on the quantity
and quality of employment, and on poverty, are even more severe.
Despite sometimes large differences among countries, the behaviour of most national economies
does not stray far from the average, as clearly illustrated by the widespread nature of stagnation
during the external debt crisis. Economic trends during the 1990s have also been highly
generalized. Although the recovery in the early years of the decade was slightly more concentrated
599 ECLAC, Preliminary Overview of the Economies of Latin America and the Caribbean, 2004.
in several southern cone and Central American countries, the economic slowdown of recent
years has affected all Latin American countries, with only a few (mainly Caribbean) countries
immune (see figure 17).
SOURCE: FAO/RLC based on ECLAC.
Figure 17 LAC: AVERAGE GROWTH OF GDP (Percentage)
1990-97 1997-04
-4.0 -2.0 0.0 2.0 4.0 6.0 8.0
Uruguay
Argentina
Venezuela
Dominica
Haiti
Paraguay
Guyana
Saint Lucia
Suriname
Jamaica
Barbados
Colombia
Brazil
Ecuador
Bolivia
El Salvador
Saint Vincent and the Grenadines
Peru
Saint Kitts and Nevis
Grenada
Mexico
Honduras
Chile
Guatemala
Panama
Cuba
Antigua and Barbuda
Costa Rica
Nicaragua
Dominican Republic
Belize
Trinidad and Tabago
60
Output per capitaAs a result of regional GDP evolution, the growth per capita over the last decade is unsatisfactory.
Following the decline in the 1980s (negative growth of -0.5% per year), annual growth from 1990
to 2004 averaged just 1%, well below the 3% achieved before the debt crisis. Moreover, sharp
fluctuations also had negative consequences for the fight against poverty and produced an
economic environment marred by crises (see figure 18).
Within the generally slow and unstable growth achieved across the region over the last decade,
there have been significant differences between countries. Generally speaking, the Caribbean
countries grew more rapidly in per capita terms, whereas among the Latin American countries
only Chile expanded faster than 3% per year. In most Latin American countries, per capita
output remained virtually flat, and in four countries it actually declined over the decade (see
figure 19).
Despite these significant differences, economic growth faces broadly similar problems across
the region, firstly in historical-structural terms, and because the various countries share key
characteristics in terms of international participation; and secondly because of their
interdependence stemming from subregional integration and bilateral economic agreements.
The difficulties faced by the Latin American and Caribbean economies in achieving rapid and
sustained economic growth, and their disappointing performance of recent years, can thus
partly be explained by common factors, relating particularly to financial flows and the effects
of the changes taking place on international markets.
MA
CR
OE
CO
NO
MIC
FR
AM
EW
OR
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LAC: GROWTH OF GROSS DOMESTIC PRODUCT AT CONSTANT PRICES 1970-2005(Annual growth rate)
Figure 18
SOURCE: FAO/RLC based on ECLAC.
0.0
-1.0
-2.0
-3.0
1.0
2.0
3.0
4.0
5.0
-4.0
-5.0
197
0-8
0
198
1
198
2
198
3
198
4
198
5
198
6
198
7
198
8
198
9
199
0
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
20
00
20
01
20
02
20
03
20
04
20
05
70s
62
B. INCIDENCE OF CAPITAL FLOWS
Although the increasing globalization of economic processes has opened up new growth
possibilities for Latin American and Caribbean countries, it has also greatly increased the
influence exerted by the international setting over the pace of progress in the region’s economies.
This has generated significant procyclical forces. In periods of vigorous economic growth,
burgeoning world markets generate opportunities for profitable productive activities in the
countries of the region, which makes them more attractive to foreign capital, thereby generating
a process of greater investment and stronger growth. In contrast, when global economic activity
falters, export prices fall, the profitability of export activities declines and growth slows down.
In such conditions, the regional economies become less attractive to foreign investment, access
to financing dries up, and financial resources flow out; as a consequence, the cost of capital
rises and economic activity slows still further. This, in turn, generates less employment and
less domestic demand, thereby reinforcing the stagnation.
SOURCE: FAO/RLC based on ECLAC/FAOSTAT.
-2.0 -1.0 0.0 1.0 2.0 3.0 4.0
Guyana
Dominican Republic
Grenada
Saint Kitts and Nevis
Trinidad and Tabago
Chile
Antigua and Barbuda
Costa Rica
Saint Vincent and the GrenadinesPeru
El Salvador
Belice
Panama
Mexico
Bolivia
Barbados
Guatemala
Brazil
Nicaragua
Argentina
Uruguay
Colombia
Cuba
Saint Lucia
Dominica
Honduras
Ecuador
Suriname
Jamaica
Paraguay
Venezuela
Haiti
Figure 19 LAC: AVERAGE GROWTH OF GDP PER CAPITA (1990-04)
Capital flows, which have been a driving force in contemporary economic growth and were clearly
implicated in the widespread collapse of growth in 2001 and 2002, are concentrated mainly in the
developed world. Nonetheless, in relation to GDP, they are very important for a number of developing
countries, particularly in Latin America and the Caribbean.
Overall, between 75% and 80% of FDI flows were channelled to developed countries during the
1970s and 1980s; of the remainder, Latin America and the Caribbean received about half. Starting
in the 1990s, as the volume of investment began to expand, the annual variation has also
increased substantially, and developing countries have been receiving between 20% and 40%
of the total. The largest FDI flows to developing countries are currently going to Asia, with a
major increase in China in particular (see figure 20).
Nonetheless, Latin America and the Caribbean is the region in which FDI flows represent the
largest share of GDP. In 1970, foreign direct investment into the region amounted only up to
US$ 1.586 billion. During the following decades it grew, albeit with fluctuations, to reach nearly
US$ 10 billion by 1990, and by 1994 the figure stood at US$ 30 billion. From then onwards FDI
inflows grew exponentially before peaking in 1999 at over US$ 108 billion. The most recent
crisis caused a reduction of capital flows to the region, however, and levels over the three
following years fell back to US$ 49 billion in 2003 (see figure 21).
Whereas capital inflows represented about 1% of regional GDP during the 1980s, their relative
importance began to increase from 1994 onwards, climbing to 2.1% in that year before soaring to a
peak in 1999 equivalent to 6.1% of regional GDP. This clearly improved the possibilities of financing
development and economic growth in the region10 (see figure 22),
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SOURCE: UNCTAD, december 2004.
INFLOWS OF FOREIGN DIRECT INVESTMEMT (1970-2003) (Millions of dollars)Figure 20
Mill
ion
s of
do
llars
1970 19
7119
7219
7319
7419
7519
7619
7719
7819
7919
8019
8119
8219
8319
8419
8519
8619
8719
8819
8919
9019
9119
9219
9319
9419
9519
9619
9719
9819
9920
0020
01
2002
2003
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1970 19
7119
7219
7319
7419
7519
7619
7719
7819
7919
8019
8119
8219
8319
8419
85
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
World Developed countries Developing regions Latin America and Caribbean Central and Eastern Europe
10 The figures cited are provided by UNCTAD. The ECLAC data used below for each country’s FDI/GDP ratio exclude FDIin Aruba, Anguilla and Montserrat, and also in financial havens.
64
In absolute terms, FDI flows into the region have been concentrated in a few countries, with the
majority of capital flows being channelled to Brazil and Mexico, followed by Argentina and Chile.
In relation to GDP, however, capital flows have also been significant in several other countries,
particularly in the Caribbean (see figures 23,24 and table 13).
SOURCE: FAO/RLC based on UNCTAD 2004 and WEO 2004.
LAC: FDI INFLOWS PER U$ 1,000 GDP (1980-2003)Figure 21
Latin Americaand el Caribbean
Developingregions
World
Developedcountries
Central and EasternEurope
0
198
0
198
1
198
2
198
3
198
4
198
5
198
6
198
7
198
8
198
9
199
0
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
200
0
200
1
200
2
200
3
200
4
200
5
10
20
30
40
50
60
70
-10
SOURCE: FAO/RLC based on UNCTAD 2004.
TREND OF FDI INFLOWS (1980-2003)Figure 22
Mill
ion
s of
do
llars
198
0
198
1
198
2
198
3
198
4
198
5
198
6
198
7
198
8
198
9
199
0
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
200
0
200
1
200
2
200
3
30.0
0.0
10.0
20.0
40.0
50.0
60.0
70.0
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
Inflows of foreign direct investment FDI inflows / GDP
65
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Figure 24 LAC: FDI INFLOWS IN RELATION TO GDP (Percentage)
SOURCE: GDP FAO/RLC; FDI UNCTAD 2004.
1999 2002
Saint Kitts and Nevis
Suriname
Paraguay
Haiti
Barbados
Panama
Guatemala
Uruguay
Argentina
Venezuela
El Salvador
Mexico
Honduras
Chile
Colombia
Peru
Saint Vincent and the Grenadines
Brazil
Costa Rica
Bahamas
Dominican Republic
Antigua and Barbuda
Ecuador
Saint Lucia
Belize
Dominica
Guyana
Jamaica
Nicaragua
Bolivia
Trinidad and Tabago
Granada
-150 -100 -50 -0 50 100 150 200 250
SOURCE: UNCTAD 2004.Based on total FDI inflows of U$69.644 billions.
LAC: FDI INFLOWS (Average 1999-2002)Figure 23
Brazil 36%
CARICOM 2%
Latin Caribbean 2%
Central America 3%
Andeancountries
12%
SouthernCone 21%
Mexico 24%
66
FDI INFLOWS PER US$1,000 GDP Table 13
Proj.a
1980 1990 2000 2001 2002 2003
Latin America and the Caribbean (FAO) 8.2 7.7 39.2 36.6 26.2 20.4
Latin America 7.9 7.3 39.0 36.2 25.7 n.d.
Brazil 12.8 2.1 54.6 44.1 36.7 20.4
Mexico 10.2 10.0 26.7 40.6 21.4 16.2
Southern Cone 5.0 13.8 40.5 22.3 15.0 n.d.
Argentina 3.2 13.0 41.0 11.9 10.8 11.0
Chile 9.1 19.7 48.6 65.4 23.8 35.1
Paraguay 6.7 14.6 13.5 13.9 -3.9 3.3
Uruguay 30.1 4.5 13.6 17.1 6.9 5.6
Andean countries 3.0 8.6 31.3 31.4 25.1 n.d.
Bolivia 13.1 13.8 86.5 81.9 67.5 34.0
Colombia 4.8 10.7 26.7 30.9 25.1 17.1
Ecuador 4.8 12.0 45.2 63.3 52.5 60.4
Peru 3.1 1.5 12.9 21.5 25.9 13.4
Venezuela 1.1 9.3 36.8 27.3 14.0 50.4
Central America 16.1 14.4 29.5 29.5 18.9 n.d.
Costa Rica 10.9 28.5 25.6 27.7 38.0 25.7
El Salvador 1.5 0.4 15.2 21.0 16.6 10.7
Guatemala 14.0 7.8 12.2 24.0 5.6 5.3
Honduras 2.3 14.3 46.8 30.5 21.7 31.6
Nicaragua 0.0 0.4 110.6 58.2 66.5 92.0
Panama 57.3 25.5 50.5 42.5 4.6 44.4
Latin Caribbean 12.9 16.7 40.1 42.9 39.1 n.d.
Cuba n.d n.d n.d n.d n.d n.d.
Haiti 9.2 3.6 3.4 1.2 1.6 n.d.
Dominican Republic 13.7 21.3 47.9 49.8 45.2 43.9
CARICOM 21.1 32.3 52.0 58.6 55.1 n.d.
Antigua and Barbuda 175.7 154.7 49.8 56.0 50.5 n.d.
Bahamas 2.8 -5.5 50.9 20.6 39.5 n.d.
Barbados 3.2 6.5 7.7 7.6 4.6 n.d.
Belize 0.0 47.2 23.7 47.4 54.9 n.d.
Dominica 0.0 77.6 40.0 44.7 56.8 n.d.
Grenada -0.1 57.8 92.0 122.8 99.0 n.d.
Guyana 0.7 22.6 94.2 78.9 61.5 n.d.
Jamaica 9.7 33.8 63.6 79.1 62.2 63.0
Saint Kitts and Nevis 20.8 306.5 292.4 255.4 226.8 n.d.
Saint Vincent and the Grenadines 18.6 38.8 87.0 60.3 52.7 n.d.
Saint Lucia 231.6 122.4 79.6 33.9 32.8 n.d.
Suriname 20.4 190.6 -109.2 -35.1 -89.1 n.d.
Trinidad and Tobago 29.7 21.6 57.5 74.9 78.6 69.6
SOURCE: GDP, FAO; FDI UNCTAD 2004.a/ Projections for 2003 obtained from ECLAC, Foreign Investment in Latin America and the Caribbean, 2003.
In the context of economic globalization, the structural reforms carried out in the Latin American
and Caribbean economies—especially capital-account liberalization, export orientation and
participation in wide-ranging subregional trade agreements—have provided a powerful stimulus
to external investment. Although such funds play a major role in financing development, their
costs are unduly variable, responding to circumstances that are beyond the control of the region’s
countries. In years of strong inflows, capital of this type makes possible to balance other outflows
and to finance the current account deficit; nonetheless, their volatile nature demands an alert
and careful management.
Fluctuations in the economic progress of Latin America and the Caribbean are highly correlated
with international capital flows. The net resource transfer abroad that was generated during
67
the debt crisis had been reversed in the region’s favour by 1991; but since 1999 the net flow has
again turned negative. In other words, as happened during the “lost decade”, the region is suffering
from the perverse effect of a resource flow from countries where capital is scarce toward those
where it is relatively more abundant; and 2004 marked the sixth consecutive year of net outflows.
Until 2001, the transfer out of the region as a whole was relatively small—under US$ 3 billion (the
resource transfer from Argentina alone amounted to nearly US$ 16 billion, but this was offset by
capital inflows into other countries). Nonetheless, in 2002, the net negative transfer totalled US$
41 billion, in 2003 there was a US$ 34 billion outflow (2% of GDP), and a further US$ 80 billion outflow
is forecast for 2004 (over 4% of GDP). Specially because of a US$ 65 billion deficit in the balance
of rents and payments.
During this last year, regional output growth has been accompanied by capital outflows. A
current account surplus for the second year running, reinforced by a significant improvement
in the terms of trade, allowed for domestic interest rates to be lowered, which discouraged capital
inflows (capital inflows declined). The cumulative drain of resources over the last five years is
equivalent to more than 5% of regional GDP, thereby placing a major constraint on financing
for development and economic growth (see figure 25)11.
In 2002 and 2003 net negative transfers became very large in several countries, especially Brazil,
Argentina and Venezuela; in other cases positive transfers were reduced, particularly in Mexico
(see figures 26 and 27).
Relative to GDP, positive transfers remain significant in some countries, especially Central
American ones (see figure 28).
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LAC: NET RESOURCE TRANSFER AND GDP (1981 - 2005)Figure 25
SOURCE: FAO/RLC based on ECLAC, Economic Survey of Latin América and the Caribbean (2003-04).
Net resource transfer (Billions of dollars) Percetage change in GDP
0
-10
-20
-30
10
20
30
40
-40
-50
2.0
1.0
0
-1.0
3.0
4.0
5.0
6.0
-2.0
-3.0
198
1
198
2
198
3
198
4
198
5
198
6
198
7
198
8
198
9
199
0
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
20
00
20
01
20
02
20
03
20
04
20
05
11ECLAC calculates the net resource transfer as the net capital inflow minus the balance on the income account (netprofit and interest payments).
68
Figure 26 LA: NET RESOURCE TRANSFER 2003 (Million of dollars)
SOURCE: FAO/RLC based on ECLAC.
-15,000 0-10,000 -5,000 5,000 10,000
Mexico
Guatemala
Uruguay
Nicaragua
El Salvador
Costa Rica
Paraguay
Haiti
Honduras
Bolivia
Peru
Panama
Ecuador
Colombia
Dominican Republic
Chile
Venezuela
Argentina
Brazil
Figure 27
SOURCE: FAO/RLC based on ECLAC.
1999-031991-98
-50,000 -40,000 -30,000 -20,000 -10,000 0 10,000 20,000 30,000 40,000 50,000
Argentina
Venezuela
Brazil
Chile
Colombia
Ecuador
Dominican Republic
Peru
Costa Rica
Uruguay
Haiti
Bolivia
Panama
Paraguay
El Salvador
Honduras
Nicaragua
Guatemala
Mexico
LA: NET RESOURCE TRANSFER 1991-98 AND 1999-03 (Millions of dollars)
69
As indicated above, the trend of capital flows is not one-way traffic, but reflects complex processes
which depend largely on conditions outside the countries of the region. For example, a rise in
international interest rates -for reasons completely unrelated to the Latin American and
Caribbean economies- can significantly raise their financing costs and hence reduce investment
and undermine economic growth in the region. This, in turn, heightens credit risk, which pushes
interest rates even higher and raises additional obstacles to growth. Autonomous capital inflows
may also be discouraged, thus generating a vicious circle that makes it increasingly hard to
restore the growth process.
International financial conditions are beyond the control of the region’s countries, yet a stable
world growth process without frequent and relatively profound crises seems a remote prospect
in the current international situation. The most likely scenario is that external shocks will
continue to shake the Latin American and Caribbean economies for the foreseeable future.
Nonetheless, the degree of vulnerability and the intensity of the negative effects also depend
on domestic conditions and policies. Among others, these include the relative balance on the
current account, the share of domestic saving in development financing, the size of the fiscal
deficit, the quality of the financial system and bank supervision, exchange-rate policies,
regulations on capital inflows and the macroeconomic policy framework. These elements, along
with the size of the external debt and its conditions, may imply very different capacities in each
country to cope with the effects of international crises.
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Figure 28 LAC: NRT IN RELATION TO GDP 1999-2003 (Percentage)
SOURCE: FAO/RLC based on ECLAC and WEO 2004 figures.
-10.0 -5.0 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0
Venezuela
Ecuador
Argentina
Dominican Republic
Chile
Colombia
Uruguay
Brasil
Costa Rica
Peru
Bolivia
Panama
Haiti
El Salvador
Mexico
Paraguay
Honduras
Guatemala
Nicaragua
70
The traditional focus on production for the domestic market, and the weak outward orientation
of growth that dominated the Latin American development strategy for several decades (and
still persists in comparison to other regions of the developing world), was a significant factor
aggravating the region’s external vulnerability. While in Africa and the Middle East exports
accounted for about 30% of GDP until the 1980s, in Latin America and the Caribbean, and in
Asia, the proportion was below 15%. During the 1990s the situation in Asia changed, however,
as its exports expanded to over 30% of GDP; but in Latin America and the Caribbean, the low share
of exports persisted until 1998, and they currently account for just 21% of GDP, reflecting in
particular the small share of foreign trade in the South American economies, apart from Chile
(see figure 30).
In the international domain, discussion is taking place on a number of alternatives for mechanisms
to discourage speculative currency movements and promote stability on financial markets and
in exchange rates. There are major problems in designing an efficient, non-distorting mechanism,
however, let alone in putting one into practice12.
C. EXTERNAL DEBT
The regional external debt is a major cause of the vulnerability of economic growth in Latin
America and the Caribbean, which puts heavy pressure on economic balances vis-à-vis the rest
of the world. The size of the debt in relation to macroeconomic variables and the conditions
agreed, the regional external debt continues to be a major constraint on possibilities for
economic and social progress.
Changes in Latin America and the Caribbean international financial relations during the 1970s
and 1980s, which led to the external debt crisis, triggered the first and most dramatic of the
external shocks that have hit the region since then. The rapid process of foreign borrowing by
relatively closed economies was more intensive in Latin American and some Caribbean ones,
than in other regions of the world (see figure 29).
EXTERNAL DEBT 1980-2005 (Billions of dollars)Figure 29
198
0
198
119
82
198
319
84
198
519
86
198
719
88
198
919
90
199
119
92
199
319
94
199
519
96
199
719
98
199
920
00
200
120
02
200
320
05
0
200
400
600
800
SOURCE: FAO/RLC based on IMF, WEO april 2004.
Africa
Developing Asia
Middle East and Turkey
Latin America and Caribbean
12 The so-called “Tobin tax” is one of the initiatives that has been most widely discussed in recent months, althoughtechnical objections now seem to be directing the search towards other mechanisms.
71
The total foreign debt of Latin America and the Caribbean amounts to US$ 742 billion (measured
as an average for the last five years) and is the highest of all developing regions. In relation to
GDP, however, the region’s indebtedness is broadly in line with the developing country norm.
Taking the average of recent years, the region’s external debt represents 41% of GDP—higher than
in Asia (26%), but below the level in Africa and the Middle East 50%). The external debt of Latin
America and the Caribbean represents almost twice the value of its annual exports—a higher ratio
than any other region. In 1986 the debt reached a level equivalent to four years’ exports, and even
in the early years of the 1990s it amounted to nearly three years’ export earnings— coefficients
that far outstrip those of other developing regions (see figure 31, 32 and table 14)13.
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SOURCE: FAO/RLC based on IMF, WEO april 2004.
EXPORTS / GDP IMF (1980-2005)Figure 30
Asia enDesarrollo
Africa
Latin Americaand the
Caribbean
Middle Eastand Turkey
198
0
198
1
198
2
198
3
198
4
198
5
198
6
198
7
198
8
198
9
199
0
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
200
0
200
1
200
2
200
3
200
4
200
50
5
10
15
20
25
30
35
40
45
50
DEBT IN RELATION TO GDP 1980-2005 (Percentage)Figure 31
0
10
20
30
40
50
60
70
80
198
019
81
198
219
83
198
419
85
198
619
87
198
819
89
199
019
91
199
219
93
199
419
95
199
619
97
199
819
99
200
020
01
200
220
03
200
5
SOURCE: FAO/RLC based on IMF, WEO april 2004.
Africa
Developing Asia
Middle East and Turkey
Latin America and Caribbean
Developing countries
13 Average indicators for the last five years (1999-2003).
72
Moreover, this greater vulnerability, compounded by the region’s relative development level and
various crises and restructurings, partly explain why the borrowing conditions imposed on
Latin America and the Caribbean are also more severe than for other regions, which means that
debt service ratios in relation to export earnings are also much higher. Considering the average
for the last five years, interest paid by the countries of the region has accounted for roughly
12.5% of exports (over 30% at start of the 1980s), whereas in Africa, Asia and the Middle East
the figures range between 3% and 5.6%. Latin America and the Caribbean has also had to allocate
about 40% of its export earnings to service its external debt, whereas the figure in other regions
varies between 11% and 16% (see again table 14 and figures 33 and 34 ).
DEVELOPING COUNTRIES: EXTERNAL DEBT, DEBT SERVICE AND INDICATORS(Average 2001-2005)
Table 14
Region External debt Debt service Interest GDP Exports
(Billions of US$)
Developing countries 2,154.1 334.6 98.0 6,059.0 1,894.3
Latin American and the Caribbean 742.8 156.9 47.2 1,832.2 382.6
Africa 269.5 27.4 9.8 538.1 181.4
Developing Asia 701.6 104.6 28.0 2,749.5 954.4
Middle East and Turkey 440.2 45.8 13.0 939.2 375.9
Region Exp/ Service/ Interest/ Debt/ Service/ Debt/ Service/ Interest/
GDP Debt Debt GDP GDP Exp Exp Exp
(Percentage)
Developing countries 31.1 15.5 4.6 35.9 5.6 116.2 18.1 5.3
Latin American and the Caribbean 20.9 21.1 6.4 40.7 8.6 195.5 41.4 12.5
Africa 33.9 10.2 3.7 51.2 5.3 151.1 15.6 5.6
Developing Asia 34.4 14.9 4.0 25.9 3.9 76.2 11.4 3.0
Middle East and Turkey 40.1 10.4 3.0 47.4 4.9 118.1 12.2 3.5
SOURCE: FAO/RLC based on IMF, WEO april 2004.
África
Asia en desarrollo
Medio Oriente y Turquía
América Latina y el Caribe
SOURCE: IMF based on WEO, april 2004.
DEBT IN RELATION TO EXPORTS 1980-2005 (Percentage)Figure 32
0
50
100
150
200
250
300
350
400
198
019
81
198
219
83
198
419
85
198
619
87
198
819
89
199
019
91
199
219
93
199
419
95
199
619
97
199
819
99
200
020
01
200
220
03
200
5
Africa
Developing Asia
Middle East and Turkey
Latin America and Caribbean
73
Early over-borrowing of Latin American and Caribbean countries, compounded by difficulties in
achieving more outward-oriented growth, have made the region’s external debt a much heavier
burden than elsewhere in the developing world. This also heightens the region’s vulnerability to
changes in the world economic context.
Although the external debt crisis has been overcome, and most countries of the region now have
access to financing on international markets, the level of debt and borrowing conditions remain
a source of vulnerability given the uncertainty and variability of external conditions. During the
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SOURCE: IMF, WEO, april 2004.
INTEREST IN RELATION TO EXPORTS 1980-2005 (Percentage)Figure 33
30
25
20
0
5
10
15
198
019
81
198
219
83
198
419
85
198
619
87
198
819
89
199
019
91
199
219
93
199
419
95
199
619
97
199
819
99
200
020
01
200
220
03
200
5
35
Africa
Developing Asia
Middle East and Turkey
Latin America and Caribbean
SOURCE: IMF, WEO, april 2004.
DEBT SERVICE IN RELATION TO EXPORTS 1980-2005 (Percentage)Figure 34
198
019
81
198
219
83
198
419
85
198
619
87
198
819
89
199
019
91
199
219
93
199
419
95
199
619
97
199
819
99
200
020
01
200
220
03
200
5
30
20
0
10
40
50
60
70
Africa
Developing Asia
Middle East and Turkey
Latin America and Caribbean
74
SOURCE: FAO/RLC based on IMF, WEO database, april 2004.
LAC: EXTERNAL DEBT INDEX (1995=100)Figure 35
Exports
Debt
GDP at currentprices
Debt Service
198
0
198
1
198
2
198
3
198
4
198
5
198
6
198
7
198
8
198
9
199
0
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
200
0
200
1
200
2
200
3
200
4
200
520
40
60
80
100
120
140
160
180
200
Figure 36 LAC: DEBT INDEX (1990=100)
SOURCE: FAO/RLC based on IMF, WEO april 2004.
0 100 200 300 400 500 600 700 800 900
Nicaragua
Guyana
Jamaica
Trinidad and Tobago
Venezuela
Dominica
Bolivia
Costa Rica
Ecuador
Panama
Honduras
Peru
Paraguay
Haiti
Brazil
Dominican Republic
Mexico
Guatemala
Uruguay
El Salvador
Antigua and Barbuda
Colombia
Chile
Argentina
Barbados
Saint Vincent and the Grenadines
Grenada
Saint Lucia
Suriname
Belize
Saint Kitts and Nevis
1995 2004
75
1990s, the relative weight of debt service grew strongly, and borrowing levels increased, especially
in a number of Caribbean countries. Only six countries saw their total debt shrink during the
decade: Nicaragua, Guyana, Jamaica, Trinidad and Tobago, Dominican Republic and Venezuela
(see figures 35 and 36).
Although regional average debt indicators are considerably stronger now than in the 1980s,
several countries still display indices that could indicate overborrowing pressure. Measured
as the average for the last five years, external debt is equivalent to over half of gross national
product in 13 countries, and in nine countries it accounts for over two years’ exports. During
the last few years, Brazil and Argentina have had to allocate about 70% of their export earnings
to debt service, with interest payments accounting for over a fifth of this (see table 15 and
figures 37, 38, 39, 40).
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LAC: EXTERNAL DEBT INDICATORS (Average 2001-2005)Table 15
Country Debt Debt Debt/ Debt/ Service/ Interest/
service GDP Exports Exports Exports
(Billions of dollars) (Ratio)
Latin America and the Caribbean 741.0 156.9 40.7 196.3 41.6 12.5
Latin America 729.6 155.3 40.7 202.3 43.1 12.9
Brazil 204.9 55.6 39.8 260.8 70.1 19.9
Mexico 170.7 40.5 26.5 140.6 33.5 9.1
Southern Cone 195.5 32.3 79.6 301.1 50.2 15.3
Argentina 139.2 24.1 96.8 421.2 73.2 22.0
Chile 40.5 6.4 52.7 155.2 24.9 5.8
Paraguay 2.5 0.3 39.6 96.5 10.6 5.3
Uruguay 13.3 1.5 100.2 418.1 48.4 31.3
Andean countries 123.4 22.8 44.5 196.3 36.2 12.9
Bolivia 4.3 0.2 49.8 240.9 13.5 5.1
Colombia 39.0 8.6 46.4 250.9 55.3 16.8
Ecuador 14.5 2.3 55.6 203.8 31.7 19.4
Peru 29.0 3.8 47.6 271.8 36.2 15.1
Venezuela 36.6 7.9 38.2 133.1 28.7 8.8
Central America 27.2 2.5 37.3 117.6 10.9 6.4
Costa Rica 3.6 0.8 20.1 44.8 9.3 3.5
El Salvador 4.0 0.4 30.6 100.0 9.0 5.7
Guatemala 3.8 0.6 19.6 94.9 16.0 7.1
Honduras 4.7 0.4 67.6 173.7 15.3 4.9
Nicaragua 4.5 0.1 167.9 445.3 14.5 7.1
Panama 6.6 0.9 50.3 189.1 27.4 14.1
Latin Caribbean 7.9 1.0 35.3 82.2 10.0 3.6
Haiti 1.3 0.04 30.2 242.1 7.3 2.6
Dominican Republic 6.6 0.9 36.9 73.1 10.2 3.6
CARICOM 11.4 1.6 36.1 67.9 9.5 4.8
Antigua and Barbuda 0.7 0.1 88.8 120.3 9.2 6.7
Barbados 1.3 0.2 51.8 95.3 12.3 10.0
Belice 0.8 0.1 81.1 143.8 26.4 10.1
Dominica 0.1 0.01 32.7 66.4 10.5 4.5
Grenade 0.2 0.02 56.6 118.4 12.0 4.6
Guyana 1.2 0.05 171.6 182.9 7.3 3.7
Jamaica 3.5 0.69 44.3 93.7 18.5 8.6
Saint Kitts and Nevis 0.3 0.04 77.7 160.0 19.3 9.2
Saint Vincent and the Grenadines 0.1 0.01 36.6 76.7 7.7 3.8
Saint Lucia 0.3 0.04 37.3 69.6 9.4 3.8
Suriname 0.4 0.05 40.6 66.0 7.7 2.0
Trinidad and Tobago 2.0 0.23 19.2 36.7 4.3 2.4
SOURCE: FAO/RLC based on IMF, WEO april 2004.
76
Figure 37 LAC: DEBT IN RELATION TO GDP (2003-2004)
SOURCE: FAO/RLC based on IMF, WEO abril 2004.
0 20 40 60 80 100 120 140 160 180
BahamasTrinidad and Tobago
Costa RicaGuatemala
MexicoHaiti
El SalvadorDominica
BrazilVenezuela
Saint Vicente and the GrenadinesParaguay
Saint LuciaSurinameJamaica
ColombiaPeruChile
Dominican RepublicEcuadorPanamaBolivia
BarbadosGrenada
HondurasBelice
Saint Kitts and NevisAntigua and Barbuda
ArgentinaUruguay
NicaraguaGuyana
SOURCE: FAO/RLC based on IMF, WEO april 2004.
0 50 100 150 200 300 350 400 450
BahamasTrinidad and Tobago
Costa RicaSurinameDominica
Saint LuciaDominican Republic
Saint Vincent and the GrenadinesJamaica
ParaguayEl Salvador
BarbadosGuatemalaVenezuela
Antigua and BarbudaGrenada
ChileBelice
MexicoSaint Kitts and Nevis
EcuadorHonduras
PanamaGuyana
HaitiBrazil
PeruBolivia
ColombiaNicaraguaArgentina
Uruguay
Figure 38 LAC: DEBT IN RELATION TO EXPORTS ( 2003-2004)
250
2003 2004
2003 2004
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Figure 39 LAC: DEBT SERVICE IN RELATION TO EXPORTS ( 2003-2004)
SOURCE: FAO/RLC based on IMF, WEO april 2004.
2003 2004
BahamasGuyana
SurinameHaiti
Trinidad and TobagoSaint Vincent and the Grenadines
NicaraguaSaint Lucia
Dominican RepublicCosta Rica
GrenadaAntigua and Barbuda
ParaguayDominica
BoliviaBarbados
GuatemalaEl Salvador
ChileJamaica
HondurasBelice
Saint Kitts and NevisPanamaEcuadorMexico
PeruVenezuela
UruguayColombiaArgentina
Brazil
0 10 20 30 40 50 60 70 80 90
Figure 40 LAC: DEBT INTEREST IN REALATION TO EXPORTS (2003-2004)
SOURCE: FAO/RLC based on IMF, WEO april 2004.
2003 2004
0 5 10 15 20 25
BahamasSuriname
GuyanaTrinidad and Tobago
HaitiDominican Republic
Costa RicaChile
Saint Vincent and the GrenadinesParaguayDominica
Saint LuciaBolivia
HondurasGrenada
NicaraguaAntigua and Barbuda
GuatemalaMexicoBelize
JamaicaVenezuela
Saint Kitts and NevisBarbadosArgentina
PeruPanamaEcuador
ColombiaBrazil
Uruguay
30 35
78
SOURCE: OMC 2004.
LAC: EXPORTS OF GOODS AND SERVICE (Millions of dollars)Figure 41
198
0
198
1
198
2
198
3
198
4
198
5
198
6
198
7
198
8
198
9
199
0
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
200
0
200
1
200
2
200
3
200
4
200
5
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
Service exports Good exports
D. BALANCE OF PAYMENTS
Exports of goods and services from Latin America and the Caribbean posted a new record of US$
432 billion in 2003, i.e. almost two and a half times the value exported in 1990. Preliminary estimates
show that exports will have again recorded strong growth in 2004, amounting to 19.8% in nominal
terms14 and 14.4% in real terms. These figures mark a major recovery, since in 2001 and 2002 export
volumes had faltered as a result of deteriorating international demand and economic problems in
several of the countries of the region (see figure 41).
14 ECLAC, Preliminary Overview of the Economies of Latin America and the Caribbean, 2004.15 Estimates published at the end of 2004, too late for inclusion in this text, show that the rapid growth of the worldeconomy, and particularly imports into China and the United States, has meant a sharp increase in international demandfor commodities, wich, in turn, boosted their prices. This led to substantial regional export growth in 2004 and asignificant improvement in the terms of trade.
Within the instability and weakness of regional economic growth, exports have been a relatively
more buoyant element over the last decade, driven both by international demand during years of
rapid growth of world economy, and by changes in the regional international participation. Subregional
integration processes in Latin America and the Caribbean have also played a role here, especially
the close ties between Mexico (and to a lesser extent Central America) and the United States; and
development of the intra-regional market, especially among the MERCOSUR countries.
Between 1986 and 1987, exports expanded quite vigorously (averaging 10% per year), as a result
of efforts made by individual countries and favourable conditions in the world economy. Later,
when these conditions deteriorated, firstly following the Asian crisis and financial moratoria,
and then in the general recession of the last few years, the rate was halved. Between 1997 and
2003, the regional exports grew by just 5% per year. In 1998 and 1999 the slower expansion was
largely due to the drop in prices, while export volumes continued to grow more or less at the
same pace as before. In recent years, however, the lower export value has reflected both weaker
prices and scant increase in the volume of goods shipped15.
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SOURCE: WTO 2004.
LAC: SHARE IN EXPORTS OF GOODS AND SERVICES (Percentage)Figure 42
1990 2003
Brazil 21% Brazil 19%
Mexico 29%Mexico 41%
SouthernCone 17%
SouthernCone 15%
Andeancountries 21%
Andeancountries 13%
Central America 4%
Latin Caribbean 2%CARICOM 6% CARICOM 4%
Latin Caribbean 3%
Central America 5%
16 This figure is based on merchandise imports amounting to US$ 361.8 billion and services imports of US$ 64.9 billion.
Export growth during the early years of the decade was quite widespread among Latin
American and Caribbean countries and particularly buoyant in Central America and Mexico;
in the latter case, the high rate of growth on a relatively broad export base at the start of the
period produced a substantial expansion of Mexico’s share of the region’s exports (and of its
imports) (see figure 42).
In an eloquent illustration of the influence exerted by the international context on the countries
of the region, the slowing of export growth since 1997 has been more or less widespread throughout
the region. In some cases, mainly among the southern cone countries and the Caribbean, the total
amount exported actually declined (see figure 43).
The change in the international trade context had an even greater effect on imports. These had
grown rapidly following the debt crisis, reflecting the increasing participation of Latin America
and the Caribbean in the world economy; between 1990 and 1997 the annual average growth
rate was 13%. From 1997 onward import growth faltered in response to the changing international
context and recession among the regional economies; but, following recovery in 2000, they
climbed to a new peak of US$ 450 billion. In the ensuing years slower economic growth caused
imports to fall back once more, and in 2003 they were estimated at US$ 427 billion16. As in the
case of exports, the reduction was widespread throughout the region; the southern cone countries
experienced a very large reduction in absolute terms, reflecting the sharp contraction suffered
by those economies.
Following deficits between 1992 and 2001 as a result of the rapid import growth, the balance
of trade in goods and services has reversed in recent years. In 2002, a surplus stood at of US$
10 billion, and in 2003 this widened to US$ 28 billion. Although economic recovery is bound to
mean renewed import growth, exports are expected to expand faster, on the back of more
competitive exchange rates and an increasingly widespread outward orientation to growth.
80
17 ECLAC, Preliminary Overview of the Economies of Latin America and the Caribbean, 2003.18 Ibid.
Figure 43 LAC: EXPORTS OF GOOD AND SERVICES (Average annual rate)
SOURCE: FAO/RLC based on WTO 2004.
-10 -5 0 5 10 15 20
Uruguay
Suriname
Dominica
Saint Kitts and Nevis
Antigua and Barbuda
Barbados
Saint Lucia
Paraguay
Honduras
Jamaica
Haiti
Argentina
Nicaragua
Colombia
Saint Vincent and the Grenadines
Chile
Dominican Republic
Ecuador
Guatemala
Costa Rica
Venezuela
Peru
Bolivia
Grenada
El Salvador
Belize
Brazil
Panama
Mexico
Bahamas
Trinidad and Tobago
90-97 97-03
International price trends in 2003 generated more favourable conditions in the external market
for Latin American and Caribbean products, as the average price of the region’s exports rose by
15.9%. If oil is excluded, the increase is smaller but nonetheless still significant at 5.9%. The slow
deterioration of terms of trade, which between 1998 and 2002 declined by 3.3% (14.9% for non-
oil countries) stooped in 2003 showing an improvement of 1.3%.17.
Recent months have seen a significant rise in mineral prices, particularly copper and gold,
thereby improving the terms of trade for several of the countries of the region. The prices of
soybeans, which have recently become a leading export product in several parts of Latin America,
have also continued to rise strongly. In addition, the prices of coffee and sugar show upward
trend , though from historically very low levels18.
1980 1990 1997 2000 2001 2002 2003
I. BALANCE ON CURRENT ACCOUNT -29,882 -1,025 -64,552 -46,666 -52,915 -14,268 5,604
Exports of goods f.o.b. 91,590 136,997 286,527 358,638 342,948 346,478 374,921
Imports of goods f.o.b. -92,461 -105,259 -299,755 -355,326 -346,947 -323,069 -333,328
Merchandise balance -870 31,738 -13,228 3,312 -3,999 23,409 41,592
Services (Credit) 15,274 25,032 40,679 49,402 47,985 46,608 49,515
Services (Debit) -27,135 -33,213 -59,572 -66,319 -67,199 -60,910 -63,151
Balance of goods and services -12,731 23,557 -32,121 -13,605 -23,213 9,106 27,956
Income (Credit) 12,384 11,832 23,538 27,484 22,994 16,536 15,102
Income (Debit) -31,280 -45,096 -68,708 -77,896 -77,649 -67,945 -71,752
Balance of income -18,895 -34,188 -47,666 -53,503 -54,655 -51,410 -56,650
Balance of current transfers 1,745 9,605 15,235 20,442 24,953 28,034 34,298
II. BALANCE ON CAPITAL ACCOUNT 21 43 1,067 1,009 660 1,073 1,102
III.BALANCE ON FINANCIAL ACCOUNT 30,936 -4,857 92,288 56,179 43,928 -5,108 2,534
Net foreign direct investment 5,744 6,722 57,599 67,459 64,127 38,733 28,413
Total financial assets -19,294 -17,328 -12,313 -11,716 -21,106 -3,860 -16,520
Total financial liabilities -31,011 5,749 47,002 436 908 -40,164 -9,359
IV. ERRORS AND OMISSIONS -17,2 8 -435 -3,998 3,474 -8,885 -9,751 1,522
V. OVERALL BALANCE -652,169 -6,632 24,804 13,998 -17,211 -28,055 10,764
VI. RESERVES AND RELATED ITEMS 652,169 6,631 -24,804 -13,998 17,211 28,055 -10,764
SOURCE: ECLAC based on figures provided by the IMF; since 1996 by national institutions.a/ Excluding components classified in Group VI categories.
LATIN AMERICA: BALANCE OF PAYMENTS (Millions of dollars)Table 16
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19 ECLAC, Preliminary Overview of the Economies of Latin America and the Caribbean, 2003.20 Late-2004 estimates show that the current account surplus has been repeated this year.
In the balance recorded breakdown of 2003 the balance of payments by components, the merchandise
trade account posted a surplus of US$ 41.5 billion, offsetting a US$ 13.6 billion deficit on trade in
services. Private transfers, consisting essentially of remittances from workers abroad, amounted
to US$ 34 billion . These are important sources of external financing for several countries, especially
in Mexico and Central America19.
In contrast, significant resources will continue to flow out of the region on the income account,
consisting mainly of profits, amortization and interest payments. In 2003, this balance amounted
to US$ 56 billion.
The net outcome of these accounts produces a surplus on the current account, which is unprecedented
in the region20.
The capital accounts of the balance of payments in Latin America and the Caribbean remained
broadly neutral in 2003. Whereas financial accounts recorded an outflow of US$ 25.5 billion,
the region received foreign direct investment amounting to US$ 28 billion, thus producing a
surplus of US$ 3.5 billion. Nonetheless, FDI continues in rapid decline. In 2003, capital inflows
in this category were US$ 10 billion less than the amount received in 2002, and under half those
entering the region annually between 1997 and 2001 (see table 16).
82
E. INFLATION
In contrast to the instabiñity and vulnerability shown by the external balance , the region has
made consistent progress toward domestic price stability. The vast majority of countries have
kept the growth of the general price level under control, even in recent years when exchange-rate
vicissitudes generated powerful inflationary pressures in several cases.
Since 1995, which was the first year without hyperinflation in any Latin American country, the
average inflation index for the region fell continuously for seven years until 2001 (dropping
from 36.8% to 6.0%). Progress achieved on the inflation front was very widespread: in 2001, in
clear contrast to the regional historical inflationary tradition, 27 out of the 33 countries posted
inflation in single digits (see figure 44)21.
In 2002 and 2003 the rate of increase in the general level of prices accelerated slightly, as a
result of disturbances on foreign-exchange markets that affected the southern cone countries
particularly, and because of the expansionary policies pursued by a number of countries to
alleviate the recessionary impact of the problematic international situation. Nonetheless, private
expenditure remained generally depressed, which eased upward pressure on prices from the
demand side. Numerous countries in the region have recognized the need to control inflation
as a policy priority, and in several cases the achievement of annual targets has been made a
central bank responsibility. In 2004, the inflation index fell once again as a regional average
(6.2%) and also in the majority of countries individually. A new historical low inflation index
(5.6%) is expected to be reached in 2005 (see figure 45)22.
21 In 2001, only Costa Rica, Ecuador, Haiti and Venezuela recorded price rises above 10%. No information is availablefor Cuba or Suriname.22 ECLAC, Preliminary Overview of the Economies of Latin America and the Caribbean, 2004.
SOURCE: IMF, WEO april 2004.
LAC: INFLATION RATE 1980-2005 (Percentage)Figure 44
1980
200
300
400
500
600
100
01980 1980 1980 1980 1980 1980 1980 1980 1980 1980 1980 2004
Per
cen
tag
e
199
5
199
6
199
7
199
8
199
9
20
00
200
1
200
2
200
3
200
4
200
5
05
1015
2025303540
Figure 45 INFLATION RATE (2003-2004)
SOURCE: IMF, WEO april 2004.
2003 2004
0 5 10 15 20 25 30
Saint Lucia
Panama
Chile
Sainy Kitts and Nevis
Saint Vincent and the Grenadines
Dominica
Barbados
Peru
Antigua and Barbuda
Belize
Grenada
Bahamas
El Salvador
Trinidad and Tobago
Ecuador
Bolivia
Mexico
Guyana
Guatemala
Nicaragua
Colombia
Brazil
Latin America and the Caribbean
Argentina
Jamaica
Honduras
Paraguay
Uruguay
Costa Rica
Suriname
Haiti
Dominican Republic
Venezuela
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F. INCOME DISTRIBUTION
Latin America and the Caribbean region has the most unequal income distribution of any region
in the world: 40% of total income is received by the wealthiest 10% of the population, and 25%
is received by the top 5% alone. These indicators represent the highest concentration of income
among developing regions, and are almost double those prevailing in developed countries,
where, on average, the wealthiest 5% of the population receive 13% of total income23. The flipside
of this is that the poorest 30% of the population in Latin America and the Caribbean receive
just 7.5% of total income—less than in any other region in the world, and just half the figure in
developed countries (14%). As a result Latin America has the largest gap between rich and poor
population in the world (see table 17 and figure 46).
23 According to IDB calculations, based on Deininger and Squire (1996a).
SOURCE: IDB calculations based on Deininger and Squire (1996a).IDB 1998, "América Latina frente a la Desigualdad".
INCOME DISTRIBUTIONTable 17
Income received by
Region Wealthiest 5% Poorest 30%
% of total income
Latin America and the Caribbean 25.0 7.5
Africa 24.0 10.2
Southeast Asia 16.0 12.0
Developed countries 13.0 14.0
84
The degree of economic polarization can also be expressed in terms of the Gini coefficient24.
Among the regions for which information is available, Latin America and the Caribbean have
the highest Gini coefficient at over 50, compared to Asia (a coefficient of 40) and the countries
of the OECD and Eastern Europe which have Gini coefficients close to 30 (see table 18).
24 The most widely used indicator for measuring the concentration of income is the Gini coefficient, which summaritedthe income shares of all population groups into a statistic that takes values between zero and one. A perfectly equaldistribution would produce a coefficient of zero, while the value 1 indicates maximum concentration; an increase inthe coefficient thus reflects greater income concentration. In reality, countries with the best income distributiondisplay indices ranging from 0.25 to 0.30; Latin America has a Gini coefficient of about 0.5 or 0.6. For ease of expression,the coefficient is sometimes multiplied by 100.
SOURCE: IDB based on Deininger and Squire (1996a).
INCOME DISTRIBUTIONFigure 46
25.0
20.0
15.0
10.0
5.0
0.0
Latin America and Caribbean
Africa
Southeast Asia
Developed countries
Wealthiest 5% Poorest 30%
GINI COEFFICIENT BY REGIONTable 18
Region 1970s 1980s 1990s average
Latin America and the Caribbean 48.8 50.8 52.2 50.5
Asia 40.2 40.4 41.2 40.6
OECD 32.3 32.5 34.2 33
Eastern Europe 28.3 29.3 32.8 30.1
Changes 70-80s 80-90s 70-90s
Latin America and the Caribbean 2.4 1.3 3.7
Asia 0.2 0.8 1.1
OECD 0.2 1.7 1.9
Eastern Europe 1.0 3.5 4.5
Differences in Gini points relative to LAC
Asia 8.3 10.4 10.9 9.9
OECD 16.1 18.3 18 17.5
Eastern Europe 20.2 21.6 19.4 20.4
SOURCE: Based on WIDER 2000.
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Economic concentration in the region is not diminishing. Over the last three decades, the Gini
coefficient has increased by more than in any other region, except Eastern Europe following
the change of economic and social system in those countries. Income concentration in Latin
America and the Caribbean thus persists or is even growing compared to other regions (see
again table 18).
Within the general economic polarization of the region, there are different situations both
among countries and in the population segments where polarization is most accentuated (i.e.
the richest or the poorest).
From the standpoint of differences between countries, Latin American ones display the greatest
inequality, while income distribution in the Caribbean is more moderate.
In terms of the nature of the concentration, in some cases polarization is due to the fact that
the highest income group receives a particularly large proportion of total income. This can be
seen in the income share received by the last decile, i.e. the wealthiest 10% of the population.
In other cases, polarization reflects the negligible proportion received by a large group of people
living in poverty; this is revealed in the income share received by the first four deciles (the
poorest 40% of the population).
The highest concentration of income in the last decile is seen in Brazil (47% of total income),
followed by Argentina, Bolivia, Nicaragua, and Chile (between 40% and 42%). Between 1990 and
2002, the concentration of income received by the wealthiest 10% increased in most countries;
decreasing only in Mexico, Uruguay, Colombia, Guatemala, Honduras and Panama. Uruguay is
the country with the least concentrated wealth in the region.
The smallest total income shares received by the poorest 40% of the population correspond to
Bolivia (9.5%), followed by Brazil (10.2%), Honduras (11.3%), Colombia (11.9%) and Nicaragua (12.2%).
Between 1990 and 2002, the income share of the poorest 40% rose slightly in half of the region’s
countries, while shrinking even further in the other half (see table 19).
Overall
LA: DISTRIBUTION OF HOUSEHOLD INCOME,A NATIONWIDE TOTAL, 1990 – 2002(Percentages)
Table 19
Share of total income received by:
Country 1990 2002
Poorest 40% Wealthiest 10% Poorest 40% Wealthiest 10%Brazil 9.5 43.9 10.2b 46.8b
Mexico 15.8h 36.6h 15.7 33.2
Southern Cone
Argentinad 14.9 34.8 13.4b 42.1b
Chile 13.2 40.7 13.8c 40.3c
Paraguay 18.6g 28.9g 12.9b 37.3c f
Uruguayf 20.1 31.2 21.6 27.3
Andean countries
Bolivia 12.1e h 38.2e h 9.5 41.0
Colombia 10.k 41.8k 11.9c f 39.1 c f
Ecuadorf 17.1 30.5 15.4 34.3
Peru 13.4l 33.3l 13.4 33.5
Venezuela 16.7 28.7 14.3 31.3
Central America
Costa Rica 16.7 25.6 14.5 30.2
Salvador 15.4 32.9 13.4b 33.3b
Guatemala 11.8e 40.6e 14.2 36.8
Honduras 10.1 43.1 11.3 39.4
Nicaragua 10.4j 38.4j 12.2b 40.7b
Panama 12.5i 35.9i 14.2 32.7
Latin Caribbean
Dominican Republic 14.5l 36l 12.0 38.3
SOURCE: FAO/RLC based on ECLAC 2004 figures, based on tabulations made from household surveys in the respective countries.a/ Households nationwide ranked by per capita income.b/ Data correspond to 2001.c/ Data correspond to 2000.d/ Greater Buenos Aires.e/ Eight main cities and El Alto.f/ Urban total.g/ Metropolitan area of Asunción.h/ Data correspond to 1989.i/ Data correspond to 1991.j/ Data correspond to 1993.k/ Data correspond to 1994.l/ Data correspond to 1997.
86
When the two measures of income concentration combine, the result is a wide income gap between
economically privileged groups and population segments that live in poverty. In this respect Brazil
is the most unequal country in the region, with wealth highly concentrated at the top of the
distribution alongside wide-ranging mass poverty. Uruguay has the region’s least unequal
distribution; but still highly concentrated compared to patterns prevailing in developed countries
(see figure 47).
In recent decades, the historically high concentration of income in the region has been aggravated
by inflationary processes; and during austerity programmes to restore macroeconomic
equilibrium, the sacrifices have generally been borne more than proportionately by the poor,
thereby accentuating polarization still further. On the contrary, during periods of economic
recovery, the benefits have tended to be concentrated among the higher-income groups, which
find more effective ways of participating in the new economic expansion. Inequality in the
distribution of income represents a major rigidity in Latin America, and in some countries it
is worsening.
Between 1990 and 2002, the concentration of income, measured by the Gini coefficient, declined
in eight countries (Uruguay, Honduras, Colombia, Guatemala, Mexico, Peru, Nicaragua and
Panama). In the other 10 countries for which the information is available polarization accentuated
further (see figure 48).
SOURCE: FAO/RLC based on ECLAC, Social Panorama 2003; UNDP Human Development Report.
LAC: CHANGES IN GINI COEFFICIENTFigure 48
0.45
0.5
0.55
0.6
0.65
0.7
0.45
0.4 0.5 0.55 0.60 0.65 0.7
200
2
1990
CosVen
Ecu ELS
Dmi
Par
Arg
Chi
Bol
Nic
Gua
Hon
PanPer
Mex
Uru
Countries with moreunequal income ditributionthan in 1990
Countries with lessunequal incomedistribution than in 1990.
Bra
Col
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SOURCE: FAO/RLC based on ECLAC 2004a/ Greater Buenos Aires.b/ Urban total.
LAC: INCOME DISTRIBUTION IN 1990 AND 2002Figure 47
Poorest 40% in 2002 Wealthiest 10% in 2002Poorest 40% in 1990 Wealthiest 10% in 1990
Argentina a
Bolivia
Brazil
Chile
Colombia
Costa Rica
Ecuador f
Salvador
Guatemala
Honduras
Mexico
Nicaragua
Panama
Paraguay
Peru
Dominican Republic
Uruguay b
Venezuela
0
10
20
30
40
50
88
Improvements in the income distribution are closely linked to employment conditions. Labour
incomes, consisting mainly of wages and salaries, form the largest component of family income,
accounting for over 80% of the total in most Latin American countries25. Another important
income source, transfers, consists largely of retirement pensions, which are also related to
employment conditions. Property income generally accounts for a relatively small share, although
it may be highly concentrated. Over half of all incomes earned from the labour market come in the
form of wages, so, while public transfer policies may be important for poverty relief, the chances
of consistently improving the income distribution depend on job creation and improvements in
productivity. Education and labour training, together with conditions for expanding productive
investment, are the essential foundation for improving equity.
On the other hand, the labour market itself displays significant peculiarities and glaring asymmetries,
which makes it essential for the economic model to support growth that generates greater demand
for labour. Labour markets need flexibility to avoid the rigidities that inhibit employment growth;
this should not simply mean precariousness, however; flexibility therefore needs to be complemented
with unemployment protection and job security policies.
Urban and rural income
Another dimension of inequity in the income distributions of Latin American and Caribbean
countries is urban-rural polarity. Differences between the countryside and the city remain a
basic source of social inequality and an expression of economic polarization. To a large extent,
the rural domain acts as a safety valve by absorbing unemployment and underemployment, and
providing means of subsistence to a large fraction of the population that is excluded from the
main dynamic of the current development model.
In all countries of the region, income per capita is higher in the cities than in rural areas.
Although the differences are very considerable in monetary terms, their effect is mitigated
because the countryside offers viable survival strategies that combine productive activities
with the household economy and community support, thereby making it possible to achieve
minimal living standards on less income.
In addition, the particular features of each social milieu generate differences in the structure
and composition of consumption, which generally also make it possible to obtain the essential
conditions of life at lower monetary cost in rural areas.
Nonetheless, even when incomes in the cities and in the countryside are weighted to make them
comparable, rural incomes are still substantially lower. In all countries, the urban poverty line26
is significantly higher than its rural counterpart; yet average urban income is further above the
urban poverty threshold than its rural counterpart. In other words, in most countries, the rural
population generally lives closer to a state of poverty (see table 20).
25 This includes incomes earned in the “employer” category, which are higher but pertain to a small segment of thepopulation only.26 The value of the poverty line is obtained by multiplying the indigence line by a constant factor that takes accountof basic non-food expenses: for urban areas this corresponds to the cost of the food basket. Calculation of thesethresholds took account of differences in food prices between metropolitan areas, other urban areas and rural zones.(ECLAC, Social Panorama 2000-2001, box 1.2).
Table 20
RURAL URBAN
Country 1990 2002 2002
Argentina (Greater Buenos Aires) n.d. n.d. 6.40 4.70
Bolivia 1.3 a 1.20 4.2d 3.20
Brazilc 2.00 1.7f 4.70 4.3f
Chile 4.90 5.3g 4.70 7.2g
Colombiai 3.1b 2.90 2.9b 3.00
Costa Rica 5.10 6.20 5.20 6.50
El Salvador 2.4c 2.4f 3.4c 3.9f
Guatemala 2.5d 1.70 3.50 2.90
Honduras 1.70 1.40 2.80 2.30
Mexico 3.0d 3.00 4.4d 4.10
Nicaragua 2.2e 1.9f 3.5e 3.2f
Paraguay 2.20 1.8f 3.40 3.4f
Peru 1.60 1.40 3.30 3.2h
Dominican Republic 3.70 3.50 4.60 4.70
Venezuela j 3.80 3.40 4.50 3.30
Panama n.d. 4.50 5.b 6.40
Ecuador n.d. n.d. 2.80 3.50
Uruguay n.d. n.d. 4.30 4.30
Paraguay (urban) n.d. n.d. n.d. n.d.
1990
LA: AVERAGE INCOME OF THE EMPLOYED ECONOMICALLY ACTIVE POPULATIONBY LABOUR MARKET PARTICIPATION, RURAL AND URBAN ZONES 1990 – 2002.(In multiples of the respective per capita poverty lines)
SOURCE: FAO/RLC based on ECLAC, Social Panorama.Rural figures include domestic servants. Figures for Brazil (1990), Chile (1990, 1994 and 1998), Colombia (1991 and 1994), Mexico (1989) and Nicaragua(1998) include wage-earners in the public sector.Urban figures for Argentina (except 1999), Brazil (1990), Chile (1990, 1994 and 1998), Mexico (1989) and Nicaragua (1998) include wage-earners inthe public sector. In addition, figures for Chile (1996), El Salvador, Panama, Dominican Republic, Uruguay (1990) and Venezuela include establishmentswith up to four employees in the case of non-professional non-technical workers. In cases where information on establishment size of is not availableno figures are provided for workers employed in low-productivity sectors.a/ Data correspond to 1997.b/ Data correspond to 1991.c/ Data correspond to 1995.d/ Data correspond to 1989.e/ Data correspond to 1993.f/ Data correspond to 2001.g/ Data correspond to 2000.h/ Data correspond to 1999.i/ From 1993 onwards, the geographic scope of the survey was widened to encompass virtually all the country's urban population. Until 1992,thesurvey covered about half of that population, except in 1991, when a nationwide survey was conducted.j/ From 1997 onwards, the sample design does not allow for an urban-rural breakdown. The figures therefore correspond to the nationwide total.
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In 1990, among countries with information available, only in Colombia, Costa Rica and Chile
the average income among rural population, measured as a multiple of the rural poverty line,
was similar to that received by the urban population in relation to its poverty line (in the first
of the countries mentioned the average income in the cities was quite close to the poverty
threshold). In all other countries, average income in the cities is further above the corresponding
poverty threshold. In Brazil and Honduras average income in the countryside was just twice its
poverty-line level (see figure 49).
In 2002, per capita income in rural and urban areas showed similar surpluses relative to the
respective poverty lines in Venezuela and Colombia. In the other countries, average urban
income is further above the poverty line than its rural counterpart. With the exception of Costa
Rica, the gap in favour of urban income is equivalent to at least one poverty line income. The
largest difference is in Brazil, where the average income per capita in the cities is 4.5 times the
poverty line income, while in the countryside it is less than double the respective threshold.
Nonetheless, as it will be shown below, this situation needs to be weighted, to take account of
the acute concentration of urban income in Brazil (see figure 50).
90
SOURCE: FAO/RLC based on ECLAC 2004.
LAC: AVERAGE INCOMES OF THE ECONOMICALLY ACTIVE POPULATION 1990(In multiples of the respective per capita poverty lines)
Figure 49
0.0
1.0
2.0
3.0
4.0
5.0
6.0Bolivia
Brazil
Chile
Colombia
Costa Rica
El Salvador
Guatemala
Honduras
Mexico
Nicaragua
Paraguay
Peru
Dominican Republic
Venezuela
Rural 1990 Urban 1990
LAC: AVERAGE INCOMES OF THE ECONOMICALLY ACTIVE POPULATION 2002(In multiples of the respective per capita poverty lines)
Figure 50
SOURCE: FAO/RLC based on ECLAC 2004.
Rural 2002 Urban 2002
Bolivia
Brazil
Chile
Colombia
Costa Rica
El Salvador
Guatemala
HondurasMexico
Nicaragua
Paraguay
Peru
Dominican Republic
Venezuela
Panama
0.0
2.0
4.0
6.0
8.0
SOURCE: FAO/RLC based on ECLAC 2004.
LAC: GINI COEFFICIENT IN RURAL AND URBAN AREAS (1990)Figure 51
0.45
0.5
0.55
0.6
0.65
0.45
0.4 0.5 0.55 0.60 0.65
RU
RA
L G
INI
URBAN GINI
Par
Countries with moreunequal incomedistribution in the cities.
Countries with moreunequal incomedestribution in thecountryside.
CosVen
ElsPer
Dmi
Mex
PanNic
Gua
Chi
Bol
HonCol
Bra
SOURCE: FAO/RLC based on ECLAC 2004.
LAC: GINI COEFFICIENT IN RURAL AND URBAN AREAS (2002)Figure 52
0.45
0.5
0.55
0.6
0.65
0.45
0.4 0.5 0.55 0.60 0.65
RU
RA
L G
INI
URBAN GINI
Countryside with moreunequal incomedistribution in the cities.
Countries with moreunequal incomedistribution in thecountryside.
Per
Els
Mex
Cos
Par
Pan
Gua Dmi
ChiHon Nic
Col
Bol
Bra
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Distribution of rural and urban income
In most countries inequality is worse in the city than in the countryside; in 1990, income
inequality was greater in rural areas than in the cities only in Bolivia, Paraguay and Chile. Costa
Rica displayed the most equal income distribution in both rural and urban areas (see figure 51).
By 2002, while there had been significant redistributive progress in rural areas in Chile, the
situation had worsened in Mexico and Costa Rica. Rural income in Brazil is also highly
concentrated, but the concentration in urban areas is greater still.
Although this aggregate analysis does not bring out the complexity of rural development and
equity problems in each country, the situation as outlined may not be unrelated to the problems
of governance and social unrest that have broken out in some of these countries in support of
rural demands (see figure 52).
SOURCE: FAO/RLC based on ECLAC 2004.
LAC: CHANGE IN GINI COEFFICIENT IN URBAN AREAS (1990-2002)Figure 53
0.5
0.55
0.6
0.65
0.45
0.4
200
2
PerELS
MexCos
Par Pan Gua
Dmi
Chi
Hon
Nic ColBol
Bra
0.45 0.5 0.55 0.60 0.65
Countries with lessunequal incomedistribution than in 1990.
Countries with moreunequal incomedistribution thanin 1990.
Uru
Ecu
1990
Arg
SOURCE: FAO/RLC based on ECLAC 2004.
LAC: CHANGE IN GINI COEFFICIENT IN RURAL AREAS (1990-2002)Figure 54
0.5
0.55
0.6
0.65
0.45
200
2
Bra
Par
PanNic
0.45 0.5 0.55 0.60 0.65
Countries with less unequalincome distribution than in1990.
Countries with moreunequal incomedistribution than in1990.
1990
ColChi
Hon
Bol
GuaDmi
Mex
ELS
Per
Cos
0.4
92
Over the last decade, urban income concentration increased in most of the countries of the
region for which information is available, diminishing only in Honduras, Mexico, Colombia,
Guatemala and Panama (see figure 53).
Unlike income concentration in the cities, the distribution of rural income improved during
the last decade in nine out of 14 countries for which information is available. Concentration
worsened in five countries: Brazil, Mexico, Costa Rica, El Salvador and Peru (see figure 54).
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In urban zones, Brazil displays a much greater concentration of income than the other countries,
and the situation has continued to worsen in recent years. Uruguay has the least unequal
distribution in the region. In terms of rural income, the greatest concentration occurs in Bolivia,
followed by Brazil, while Peru is the least unequal in this regard.
Income concentration in Latin America is more acute than in other regions of the developing
world, and also in comparison to industrialized countries. Far from diminishing, income
distribution has continued to be polarized over the last few decades in most of the region’s
countries.
Following the “Changing production patterns with social equity” proposal, developed by ECLAC
in the 1990s, numerous in-depth studies have been made of the relationship between growth
and distribution. These have shown that, far from being mutually exclusive or competing
alternatives, growth and equity are mutually empowering. The huge degree of income
concentration in Latin America is not just a problem of ethics or morals, or of politics or
governance, it also acts as a major constraint on the region’s ability to regain rapid and sustained
economic growth.
The Latin American development model needs to include elements which reduce exclusion and
facilitate progress toward equal opportunities, while remaining consistent with the demands of
the international context and functional to the development of the market economy. This condition
is essential for achieving growth with equity, and moving the income distribution toward the more
equitable patterns that prevail in developed countries.
G. POVERTY27
The number of people living in poverty28n Latin America and the Caribbean has been growing
continuously. In 1960, there were 110 million, but since then the number has climbed steadily
to a total of 225 million today (the only year in which the number of poor people fell was 2000;
but in 2001 it rose again to overtake the 1999 figure).
In relation to total population, the number of people living in poverty declined steadily from 51%
to 40% between 1960 and 1980. During the “lost decade” of the external debt crisis, the proportion
of the population living in poverty rose again to reach 48% by 1990. During the following decade,
the proportion resumed its downward trend, dropping to 42% by 2000; but in the first few years
of the new millennium, in the wake of the recession that began in 2001, the figure has risen again
and currently stands at 44% (see table 21 and figure 55).
27 This chapter analyses poverty trends in the Latin American and Caribbean countries for which information wasavailable.
28 Estimates of the magnitude of poverty were obtained from ECLAC, based on calculations of the cost of satisfyingbasic needs and poverty lines. The poverty line for each country and geographic zone is estimated in terms of the costof a basket of basic food items. The value of this basket is added to an estimate of the resources needed to satisfy basicnon-food needs.The indigence line corresponds to the cost of the food basket, and the indigent (or extremely poor) are defined as personsliving in households whose incomes are so low that, even if used entirely to purchase food, they would be insufficientto satisfy the nutritional needs of all family members.The value of the poverty line is obtained by multiplying the indigence line by a constant factor that takes account ofbasic non-food expenses; for urban areas this corresponds to 2, and in rural zones to about 1.75 (ECLAC, Social Panorama2000-2001, box I.2).Calculation of these thresholds took account of differences in food prices between metropolitan areas, other urbanareas and rural zones. Generally speaking, the prices considered for other urban zones and rural areas are some 5%and 25% lower, respectively, than those prevailing in metropolitan areas.
LA: MAGNITUDE OF POVERTY AND INDIGENCEa (1970-2004)Table 21
Year Population living in povertyb Population living in indigence
(Thousand people) (Percentage) (Thousand people) (Percentage)
1970d 112,800 42.0 60,000 22.0
1980 135,900 40.5 62,400 18.6
1986 170,200 43.3 81,400 20.7
1990 200,200 48.3 93,400 22.5
1994 201,500 45.7 91,600 20.8
1997 203,800 43.5 88,800 19.0
1999 211,400 43.8 89,400 18.5
2000 206,600 42.5 88,400 18.1
2001 213,600 43.2 91,700 18.5
2002 221,400 44.0 97,400 19.4
2003c 226,000 44.2 100,000 19.6
2004c 224,000 43.2 98,000 18.9
SOURCE: FAO/RLC based on ECLAC 2003 figures.a/ Estimation based on 19 of the region's countries.b/ Includes population living in conditions of indigence.c/ Projections.d/ Figures for 1970 obtained from ECLAC, Social Panorama 1994.
SOURCE: FAO/RLC based on ECLAC 2004.
LA: MAGNITUDE OF POVERTY AND INDIGENCE (Thousand of people)
1970 19801990 2000 2004
100,000
200,000
300,000
400,000
500,000
600,000
Figure 55
Poor population
Indigent population
Total population
94
The region’s indigent population has also been expanding, rising from 60 million people in 1970
to 100 million in 2003. The number of indigent people only declined between 1990 and 1997, and
again in 2000. A further reduction is expected in 2004, bringing the figure down to 98 million.
Indigence affects almost one fifth of Latin America’s total population, and it has so far proven
impossible to achieve a sustained reduction in this fraction. The proportion of the population
living in conditions of indigence declined slowly until 1980, when it stood at 18.6%. During the
“lost decade”, the figure rose to 22.5% by 1990. In the 1990s, the indigence rate declined slowly
but steadily, falling to 18.1% by 2000; but since then it has risen again to reach 19.6% in 2003.
In 2004 it is forecast to drop to 18.9% (see figure 56).
SOURCE: FAO/RLC based on ECLAC 2004.
LAC: INDEX OF PER CAPITA GDP AND PÔVERTY (1970-2004)Figure 57
85
90
95
100
105
110
36
38
40
42
44
46
48
50
1970 1980 1986 1990 1994 1997 1999 2000 2001 2002 2003 2004
Index of per capita GDP Poverty (%)
Ind
ex 1
99
5 =
10
0 Pe
rcen
tag
e (%
)
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Poverty and indigence rates in relation to the total population tend to ease somewhat during
economic upswings, and the percentages tend to rise again during recession phases. This is clearly
illustrated by a comparison of changes in the percentage of the population living in poverty and
the index of per capita output, which depends essentially on the pace of economic expansion,
since demographic growth trends are very stable (see figure 57).
SOURCE: FAO/RLC based on ECLAC.
LA: POOR AND INDIGENT POPULATION (Thousand of people)Figure 56
Non poor
600,000
500,000
400,000
300,000
200,000
100,000
01970 1980 1986 1990 1994 1997 1999 2000 2001 2002 2003 2004
Poor (non indigent) Indigent
PROYECTION
SOURCE: FAO/RLC based on ECLAC 2004.For Caribbean countries the GDP figure is adjusted to the poverty survey year shown in the appendix.
Figure 58 LAC: POVERTY RELATIVE TO GDP PER CAPITA (2001)
Per
cen
tag
e (%
)
GDP per capita
0
10
20
30
40
50
60
70
80
90
1.000 2.000 3.000 4.000 5.000 6.000 7.000
HaiHon
Nic Bol
Sur
ParGua
Ecu
SalColPer
STVBel
Dmi
Jam
Dom
STL PanGra
Ven
CosTri
BraMex
SKN
ChiUru
AntBar
ArgGuy
96
The relative reduction of poverty in Latin America thus shows a clear and logical direct correlation
with economic growth. Although this relation implies other factors that also have a significant
effect, the spread of poverty during the numerous economic crises experienced by the region
in recent years shows that sustained economic growth is a necessary, although insufficient,
condition for reducing it.
Moreover, while it is clear that countries with lower per capita incomes have higher poverty
indices, some countries with a better income distribution, such as Uruguay or Costa Rica (or
with high income concentration at the very top of the distribution, such as Chile) have lower
poverty indices than one would expect from their per capita income levels. The effect of economic
growth on poverty may vary greatly, depending on the variables that affect the distribution,
especially employment conditions (see figure 58).
On the other hand, a substantial proportion of the indigent population consists of groups that
suffer from severe degrees of economic exclusion, which means that growth alone is unlikely
to reduce indigence directly. In some countries, however, economic growth may improve
possibilities for financing policies and programmes to reduce indigence, which would also have
a positive effect on these population groups (provided such policies and programmes are actually
effectively implemented).
The incidence of poverty varies widely among the countries of the region29. Several CARICOM
countries (the Bahamas, Antigua and Barbuda, Barbados and Jamaica) display poverty indices
of below 20%. In Latin America, Uruguay currently has the smallest proportion of poor (11.4%)
and indigent (2.4%) people in the total population, while the significant economic and social
progress achieved by Chile over the last decade ranks it second, with less than 20% of its
population classified as poor. Trinidad and Tobago and Costa Rica are also close to that level
(22%). Of the remaining countries, the poor represent between 25% and 50% of the total population
in 15 cases, and there are nine countries where the proportion of the population living in poverty
is between 50% and 75% (see table 22 and figure 59a and 59b).
29 Information is only available for 18 countries.
SOURCE: FAO/RLC based on ECLAC figures.From 2000 to 2001 microsimulations are projected on household surveys carried out in the respective countries.a/ Urban area only.b/ The figure shown for 1999 corresponds to the 1998 measurement. The figure shown for 2000 is based on household surveys.c/ The figure shown for 1999 corresponds to the 1998 measurement.d/ The figure shown for 1999 corresponds to the 1997 measurement.e/ The figure shown for1994 corresponds to the urban area.f/ Totals in millions for LA differ from the sum of the individual countries because the latter are obtained from ECLAC, Social Panorama 2001-2002.n.a.: not available.
MAGNITUDE OF POVERTY AND INDIGENCE IN LATIN AMERICA (1990-2002)Table 22
1990 1999 2000 2001 2002
Poverty Indigence Poverty Indigence Poverty Indigence Poverty Indigence Poverty Indigence
(Percentages of population)
Argentinaa 28.5 8.2 19.7 4.8 24.7 7.2 30.3 10.2 n.d. n.d.
Bolivia 64.2 39.5 60.6 36.5 60.6 36.5 61.2 37.3 62.4 37.1
Brazil 48 23.4 37.5 12.9 36.5 12.3 37.5 13.2 n.d. n.d.
Chileb 38.6 12.9 21.7 5.6 20.6 5.7 20 5.4 n.d. n.d.
Colombia 56.1 26.1 54.9 26.8 54.8 27.1 54.9 27.6 n.d. n.d.
Costa Rica 26.2 9.8 20.3 7.8 20.6 7.9 21.7 8.3 20.3 8.2
Ecuadora 62.1 26.2 63.6 31.3 61.3 31.3 60.2 28.1 n.d. n.d.
Salvador 60.2 27.7 49.8 21.9 49.9 22.2 48.9 22.1 n.d. n.d.
Guatemalac 69.1 41.8 60.5 34.1 60.1 33.7 60.4 34.4 59.9 30.3
Honduras 80.5 60.6 79.7 56.8 79.1 56 79.1 56 77.3 54.4
Mexicob 47.8 18.8 46.9 18.5 41.1 15.2 42.3 16.4 39.4 12.6
Nicaragua 77.6 51.4 69.9 44.6 67.5 41.4 69.3 42.3 n.d. n.d.
Panama 45.7 22.9 30.2 10.7 30 10.7 30.8 11.6 34 17.4
Paraguaye 63 35 60.6 33.9 61.7 35.7 61 33.2 n.d. n.d.
Peru 56 25 48.6 22.4 48 22.2 54.8 24.4 n.d. n.d.
Dominican Republic n.a. n.a. n.a. n.a. 46.9 22.1 n.a. n.a. 44.9 20.3
Uruguaya 17.8 3.4 9.4 1.8 10.2 2 11.4 2.4 n.d. n.d.
Venezuela 40 14.6 49.4 21.7 48.8 21.2 48.5 21.2 48.6 22.2
Latin America 48.3 22.5 43.8 18.5 42.5 18.1 43.2 18.5 44 19.4
(Thousand people)
Argentinaa 9,270 2,667 7,206 1,756 9,147 2,666 11,359 3,824 n.d. n.d.
Bolivia 4,220 2,596 4,934 2,972 5,047 3,040 5,212 3,176 5,437 3,233
Brazil 71,019 34,622 63,092 21,704 62,198 20,960 64,710 22,778 n.d. n.d.
Chileb 5,057 1,690 3,259 841 3,133 867 3,080 832 n.d. n.d.
Colombia 19,618 9,127 22,729 11,095 23,074 11,410 23,499 11,814 n.d. n.d.
Costa Rica 799 299 798 307 829 318 892 341 852 344
Ecuadora 6,374 2,689 7,893 3,885 7,752 3,958 7,754 3,619 n.d. n.d.
Salvador 3,077 1,416 3,066 1,348 3,133 1,394 3,130 1,414 n.d. n.d.
Guatemalac 6,046 3,657 6,709 3,782 6,842 3,837 7,059 4,020 7,185 3,634
Honduras 3,920 2,951 4,988 3,555 5,076 3,594 5,201 3,682 5,214 3,669
Mexicob 39,781 15,646 45,660 18,011 40,636 15,029 42,456 16,460 40,128 12,833
Nicaragua 2,967 1,966 3,452 2,202 3,423 2,099 3,609 2,203 n.d. n.d.
Panama 1,096 549 849 301 857 306 893 336 1,004 514
Paraguaye 2,658 1,477 3,247 1,816 3,391 1,962 3,438 1,871 n.d. n.d.
Peru 12,079 5,392 12,262 5,652 12,318 5,697 14,299 6,367 n.d. n.d.
Dominican Republic n.a. n.a. n.a. n.a. 3,927 1,850 n.a. n.a. 3,883 1,755
Uruguaya 553 106 311 60 340 67 383 81 n.d. n.d.
Venezuela 7,801 2,847 11,711 5,144 11,795 5,124 11,947 5,222 12,195 5,571
Latin America (ECLACf) 200.2 93.4 211.4 89.4 206.6 88.4 213.6 91.7 221.4 97.4
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LAC: POVERTY AND INDIGENCE 2001 (Percentage)Figure 59a
Indigence Poverty
Bah Uru
An
t
Bar
Jam C
hi
Tri
Co
s
Slu
Arg
Pan
SK
N
Gra Be
Gu
y
Bra
SV
G
Do
m
Mex
Dm
i
Ven Per Els
Co
l
Ecu
Gu
a
Bo
l
Par Nic
Su
r
Ho
n
Hai
90
80
70
60
50
40
30
20
10
0
SOURCE: FAO/RLC based on ECLAC 2004.For the Caribbean countries the figure is adjusted to the poverty survey year shown in the appendix.
98
Despite fluctuations in the alleviation of poverty, its incidence has declined in most of the
region’s countries over the last decade. Although the extent of progress varies considerably, it
was particularly significant in Chile, and to a lesser extent also in Panam and Brazil . Among
the 17 countries for which information is available, the proportion of poor people increased only
in Argentina and Venezuela.
Recent estimates by ECLAC30 show that poverty indicators in Latin American countries have
generally varied by small amounts in recent years (2002 and 2003). Argentina, and to a lesser
30 Síntesis Panorama Social de la CEPAL, 2002-2003.
SOURCE: FAO/RLC based on ECLAC.
LAC: POOR AND INDIGENT POPULATIONS 1990-2001 (Percentage)Figure 59b
90
80
70
60
50
40
30
20
10
0
Uru Chi Cos Arg Pan Bra Mex Ven Per Els Col Ecu Gua Bol Par Nic Hon
199
020
01
199
020
01
199
020
01
199
020
01
199
020
01
199
020
01
199
020
01
199
020
01
199
020
01
199
020
01
199
020
01
199
020
01
199
020
01
199
020
01
199
020
01
199
020
01
199
020
01
< 25%
25 - 50%
50 - 70% > 75%
Indigence Poverty
LA: MAGNITUDE OF POVERTY AND INDIGENCEa (1970-2002)Table 23
year Povertyb Indigence
Urban Rural Urban Rural
(Thousand people) (Porcentage) (Thousand people) (Porcentage) (Thousand people) (Porcentage) (Thousand people ) (Porcentage
1970c 41,600 27.0 71,200 63.0 18,700 12.0 41,300 37.0
1980 62,900 29.8 73,000 59.9 22,500 10.6 39,900 32.7
1986 94,400 35.5 75,800 59.9 35,800 13.5 45,600 36.0
1990 121,700 41.4 78,500 65.4 45,000 15.3 48,400 40.4
1994 125,900 38.7 75,600 65.1 44,300 13.6 47,400 40.8
1997 125,700 36.5 78,200 63.0 42,200 12.3 46,600 37.6
1999 134,200 37.1 77,200 63.7 43,000 11.9 46,400 38.3
2000 131,800 35.9 75,300 62.5 42,800 11.7 45,600 37.8
2001 138,700 37.0 75,200 62.3 45,800 12.2 45,900 38.0
2002 146,700 38.4 74,800 61.8 51,600 13.5 45,800 37.9
Source: FAO/RLC based on ECLAC 2003 figures.a/ Estimation based on 19 of the region's countries.b/ Includes population living in conditions of indigence.c/ Figures for 1970 obtained from ECLAC, Social Panorama 1994.
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extent Uruguay, were among the exceptions that saw their living standards deteriorate
substantially in 2002. ECLAC projections for 2003 saw poverty rates rising slightly in the region
as a whole, caused largely by a lack of growth in per capita GDP. Poverty conditions are likely
to remain unchanged in most countries, except in Venezuela where the proportion of the
population classified as poor could increase significantly, and in Argentina where the restoration
of economic growth can be expected to reduce it.
Urban and rural poverty
Relations between economic growth and poverty also display significant peculiarities that distinguish
between poverty and indigence in the urban and rural domains.
Until 1980 most poor people lived in the countryside; but during the 1980s, the impact of the
debt crisis, in conjunction with a vigorous urbanization process, caused urban poverty indices
to worsen substantially. Between 1980 and 1990 the number of poor people living in the cities
doubled, whereas in the countryside the increase was just 8%. Since then, and given that the
total rural population has remained broadly constant as a result of emigration, most poor people
now live in the cities (see table 23).
Following a surge in the number of poor and indigent people in the cities during the 1980s. Since
1990 the number of people living in poverty or indigence has been increasing at a lower pace than
the over all trend in demografhic growth. In 1990 and 2000, the proportion of the population classified
as poor in urban areas fell from 41.4% to 35.9%, while those defined as indigent declined from 15.3%
to 11.7%. In the two following years, however, the figures increased again, reaching 38.4% in the case
of poverty, and 13.55% in the case of indigence (see figure 60).
100
As a result of scant and intermittent progress in reducing poverty, compounded by the
urbanization process, most poor and indigent people now live in the cities. Urban poverty
accounts for nearly two thirds of the total, poverty and over half of indigent population. In
absolute terms, poverty is mostly located in urban areas.
In relative terms, however, poverty and indigence are much more prevalent in the countryside: of
the rural population, 62% is poor and 38% indigent—figures that are virtually unchanged since 1990.
In contrast, the corresponding percentages in the cities are 38% and 14% (see figures 60, 61 and 62).
SOURCE: FAO/RLC based on ECLAC.The first column is divided in poverty and indigence.
LAC: POOR AND INDIGENT POPULATION IN CITIES 1990-2002 (Thousand of people)Figure 60
250,000
200,000
150,000
100,000
50,000
1970
Po
or
No
n p
oo
r
1980 1986 1990 1994 1997 1999 2000 2001 2002
SOURCE: FAO/RLC based on ECLAC.The first column is divided into poverty and indegence.
LAC: POOR INDIGENT POPULATION IN THE COUNTRYSIDE 1990-2002(Thousand of people)
Figure 61
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
1970 1980 1986 1990 1994 1997 1999 2000 2001 2002
Po
or
No
n p
oo
r
Po
or
No
n p
oo
r
Po
or
No
n p
oo
r
Po
or
No
n p
oo
r
Po
or
No
n p
oo
r
Po
or
No
n p
oo
r
Po
or
No
n p
oo
r
Po
or
No
n p
oo
r
Po
or
No
n p
oo
r
Po
or
No
n p
oo
r
Po
or
No
n p
oo
r
Po
or
No
n p
oo
r
Po
or
No
n p
oo
r
Po
or
No
n p
oo
r
Po
or
No
n p
oo
r
Po
or
No
n p
oo
r
Po
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No
n p
oo
r
Po
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No
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Po
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101
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Poverty remains a widespread feature of rural life in Latin American and Caribbean countries,
and efforts to combat it are not achieving positive results. In fact rural poverty relief has relied
more on high levels of emigration than on closing the gap between living standards in the
countryside and those in the city. Moreover, a large proportion of poor people living in the cities
are of immediate or recent rural origin. The number of poor and indigent people in rural areas
tends to be sustained over time, and represents part of the hard core of structural poverty that
responds little to changes stemming from overall economic growth.
Slow progress in reducing poverty and indigence, compounded by fluctuations in the pace of
expansion, partly reflects the obstacles facing economic growth in the region. In each episode
of economic crisis or recession, poverty tends to increase. Sustained economic growth is therefore
an necessary condition for reducing it—necessary but not sufficient. A more equitable income
distribution is also essential to enable growth to contribute to poverty reduction; but there are
also population nuclei which, through marginality, represent hard cores of poverty that can
only be tackled through specifically targeted measures.
The challenge is to speed up the pace of growth, emphasizing the quality of jobs and social
protection systems, together with productivity increase, in order to continue reducing poverty
on a sustained basis in a process that also helps to reduce inequality.
Studies conducted by the United Nations Development Programme (UNDP), in collaboration
with ECLAC and IDB, show that the factor that most explains changes in poverty levels and
inequality is economic-policy design. The most effective tool for combating poverty, along with
its intergenerational reproduction and inequality, is therefore the design of economic policy
itself. This needs to incorporate explicit targets for reducing poverty and inequality, and for
expanding quality job opportunities for population sectors in which poverty levels are high.
SOURCE: FAO/RLC based on CEPAL 2004.
LAC: POOR AND INDIGENT POPULATION (Thousand of people)Figure 62
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
1970
UR
BA
N
RU
RA
L
1980 1986 1990 1994 1997 1999 2000 2001 2002
Indigent Poor (non indigent) Non Poor
UR
BA
N
RU
RA
L
UR
BA
N
RU
RA
L
UR
BA
N
RU
RA
L
UR
BA
N
RU
RA
L
UR
BA
N
RU
RA
L
UR
BA
N
RU
RA
L
UR
BA
N
RU
RA
L
UR
BA
N
RU
RA
L
UR
BA
N
RU
RA
L
102
In the fight against poverty it is essential to establish social policies that benefit excluded population
groups, bearing in mind that measures to combat poverty should not conflict with the principles
that underpin stability and economic growth. Policies favouring intensive use of labour in poverty-
stricken areas contribute as much to growth as to poverty relief.
Universal coverage of basic social services is another of the most effective tools for overcoming
poverty, backed by improvements in access to and coverage of rural services aimed at boosting
rural productivity. Access to public utilities—health, education, water, electricity, and so forth—
and coverage for the poorest need to be expanded in coordinated and comprehensive fashion
to avoid duplication of effors.
Unequal access to public resources and decision making, for a large proportion of the population,
underlies economic inequality in the region. There is a need to strengthen institutions and
reduce the economic, social and political exclusion from which much of the population suffers.
More open social and political institutions should be developed to afford minorities and excluded
groups greater involvement and more active participation in society.
The priorities are to significantly strengthen efforts in education, culture, training and human
capital investment; to develop more efficient institutions and reduce polarization in power relations.
H. FOOD SECURITY
“Food security exists when all persons at all times have physical and economic access to
sufficient safe and nutritious foods to meet their dietary needs and food preferences for an
active and healthy lifestyle.31“
If the condition described above depended on productive capacities alone, it could easily be
attained. Current technological developments make it possible to produce more than enough
to feed the world’s entire population. Nonetheless, at the start of the third millennium, there
were 852 million undernourished people in the world, the vast majority of whom (815 million)
were living in developing countries (see figures 63 and 64)32.
SOURCE: FAO/RLC based on SOFI 2004.
PREVALENCE OF UNDERNUTRITION (Percentage of total developing population)Figure 63
Subsaharan Africa 20%Near East andNorth Africa 3%
Latin Americaand Caribbean 7%
Subsaharan Africa 25%Near East andNorth Africa 5%
Latin Americaand Caribbean 6%
Asia and the Pacific 64%Asia and the Pacific 69%
1990-1992 2000-2002
31 FAO definition adopted by the Heads of State and Government or representatives at the World Food Summit 13-17November 1996, Rome Declaration on World Food Security.32 FAO estimates show that there were 852 million undernourished people in the world in 2000-2002: 9 million inindustrialized countries, 28 million in transition countries, and 815 million in developing countries. FAO, “The Stateof Food Insecurity in the World 2003”.
103
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In Latin America and the Caribbean, even more so than in the world as a whole, the main cause
of undernutrition and the slow progress in reducing it, is not a lack of capacity to produce
sufficient food; the region produces a comfortable surplus in its international trade in food.
Moreover, the vast majority of the region’s countries produce food surpluses individually. The
few that do not include several major oil exporters or tourist destinations, with sufficient
external purchasing power to complement their domestic food supply through imports.
The main problem in achieving food security concerns access possibilities. In other words, there
are population groups that have insufficient income to gain access to the food that is available
on the market, or to resources enabling them to produce it in a subsistence system. In other words,
food insecurity is a problem of poverty in the vast majority of cases.
Nonetheless, there are also factors caused by the isolation of certain areas, and emergencies
arising from natural disasters or situations of social conflict have sometimes been partly to blame.
Economic upheavals can also aggravate undernutrition; economic crises and recessions have
increased food insecurity significantly in several countries. On the other hand, social protection
networks can help limit the effects of climate, social or economic disturbances on food security,
and reduce undernourishment and child malnutrition among poor population groups.
The undernourished population in Latin America and the Caribbean shrank from 59.5 million
during the early 1990s to 52.9 million by the start of the following decade, i.e. from 13% to 10%
of the total population. Reflecting the size of their populations, the largest numbers of
undernourished people are in Brazil (15.6 million), followed by Colombia (5.7 million), Mexico
(5.2 million), Venezuela (4.3 million) and Haiti (3.8 million) (see table 24 and figure 65).
SOURCE: FAO/RLC based on SOFI 2004.
PREVALENCE OF UNDERNUTRITION (Percentage of the total population of the region)Figure 64
40
35
30
25
20
15
10
5
0
Asia and the Pacific Latin America and Caribbean Nearest and NorthAfrica
Subsaharan Africa
1979-1981 1990-1992 2000-20021995-1997 1999-2001
PREVALENCE OF UNDERNUTRITION IN DEVELOPING COUNTRIESTable 24
SOURCE: SOFI 2004.The countries periodically review their official statistics, both past and present; and this is also true of United Nations population data. Wheneverthis happens, FAO revises its undernourishment estimates.The figures that follow the country name are prevalence categories (proportion of the population undernourished in 2000–2002), as follows[1] < 2.5% population undernourished.[2] 2.5-4% population undernourished.[3] 5-19% population undernourished.[4] 20-34% population undernourished.[5] 35% population undernourished.
COUNTRIES Number of people undernourished Number of people undernourished Proportion of totalpopulation undernourished
1979-81 1990-1992 1995-1997 1999-2001 2000-2002 1980-1991 1991-1996 1996-01 1991-01 1979-81 1990-1992 1995-1997 1999-2001 2000-2002
[Undernutrition category] (Mill ions) (Percentage change) (Percentage)
Latin America and the Caribbean 45.9 59.5 54.8 53.4 52.9 2.4 -1 .6 -0.5 -1 .2 13.0 13.0 11 .0 10.0 10.0
Brazil [3] 18.1 18.5 16.5 15.6 15.6 0.2 -2.3 -1 .1 -1 .7 15.0 12.0 10.0 9.0 9.0
Mexico [3] 3.0 4.6 5.0 5.2 5.2 4.0 1 .7 0.8 1 .2 4.0 5.0 5.0 5.0 5.0
Argentina [1] 0.3 0.7 0.4 0.4 0.6 8.0 -10.6 0.0 -1 .5 1 .1 2.1 1 .1 1 .1 1 .6
Chile [2] 0.7 1 .1 0.7 0.6 0.6 4.2 -8.6 -3.0 -5.9 7.0 8.0 5.0 4.0 4.0
Paraguay [3] 0.4 0.8 0.7 0.7 0.8 6.5 -2.6 0.0 0.0 13.0 18.0 13.0 13.0 14.0
Uruguay [2] 0.1 0.2 0.1 0.1 0.1 6.5 -12.9 0.0 -6.7 3.0 6.0 4.0 3.0 4.0
Bolivia [4] 1 .4 1 .9 1 .9 1 .8 1 .8 2.8 0.0 -1 .1 -0.5 26.0 28.0 25.0 22.0 21.0
Colombia [3] 6.1 6.1 5.1 5.7 5.7 0.0 -3.5 2.2 -0.7 22.0 17.0 13.0 13.0 13.0
Ecuador [2] 0.9 0.9 0.6 0.6 0.6 0.0 -7.8 0.0 -4.0 11 .0 8.0 5.0 4.0 4.0
Peru [3] 4.9 9.3 4.6 2.9 3.4 6.0 -13.1 -8.8 -9.6 28.0 42.0 19.0 11 .0 13.0
Venezuela [3] 0.6 2.3 3.5 4.4 4.3 13.0 8.8 4.7 6.5 4.0 11 .0 16.0 18.0 17.0
Costa Rica [2] 0.2 0.2 0.2 0.2 0.2 0.0 0.0 0.0 0.0 8.0 6.0 5.0 6.0 4.0
El Salvador [3] 0.8 0.6 0.8 0.8 0.7 2.6 5.9 0.0 1.6 17.0 12.0 14.0 14.0 11 .0
Guatemala [4] 1 .2 1 .4 2.2 2.9 2.8 1 .4 9.5 5.7 7.2 18.0 16.0 21.0 25.0 24.0
Honduras [4] 1 .1 1 .1 1 .2 1 .3 1 .5 0.0 1.8 1 .6 3.2 31.0 23.0 21.0 20.0 22.0
Nicaragua [4] 0.8 1 .2 1 .5 1 .5 1 .4 3.8 4.6 0.0 1.6 26.0 30.0 33.0 29.0 27.0
Panamá [4] 0.4 0.5 0.6 0.7 0.8 2.0 3.7 3.1 4.8 21.0 21.0 23.0 26.0 26.0
Cuba [2] 0.4 0.8 1 .9 1 .3 0.4 6.5 18.9 -7.3 -6.7 4.0 8.0 18.0 11 .0 3.0
Haití [5] 2.6 4.6 4.5 4.0 3.8 5.3 -0.4 -2.3 -1 .9 48.0 65.0 59.0 49.0 47.0
Dominican Republic [4] 1 .4 1 .9 2.0 2.1 2.1 2.8 1 .0 1 .0 1 .0 25.0 27.0 26.0 25.0 25.0
Guyana [3] 0.1 0.2 0.1 0.1 0.1 6.5 -12.9 0.0 -6.7 13.0 21.0 12.0 14.0 9.0
Jamaica [3] 0.2 0.3 0.3 0.2 0.3 3.8 0.0 -7.8 0.0 10.0 14.0 11 .0 9.0 10.0
Suriname [3] 0.1 0.1 0.04 0.04 0.04 0.0 -16.7 1 .9 -7.9 18.0 13.0 10.0 11 .0 11 .0
Trinidad and Tobago [3] 0.1 0.2 0.2 0.2 0.2 6.5 0.0 0.0 0.0 6.0 13.0 15.0 12.0 12.0
104
105
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During the last decade the total number of undernourished people decreased in 12 of the region’s
countries; in four other countries the number remained unchanged from the start of the decade;
and in nine countries it has increased (see figure 66).
SOURCE: SOFI 2004.a/ CARICOM includes only Guyana, Jamaica, Suriname and Trinidad and Tobago.
LAC: PERSONS UNDERNOURISHED, 2000-2001a(Percentage of a total population of 52,9 millions)
Figure 65
Brazil 29%
Mexico 10%
Colombia11%
Venezuela8%
Guatemala 5%
Peru6%
Haiti(5)7%
Trinidad and Tobago 0.4%
Suriname 0.08%
Jamaica 1%
Dominican Republic 4%
Cuba 1%
Panama 2%
Nicaragua 3%
Honduras 3%
El Salvador 1%
Costa Rica 0.4%
Ecuador 1%Bolivia 3%
Paraguay 2%
Chile 1%
Argentina 1%
Figure 66 LAS: NUMBER OF PEOPLE UNDERNOURISHED (Growth rate 1991-2001)
SOURCE: SOFI 2004.
-10 -8 -6 -4 -2 0 2 4 6 8
Peru [3]Suriname[3]
Cuba [2]Guyana [3]
Uruguay [2]Chile [2]
Ecuador [2]Haiti [5]
Brazil [3]Argentina [1]Colombia [3]
Bolivia [4]Costa Rica [2]
Jamaica [3]Paraguay [3]
Trinidad and Tobago [3]Dominican Republic [4]
Mexico [3]Nicaragua [4]
El Salvador [3]Honduras [4]
Panama [4]Venezuela [3]Guatemala [4]
Proportion of the populationundernourished in 1998-2000:
(1) <2.5% of population undernourished.(2) 2.5-<4% of population undernourished.(3) 5-<19% of population undernourished.(4) 20-<34% of population undernourished.(5) 35% of population undernourished.
106
Proportion of population undernourished
The number of undernourished people in relation to total populations in the region is especially
high in the Latin Caribbean (except Cuba) and in Central America (excluding Costa Rica). The
largest percentage is in Haiti, where undernutrition affects 47% of the population. In another six
countries (Nicaragua, Panama, Dominican Republic, Guatemala, Bolivia and Honduras), between
20% and 30% of the total population are undernourished. In most countries of the region (11) the
percentages range between 5% and 19%, while in just six countries undernourishment afflicts
less than 4% of the national population: Argentina (under 1%), Cuba (3%), and Chile, Ecuador and
Uruguay and Costa Rica (4%) (see figure 67).
During the past decade (1990-1992 to 2000-2002), the proportion of the population suffering from
undernourishment decreased in 20 of the region’s 24 countries for which information is available. The
largest reduction as a proportion of the population was achieved in Peru, followed by Cuba, Guyana,
Chile and Ecuador. The incidence of undernutrition worsened in three countries (Venezuela, Guatemala
and Panama), while remaining unchanged at 5% in Mexico (see figure 68).
During the first half of the decade, between 1990 and 1996, although most countries were able
to reduce the incidence of undernutrition, seven were not (Cuba, Venezuela, Guatemala, El
Salvador, Nicaragua, Panama, and Trinidad and Tobago). Of these, Cuba achieved a sharp
reduction in undernutrition between 1996 and 2001, while Nicaragua and Trinidad and Tobago
also managed a reduction; but in Venezuela, Guatemala and Panama, the situation continued
to worsen. In this latter period, conditions of undernutrition also deteriorated in Costa Rica,
Guyana and Suriname (see figure 69).
SOURCE: FAO 2004. For 1979-1981 data SOFI 2002.
LAC: PROPORTION OF POPULATION UNDERNOURISHED (Percentage)Figure 67
70
60
50
40
30
20
10
0
Arg
enti
na
Cu
ba
Ch
ile
Ecu
ado
r
Uru
guay
Cos
ta R
ica
Mex
ico
Gu
yan
a
Bra
zil
Jam
aica
Su
rin
ame
El S
alva
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Trin
idad
an
d To
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Per
u
Co
lom
bia
Par
agu
ay
Ven
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ela
Bo
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Ho
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Gu
atem
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Do
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Rep
ubl
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Pan
ama
Nic
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Hai
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1979-1981 1990-1992 2000-20021995-1997 1999-2001
2.5 a 4%
5 a 19%
20 a 30%
> 45%
107
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Key factors explaining these changes are economic growth and poverty relief; but these are not
exclusive, nor do they involve a simple linear relation in which economic growth leads automatically
to poverty reduction and hence to less undernutrition. There is a clear relation between economic
growth and poverty reduction, but it is mediated by several factors, particularly the state of the
income distribution. Poverty reduction is also a significant factor in reducing undernourishment;
but again the relation is neither clearly defined nor linear.
Figure 68 LAC: PROPORTION OF POPULATION UNDERNOURISHED (Growth rate 1991-2001)
SOURCE: SOFI 2004.
-12 -10 -8 -6 -4 -2 0 2 4 6
Peru [3]Cuba [2]
Guyana [3]Chile [2]
Ecuador [2]Uruguay [2]
Costa Rica [2]Jamaica [3]
Haiti [5]Brazil [3]
Bolivia [4]Argentina [1]Colombia [3]Paraguay [3]Suriname [3]
Nicaragua [4]El Salvador [3]
Trinidad and Tabago [3]Dominican Republic [4]
Honduras [4]Mexico [3]
Panama [4]Guatemala [4]Venezuela [3]
Proportion of the populationundernourished in 1998-2000:
(1) <2.5% of population undernourished.(2) 2.5-<4% of population undernourished.(3) 5-<19% of population undernourished.(4) 20-<34% of population undernourished.(5) 35% of population undernourished.
SOURCE: FAO/RLC based on SOFI 2004.
Figure 69 LA: CHANGE IN UNDER NUTRITION PREVALENCE 1990-2001(Annual average rate)
Ch
ang
e in
un
der
nu
trit
ion
19
96
-20
01
5
0
5
10
15
5 10 15 20 25 30-5-10-15
Per
Jam
Arg
ChiUru
HaiBolBra
Par
Hon
Col
SurGuy
Cos
Dmi
Mex
Pan
Els
Nic
Tri
GuaVen
Cub
Change in undernutrition 1990-1996
SOURCE: FAO/RLC based on ECLAC 2004 y SOFI 2004.
Figure 70 LA: CHANGE IN PROPORTION OF POVERTY AND UNDERNUTRITION (1991-2001)
Change in Poverty
3
2
1
0
-1
-2
-3
-4
-5
-6
-7
2 4 6-2-4-6-8-10-12
Arg
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ColBol Par Hon
Mex
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Ecu
Per
Pan
Gua
Ven
Ch
ang
e in
pov
erty
108
Figure 70 shows that in most countries where poverty has decreased, the prevalence of
undernutrition has also declined (bottom left-hand quadrant); nonetheless, there were two
countries where poverty decreased but undernutrition increased (Guatemala and Panama). Only
in Argentina did poverty increase while undernutrition declined, whereas in Venezuela, both
poverty and undernutrition have increased (see figure 70).
Average food availability is also a relevant factor, but this does not bear a direct linear relation
to the prevalence of undernutrition, or to other indicators of the population’s nutritional
status. Brazil and Mexico, for example, have greater food availability per person than most
countries in the region, but the prevalence of undernutrition and child malnutrition are more
serious than elsewhere. This suggests the need to analyse variables relating to distribution,
equity and social exclusion. Peru and Jamaica, in contrast, have relatively less food availability
per person than other countries, but they have better undernutrition indices than the regional
average (see table 25).
AVAILABILITY OF FOOD, DIVERSIFICATION OF DIET, INFANT MORTALITY, CHILDNUTRITIONAL STATUS, EDUCATION AND URBANIZATION
Table 25
SOURCE: SOFI 2004.NOTE: Non starchy foods: all FES sources, except cereals, root crops and tubers.- Under-fives mortality rate: Likelihood that a newborn child will die before reaching five years of age, if exposed to current age-specific mortalityrates. The probability is expressed as a rate per 1,000 live births.- Under-fives with weight deficiency: Proportion of children under five years of age whose weight in relation to their age is two percentage pointsor more below average. The dates of the surveys vary.- Literacy rate: Percentage of population between 15 and 24 years of age who can read, write and understand a short simple sentence about dailylife.- Urbanization: Percentage of population living in urban zones midway through the annual reference period.LEGENDn.a. Information not availableSOURCES: Undernutrition categories, Availability of food, and Diversification of diet: FAO.Infant mortality: UNICEF.Child nutritional status: WHO.Education: UNESCO.Urbanization: United Nations Population Division, Population Prospects, 2003 revision.
UNDERNUTRITION PREVALENCE Availabil ity of Diversification Infant Mortality Nutritional status Education Urbanization CATEGORY food of diet status of children
ON TOTAL POPULATION Food Proportion Rate of under ProportionIN 2000–2002 Energy of non-starchy mortality five of population
Supply foods among children with weight Literacy living in urban(FES) n total FES under five deficiency index areas
1990–1992 2000–2002 1979–1981 2000–2002 1990 2002 1990 2000 1990 2003 1990 2000
COUNTRY kcal /day/ person % per 1000 % % %live births
LESS THAN 2.5% OF POPULATION UNDERNOURISHED
Argentina 2990 3070 67 65 28 19 2 5 98 99 87 89
2.5% - 4% OF POPULATION UNDERNOURISHED
Chile 2610 2850 51 56 19 12 2 1 98 99 83 86
Costa Rica 2710 2860 62 65 17 11 3 n.a. 97 99 54 59
Cuba 2720 3000 58 63 13 9 n.a. 4 99 100 74 75
Ecuador 2510 2740 65 66 57 29 17 14 96 98 55 60
Uruguay 2660 2830 62 59 24 15 4 n.a. 99 99 89 92
5% - 19% OF POPULATION UNDERNOURISHED
Brazil 2810 3010 57 66 60 37 7 6 92 96 75 81
Colombia 2440 2580 59 59 36 23 10 7 95 97 69 75
El Salvador 2490 2550 44 48 60 39 15 10 84 89 49 58
Guyana 2350 2710 50 50 90 72 18 14 100 100 33 36
Jamaica 2500 2670 58 60 20 20 7 4 91 95 51 52
Mexico 3100 3160 52 53 46 29 14 8 95 97 72 75
Paraguay 2400 2560 56 59 37 30 4 n.a. 96 97 49 55
Peru 1960 2550 46 46 80 39 11 7 95 97 69 73
Suriname 2530 2630 52 56 48 40 n.a. 13 n.a. n.a. 65 74
Trinidad and Tobago 2640 2730 59 62 24 20 7 6 100 100 69 74
Venezuela 2460 2350 63 60 27 22 8 4 96 98 84 87
20% - 34% OF POPULATION UNDERNOURISHED
Bolivia 2110 2250 52 50 120 71 11 8 93 97 56 62
Dominican Republic 2260 2320 65 67 65 38 10 5 88 92 55 58
Guatemala 2350 2190 40 48 82 49 33 24 73 81 41 45
Honduras 2310 2350 46 54 59 42 18 17 80 86 40 44
Nicaragua 2220 2280 52 49 68 41 11 10 68 73 53 56
Panama 2320 2240 61 61 34 25 n.a. 8 95 97 54 56
35% OR MORE OF POPULATION UNDERNOURISHED
Haiti 1780 2080 49 45 150 123 27 17 55 67 29 36
109
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Child malnutrition
A serious indicator of nutritional shortcomings is the number of underweight children.
Undernutrition among children is caused by insufficient consumption of the calories needed to
meet their biological needs; undernourished mothers who give birth to underweight children; and
illnesses that exhaust those nutrients. In addition, some diets are lacking in essential nutrients.
110
32 The difference between these two ways of expressing the same general goal stems from their consideration ofdemographic growth. The World Food Summit pledge is more ambitious since it aims to halve the absolute number ofundernourished people in the world, irrespective of whether the number of people who do enjoy food security increases.In contrast, the Millennium Goal is expressed in terms of halving the ratio between the two groups.
In Latin America and the Caribbean, the percentage of undernourished children under five years
of age fell from 11% in 1990 to 8% in 2000. In the latest period for which data is available (2000-
2002), six countries show figures of 5% or lower; in twelve countries the population of under
five that is underweight for their age varies between 5% and 15%; and in three countries
(Guatemala, Haiti and Honduras) the figure is close to or above 25%. Child undernutrition
continues to be a problem that mainly affects low-income countries and the poorest regions of
middle-income countries (see figure 71).
The most severe manifestation of hunger and extreme poverty among children is chronic
undernourishment, which causes growth retardation and small size in relation to age. The
seriousness of this problem stems from the irreversible nature of its sequels, since it occurs at
the most critical age for children’s psycho-motor development. It thus becomes one of the main
mechanisms for transmitting poverty from one generation to the next.
The pledge of the World Food Summit
The World Food Summit pledged to halve the number of people suffering from hunger by 2015.
A similar objective was included among the Millennium Development Goals; in the latter case,
the proposal is to halve the proportion of the population suffering from undernourishment33
Despite progress made in reducing the percentage of undernourished people in Latin America
and the Caribbean, as described above, in absolute terms the number of undernourished persons
fell by just 6.6 million between 1990 and 2001 (from 59.5 million to 52.9 million), i.e. by about
SOURCE: FAO/RLC based on SOFI 2004. FAO SOFI 2003.
CHILDREN UNDER FIVE WITH WEIGTH DEFINCIENCY (Percentage)Figure 71
35
30
25
20
15
10
5
0
1990 2000
Ch
ile
Cu
ba
Jam
aica
Ven
ezu
ela
Arg
enti
na
Rep
. Do
min
ican
a
Trin
idad
an
d Ta
bago
Bra
zil
Co
lom
bia
Per
u
Pan
ama
Mex
ico
Bo
livia
El S
alva
dor
Nic
arag
ua
Su
rin
ame
Ecu
ado
r
Gu
yan
a
Ho
ndu
ras
Hai
ti
Gu
atem
ala
111
MA
CR
OE
CO
NO
MIC
FR
AM
EW
OR
K
SOURCE: FAO/RLC based on SOFI 2004.
LAC: SITUATION IN RELATION TO THE TARGET OF THE WORLD FOOD SUMMIT ANDTHE MILLENNIUM DEVELOPMENT GOAL ON FOOD SECURITY
Figure 72
10
5
0
-5
-10
-15
Per
u
Cu
ba
Gu
yan
a
Ch
ile
Ecu
ado
r
Uru
guay
Cos
ta R
ica
Jam
aica
Hai
ti
Bra
zil
Bo
livia
Arg
enti
na
Co
lom
bia
Par
agu
ay
Su
rin
ame
Nic
arag
ua
El S
alva
dor
Trin
idad
an
d To
bago
Do
min
ican
Rep
ubl
ic
Ho
ndu
ras
Mex
ico
Pan
ama
Gu
atem
ala
Ven
ezu
ela
Rate of change in proportion of population undernourished between 1991 and 2001
Rate needed to have already achieved the food security.
Rate needed to achieve the food security goal.
Rate of change in population undernourished between 1991 and 2001
600,000 people per year. This is far below the annual rate of 1.19 million people needed to reduce
the number of undernourished people by 29.75 million before 2015. To achieve the target of the
World Food Summit, the annual rate of reduction would need to rise to 1.65 million during the
last 14 years of the period (2001 to 2015).
The situation in the individual countries of the region is quite varied in this respect. Some have
already met the target for 2015, and others are well on the way to doing so; but there are other
countries that are laggards, and some cases that have even regressed from their starting point.
Peru, Cuba, Guyana, Chile and Ecuador have already managed to comply with the MDG food
security goal. Another seven countries (Uruguay, Costa Rica, Jamaica, Haiti, Brazil, Bolivia and
Argentina) are reducing undernutrition at rates that should enable them to meet the target before
2015. Eight more (Colombia, Paraguay, Suriname, Nicaragua, El Salvador, Trinidad and Tobago,
Dominican Republic and Honduras) are reducing the prevalence of undernutrition at a rate that
should allow them to halve the proportion of undernourished people by 2015. In Mexico there has
been no change, and in Panama, Guatemala and Venezuela the proportion of undernutrition in
the total population is actually increasing (see figure 72).
III. AGRICULTURAL SECTOR DEVELOPMENT
114
A. TREND OF SECTORAL GDP
Agricultural output in Latin America and the Caribbean grew by 4.1% in 2003, the highest rate
since 1999, thereby confirming the relatively faster sectoral growth trend that has prevailed
since 1994. Nonetheless, a longer-term view reveals a continuation of the slow pace of expansion
that has characterized the regional sector development over the last few decades. The average
annual growth rate between 1990 and 2003 was 2.7%, slightly above the 2.4% achieved in the
1980s, but significantly lower than the 3.4% recorded in the preceding decade. In the most
recent period, modest rates have not been accompanied by the wide fluctuations that occurred
in the 1980s (see figure 73).
More than the vagaries of climate or abrupt changes in market conditions, the slow pace of
sectoral growth over the last two decades reflects the persistence of fundamental problems of
competitiveness and profitability, compounded by the inadequacy of agricultural development
policies.
Explanations for this poor performance are partly structural, such as the existence of extensive
isolated rural areas, lacking basic services, without productive or transport infrastructure, and
population groups that are subject to severe levels of exclusion. Such problems are hard to
surmount in the short or medium term through specific policies; and overcoming them should
be viewed more as an outcome of cumulative national development than as a condition for
agricultural growth. While it is very important to take these issues into account when designing
the model of development, the capacity to influence annual growth rates by making structural
improvements is limited.
Figure 73
SOURCE: ECLAC.Nota: Cuba, Belize, Dominica y Grenada, included as from 1989.
LAC: GROWTH OF AGRICULTURAL GDP (1971-2003)
-2
-4
0
2
4
6
8
197
1
197
2
197
3
1974
197
5
1976
197
7
1978
197
9
198
0
198
1
198
2
198
3
198
4
198
5
198
6
198
7
198
8
198
9
199
0
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
20
00
20
01
20
02
20
03
115
AG
RIC
ULT
UR
AL
SE
CT
OR
DE
VE
LOP
ME
NT
Although such conditions certainly reduce the agricultural development base, the sluggish
growth of the last 23 years also reflects problems of a different type, namely an inability to
exploit the margin of productive progress made possible by current growth levels. Low profitability
stemming from difficult access to financing, and a significant deterioration of research and
technology transfer systems in many of the region’s countries, are two of the supply-side factors
that do most to restrict the pace of agricultural growth in the region.
Another set of factors that influence trends in agricultural output involve conditions prevailing
outside the sphere of primary production in Latin American and Caribbean countries. Although
natural resources, labour supply and technology development are still very important, global
changes and new conditions on agricultural markets have also increased the influence of factors
that are exogenous to the agriculture and livestock sector per se, such as vertical integration,
the macroeconomic framework and conditions on national and international markets. These
three groups of factors have a powerful effect on agricultural competitiveness and profitability.
Profitability depends not only on the competitiveness of primary production, but on the whole
production-processing-consumption chain, mediated by the prevailing economic “climate”.
Ensuring that agriculture is a profitable activity requires more than efficient production on
the farm; the competitiveness of the system as a whole needs to be strengthened. Nowadays
this is not a question of discovering comparative advantages in natural resources, but of
building systemic competitiveness. To make Latin American agriculture profitable requires
increasing technical progress in agriculture with better management systems, and the
development of conditions that foster efficiency in the agro-food system, encompassing entire
production-processing-marketing chains. Weakness in these chains, resulting from a failure
to develop the physical, institutional and human capital needed to maintain and develop the
corresponding linkages, is one reason for the inefficient integration of primary production
within the agro-food system.
The exchange rate, interest rates, and uncertainty surrounding external conditions have also
acted as constraints on productive investment in the agrifood system, and in primary production
particularly. In addition to basic macroeconomic tools, productive investment in agriculture is
also affected by other important elements in the overall environment, such as the efficiency of
financial systems and services; international positioning, market information and marketing
services; physical infrastructure, not only productive, but also commercial and processing; the
availability, regularity and cost of energy, communications and transport services; economic
regulations and the organization of productive agents; the quality and integrity of public
administration; education, labour skills and living standards among the population, and so forth.
Distortions on international markets for agricultural products, mainly caused by agricultural
subsidies in developed countries, force the decline of the prices of important exportable products,
thereby undermining the potential for sectoral growth. Moreover, various forms of non-tariff
and para-tariff protectionist barriers have arisen in recent years, which further aggravate the
problematic international context facing the region’s agricultural exports, and are a major cause
of the weak sectoral growth rate.
The failure of agricultural growth in Latin America and the Caribbean to achieve a rapid takeoff
since the introduction of reforms as part of the new development model is discouraging.
Nonetheless, to a greater or lesser extent, conditions do exist to overcome the difficulties
116
mentioned, since the differences between the various countries reflect different degrees of
progress in overcoming them.
In general terms, the evolution of agricultural output of Latin American and Caribbean countries
over the last decade bears a direct relation to global economic growth; countries with faster
growing economies overall also have faster agricultural growth. This relationship is affected,
firstly, by agriculture’s contribution to economic growth. This exceeds its direct share of GDP,
because, in many countries of the region, crop and livestock production forms the basis of much
of their commercial and industrial activities and has a major impact on the overall
competitiveness of the system. Faster economic growth, in turn, means stronger domestic
demand, stimulus for vertical integration and greater support for agricultural productivity.
Between 1990 and 2003, the economy of Latin America and the Caribbean grew at an average
annual rate of 2.6%, while agriculture grew at a similar rate of 2.7% per year (see the axes in
figure 74). The fastest agricultural growth in the region was the 5.8% recorded by Belize, which
also posted a relatively high overall growth rate of 4.1%. Other countries with high growth rates
in agriculture, such as Peru and Guyana, also display above-average overall total rates.
Reciprocally, the Dominican Republic posted the highest overall growth rate (5.6%), and displayed
an agricultural growth rate of 4.1%, while Chile also achieved strong growth in both cases: 4.6%
in terms of sectoral output and 5.0% in terms of overall GDP. At the other end of the scale, Haiti
registered the lowest total economic growth and also the smallest agricultural expansion; in
fact it was the only country where both rates were negative (see figure 74 and table 26).
SOURCE: FAO/RLC based on ECLAC.
Figure 74 LAC: GROWTH OF GDP AND AGRICULTURAL GDP 1990-2003(Average annual rate)
Ag
ricu
ltu
ral G
DP
8
6
4
2
0
-2
-4
-6
-8
-1 1 2 3 4 5 6
DomCubHai
VenUru
Par
Bar
Arg
Ecu
Col
Bra
Mex
HonBol
Pan
NicPer
Bel
Gra
Stv
ElsStkAnt
Tri
Guy
CosDmi
Stl
Jam
GDP
117
AG
RIC
ULT
UR
AL
SE
CT
OR
DE
VE
LOP
ME
NT
During the period under consideration, most countries of the region maintained or improved
upon the agricultural growth rates they had achieved in the previous decade, the main exceptions
being Colombia, Haiti, Jamaica, Venezuela, and Trinidad and Tobago. Growth also slowed in
Chile, Ecuador, Honduras and Paraguay, although to a lesser extent; while, the Caribbean
countries generally posted very low or negative rates, except Belize and Guyana (see figure 75).
LAC: GROWTH OF GDP AND AGRICULTURAL GDP (Percentage)Table 26
GDP GDP
Country 1990-03 1990-03
Latin American and the Caribbean 2.6 2.7
Latin America 2.6 2.7
Brazil 2.5 3.3
Mexico 3.0 1.9
Southern Cone 2.7 2.9
Argentina 2.1 2.5
Chile 5.0 4.6
Paraguay 1.5 2.6
Uruguay 1.3 1.6
Andean countries 2.2 2.3
Bolivia 3.4 2.7
Colombia 2.3 1.3
Ecuador 1.9 4.0
Peru 3.9 5.1
Venezuela 0.8 0.8
Central America 3.9 2.7
Costa Rica 4.6 3.5
El Salvador 3.8 0.8
Guatemala 3.8 2.6
Honduras 3.0 2.2
Nicaragua 3.9 4.7
Panama 3.6 3.7
Latin Caribbean 1.8 -0.1
Cuba 0.9 -2.1
Haiti -0.1 -1.3
Dominican Republic 5.6 4.1
CARICOM 2.5 0.5
Antigua and Barbuda 3.3 1.1
Bahamas n.a. n.a.
Barbados 1.5 -0.3
Belize 4.1 5.8
Dominica 0.9 -2.2
Grenada 3.2 -0.1
Guyana 4.4 5.1
Jamaica 0.7 -0.1
Saint Kitts and Nevis 3.9 0.9
Saint Vincent and the Grenadines 2.7 -1.7
Saint Lucia 1.2 -6.6
Suriname 0.5 n.a.
Trinidad and Tobago 4.2 -0.3
SOURCE: FAO/RLC based on ECLAC.
Agricultural
118
Agricultural output in Latin America and the Caribbean was 41% higher in 2003 than in 1990,
and 81% greater than in 1980. At the same time, the cumulative growth differential since 1990
has entailed major changes in each country’s contribution to the region’s agricultural output.
Brazil’s share grew by most, from 39% to 44%, while Cuba and Mexico suffered the largest
relative reductions (see figures 76 and 77).
Figure 75 LAC: AVERAGE GROWTH OF AGRICULTURAL GDP (Percentage)
SOURCE: FAO/RLC based on ECLAC.For some Caribbean countries there is no information before 1990.For Bahamas and Suriname there is no information available.
-7.0 -5.0 -3.0 -1.0 1.0 3.0 5.0 7.0
Saint LuciaDominica
CubaSaint Vincent and the Grenadines
HaitiBarbados
Trinidad and TobagoJamaicaGrenada
El SalvadorVenezuela
Saint Kitts and NevisAntigua and Barbuda
ColombiaUruguay
MexicoHondurasArgentinaParaguay
GuatemalaBoliviaBrazil
Costa RicaPanamaEcuador
Dominican RepublicChile
NicaraguaGuyana
PeruBelize
1980-90 1990-03
AG
RIC
ULT
UR
AL
SE
CT
OR
DE
VE
LOP
ME
NT
Figure 77 LAC: AGRICULTURAL GDP (Millions of 1995 dollars)
SOURCE: FAO/RLC based on ECLAC.
1990 2003
0 10,000 20,000 30,000 40,000 50,000 60,000 70,000
Saint Kitts y Nevis
Antigua and Barbuda
Saint Lucia
Grenada
Saint Vincent and the Grenadines
Dominica
Trinidad and Tabago
Barbados
Guyana
Jamaica
Haiti
Panama
Nicaragua
Honduras
BoliviaEl Salvador
Uruguay
Costa Rica
Dominican Republic
Paraguay
Cuba
Guatemala
Venezuela
Ecuador
Chile
Peru
Colombia
Argentina
Mexico
Brazil
0 50 100 150 200 250 300
Saint Kitts and Nevis
Antigua and Barbuda
Saint Lucia
Grenada
Saint Vincent andthe Grenadines
Dominica
Trinidad and Tabago
Barbados
Guyana
119
SOURCE: FAO/RLC based on FAOSTAT.a/Excluding Cuba in 1980.
LAC: SHARE IN REGIONAL AGRICULTURAL GDP (Percentage)Figure 76
Latin Caribbean 6%CARICOM 0.9%
Central America 6%
Andeancountries
19%
SouthernCone14%
Mexico15%
Brazil39%CARICOM 0.6%
Latin Caribbean 3%
Central America 6%
Andeancountries
18%Brazil44%
Mexico13%
SouthernCone15%
Latin Caribbeana 2%CARICOM 0.8%
Central America 7%
Andeancountries
19%
SouthernCone15%
Brazil39%
Mexico17%
1980 1990
2003
120
Share of agriculture in global GDP
Over the last two decades, the share of agriculture in the GDP of Latin America and the Caribbean
has remained broadly between 7% to 8% range; but in 2003 it rose to 8.1%, which implies a
relative slowdown in the declining trend of agriculture in relation to GDP that is a normal of
development processes.
Two reflections are relevant when considering the share of agricultural output in the overall
economy. Firstly, this coefficient alone is inadequate to express agriculture’s importance, or to
measure its contribution to national development. Secondly, the significance of the trend needs
to be considered from a development perspective.
Agriculture’s strategic signifcance is more important than its share of GDP. In many of the region’s
countries of the region crop and livestock production provide the basis for a large proportion of
their commercial and industrial activities, which means that sectoral trends are very important
for overall systemic competitiveness. The vertical integration of agriculture and coordination
within a complex agro-food system usually does not diminish as development proceeds. On the
contrary, in industrialized countries, the aggregate output of the agro-food system tends to multiply
the value of primary agricultural output eight or tenfold, whereas in Latin American and Caribbean
countries this coefficient varies between 3 and 6. The importance of the agro-food sector will tend
to grow in relation to primary production. Moreover, given its role in food consumption, agriculture
has a major effect on the incomes and real wages of the population as a whole. The sector continues
to be a major generator of foreign exchange; and in several of the region’s countries, it is the
leading source of purchasing power abroad. Lastly, agricultural development also has a decisive
effect on key development issues such as poverty relief, regional balance, land management and
environmental sustainability (see figure 78 and table 27).
SOURCE: FAO/RLC based on data provided by ECLAC.
LAC: SHARE OF AGRICULTURAL GDP IN TOTAL GDP (Percentage)Figure 78
198
0
198
1
198
2
198
3
198
4
198
5
198
6
198
7
198
8
198
9
199
0
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
200
0
200
1
200
2
200
37.0
8.2
8.0
7.8
7.6
7.4
7.2
121
AG
RIC
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UR
AL
SE
CT
OR
DE
VE
LOP
ME
NT
A lower share of agriculture in gross domestic product is a characteristic of more developed
countries. For Latin America and the Caribbean, figure 79 eloquently illustrates how the agricultural
share of national output is higher among the poorer countries, and tends to decline among the
more developed ones—including those where agriculture is more efficient—to approach the 1% -
4% levels prevailing in industrialized countries (see figure 79).
SHARE OF AGRICULTURAL GDP IN TOTAL GDP (Percentage)Table 27
Country 1980 1990 2000 2001 2002 2003
Latin America and the Caribbean 7.1 7.9 7.4 7.6 7.9 8.1
Latin America 7.1 7.9 7.4 7.6 7.9 8.1
Brazil 7.2 8.0 8.2 8.6 8.9 9.4
Mexico 5.4 5.1 4.2 4.4 4.4 4.5
Southern Cone 5.1 6.6 5.8 6.2 6.7 6.6
Argentina 4.5 5.8 5.1 5.4 5.9 5.8
Chile 4.6 6.4 5.7 6.0 6.2 6.0
Paraguay 23.4 25.6 25.6 27.6 28.1 29.3
Uruguay 8.6 8.2 7.6 7.3 8.8 9.8
Andean countries 9.5 11.2 10.9 10.8 11.1 11.3
Bolivia 12.9 15.4 14.1 14.5 14.2 14.7
Colombia 16.4 15.1 13.9 13.8 13.6 13.4
Ecuador 14.7 18.7 23.3 22.1 22.9 22.7
Peru 5.7 8.2 9.3 9.1 9.1 8.9
Venezuela 5.0 5.9 5.2 5.2 5.6 6.1
Central America 16.9 17.4 15.2 15.1 14.9 14.9
Costa Rica 11.6 12.7 11.6 11.6 11.0 11.1
El Salvador 17.7 16.5 12.1 11.6 11.4 11.1
Guatemala 22.0 23.0 20.2 20.0 19.9 20.1
Honduras 19.7 20.5 19.4 18.8 19.3 19.0
Nicaragua 28.5 31.6 34.8 34.5 34.7 35.0
Panama 7.5 8.9 8.0 8.4 8.4 8.4
Latin Caribbean 17.5 10.3 8.7 8.4 7.9 7.8
Cuba 0.0 9.0 6.9 6.2 5.6 5.6
Haiti 19.7 19.7 18.6 18.9 18.3 18.2
Dominican Republic 16.3 13.4 11.4 12.0 11.8 11.5
CARICOM 6.1 7.3 6.7 6.32 6.2 6.4
Antigua and Barbuda n.a. 4.2 3.5 3.39 3.4 3.4
Bahamas n.a. n.a. n.a. n.a. n.a. n.a.
Barbados 9.4 6.7 5.7 5.4 5.3 5.3
Belize n.a. 18.8 22.1 21.0 20.9 26.9
Dominica n.a. 21.6 15.8 14.7 15.6 15.1
Grenada n.a. 12.3 7.4 7.4 9.0 8.7
Guyana 39.8 40.8 45.6 46.2 48.5 47.0
Jamaica 8.8 7.4 7.3 7.5 6.9 7.3
Saint Kitts and Nevis n.a. 5.9 4.1 4.6 5.1 4.4
Saint Vincent and the Grenadines n.a. 19.3 10.9 10.0 7.9 7.7
Saint Lucia n.a. 16.2 8.3 6.7 9.4 8.3
Suriname n.a. 15.4 13.4 n.a. n.a. n.a.
Trinidad and Tobago 1.5 1.4 1.4 1.3 1.3 1.0
SOURCE: FAO/RLC based on ECLAC.Data for Cuba included as from 1989.
122
From the point of view of the development theory, the share of agriculture in the total economy
can be expected to decline because of the faster growth of other sectors that are subject to higher
income elasticity of demand. Nonetheless, in the recent evolution of Latin America and the
Caribbean, stability (rather than a reduction) in agriculture’s share of the region’s GDP is more
the result of sluggish overall economic growth than of a rapid expansion in agriculture. This
can be clearly seen in the increased share of agriculture during the “lost decade” of the 1980s,
and also during the recession of the late 1990s and first few years of the new millennium (see
again figure 78).
The relative importance of economic stagnation or agricultural growth, in keeping the share of
agriculture in GDP stable, varies significantly between the different countries of the region.
Broadly speaking, in South American countries agriculture is increasing its share of GDP, while
in Central America,Mexico and the Caribbean it is declining (see figure 80).
The share of agriculture in gross domestic product varies sharply between subregions; the
largest shares are seen in Central America (around 15%), while Mexico displays the smallest
share of just 4% (see figure 81).
SOURCE: FAO/RLCP based on WEO and ECLAC 2004.
Figure 79 LAC: NOMINAL GDP PER CAPITA AND SHARE OF AGRICULTURE IN THEECONOMY (2003)
GD
P (
N) pe
r ca
pita
Share of agricultural GDP in total GDP
5 10 15 20 25 30 35 40
4,000
6,000
8,000
10,000
12,000
2,000
0
Bar
SKN
Mex
Tri
Chi
Arg
VenJam
Pan
SLuGra Cos
SVG Uru
BraEls
DmiPer Col
Bol
Dom
HaiHon
GuaEcu
ParNic
AyB
123
AG
RIC
ULT
UR
AL
SE
CT
OR
DE
VE
LOP
ME
NT
The share of agriculture in GDP also varies widely between countries considered individually. The
largest shares in 2003 were reported by Guyana (47%), followed by Nicaragua (35%), Paraguay (29%),
Belize (27%) and Ecuador (23%). In these countries the agricultural share of GDP has also grown in
the last few decades. The smallest shares of agriculture in GDP were in Trinidad and Tobago (1%);
Antigua and Barbuda, Saint Kitts and Nevis, and Mexico (4%); Barbados (5%); Cuba, Argentina, Chile
and Venezuela (6%). The share of agriculture has been declining over the last decade in these countries
apart from Argentina and Venezuela (see figure 82).
SOURCE: FAO/RLC based on ECLAC.CARICOM figures, ares not for 1989 and 2000.
LAC: SHARE OF AGRICULTURAL GDP IN TOTAL GDP, BY SUBREGION (Percentage)Figure 80
1980 2003
0
2
46
8
10
12
14
16
18Brazil
Mexico
Southern
Andean countriesCentral America
CARICOM
Latin Caribbean
SOURCE: FAO/RLC based on ECLAC.
LAC: SHARE OF AGRICULTURAL GDP IN TOTAL GDP, BY SUBREGION (Percentage)Figure 81
198
0
198
1
198
2
198
3
198
4
198
5
198
6
198
7
198
8
198
9
199
0
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
200
0
200
1
200
2
200
30 Mexico
Southern Cone
CARICOM
Latin Caribbean
Brazil
Andean countries
Central America
2
4
6
8
10
12
14
16
18
20
a
a/ In 1989 the information of Cuba begins to be included.
124
Other interesting information is contained in the differences between each country’s share of
regional GDP (agricultural and total), as shown in figure 83. In Mexico, the southern cone (except
Paraguay) and half of the Caribbean countries, agriculture has a smaller weight than in the regional
average. On the other hand, Central American and Andean countries (except Venezuela), along
with Paraguay and half of the Caribbean countries, are relatively more agricultural than the
regional average. The fact that Brazil is in this second group, despite its industrial base and the
development of services, indicates the importance of agriculture in that country (see figure 83).
Figure 82 LAC: SHARE OF AGRICULTURAL GDP IN TOTAL GDP BY COUNTRY (Percentage)
SOURCE: FAO/RLC based on ECLAC 2004. The figure shown for Suriname in 2003 is actually for 2000.
0 5 10 15 20 25 30 35 40 45 50
Trinidad and Tabago
Antigua and Barbuda
Saint Kitts and Nevis
Mexico
Barbados
Cuba
Argentina
Chile
Venezuela
Jamaica
Saint Vincent and the Grenadines
Saint Lucia
Panama
Grenada
Peru
Brazil
Uruguay
El Salvador
Costa Rica
Dominican Republic
Suriname
Colombia
Bolivia
Dominica
Haiti
Honduras
Guatemala
Ecuador
Belize
Paraguay
Nicaragua
Guyana
1980 1990 2003
a
a/ For Cuba there is no information available for 1990.
125
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Population economically dependent on agriculture.
Changes in agricultural GDP shares have been accompanied by changes in the proportion of
the economically active population engaged in agricultural activities. The combination of the
two variables affects the average productivity of agricultural employment. In many countries
of the region, agricultural productivity growth reflects progress in reducing rural
underemployment.
In Latin America and the Caribbean, the economically active population engaged in agriculture
peaked at 45 million people in the mid-1980s, since when it has been slowly contracting and
was estimated at 43.5 million people in 2003. During this period (between 1985 and 2003) the
region’s total economically active population (EAP) has grown from 150 million to 234 million
people. In other words, the overall expansion of the labour force has been entirely absorbed by
other sectors. Agriculture therefore accounts for a declining share of the EAP: from 35% of all
workers in 1980, it had shrunk to 25% in 1990 and currently stands at 19% (see figure 84).
Figure 83 LAC: SHARE IN TOTAL AND AGRICULTURAL GDP 2003(Millions of dollars at constant 1995 prices)
SOURCE: FAO/RLC based on ECLAC data.
0 10 20 30 40 50
Share of agricultural GDP Share of total GDP
Dominica
Saint Kitts and Nevis
Saint Vincent and the Grenadines
Grenada
Saint Lucia
Antigua and Barbuda
Guyana
Suriname
Belize
Barbados
Nicaragua
Haiti
Honduras
Jamaica
Trinidad and Tabago
Bolivia
Paraguay
Panama
El Salvador
Costa Rica
Uruguay
Dominican Republic
Guatemala
Ecuador
Cuba
Venezuela
Peru
Chile
Colombia
Argentina
Mexico
Brazil
0.0 0.1 0.2
Dominica
Saint Kitts and Nevis
Saint Vincente ylas Granadinas
Granada
Saint Lucia
Antigua and Barbuda
Guyana
Suriname
Belize
Barbados
126
LAC: SHARE OF AGRICULTURE IN GDP AND THE ECONOMICALLY ACTIVE POPULATION(Percentage)
Table 28
Country 1980 1990 2000 2001 2002 2003 2004
EAP(AGR) / EAP 34.5 25.6 20.0 19.5 19.0 18.6 18.1
Agricultural GDP as a percentage 7.1 7.9 7.4 7.6 7.9 8.1 n.dof total GDP
SOURCE: FAO/RLC based on ECLAC.EAP(AGR): Economically active population in agriculture .EAP: Economically Active Population.
In future, the proportion of the population that is economically dependent on agriculture can be
expected to continue shrinking, to correct the imbalance that still exists between agricultural 7%
to 8% contribution to GDP and its 19% share of the economically active population (see table 28).
SOURCE: FAOSTAT.
LAC: SHARE OF AGRICULTURE IN THE ECONOMICALLY ACTIVE POPULATION(Percentage)
Figure 84
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
198
0
198
1
198
2
198
3
198
4
198
5
198
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198
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198
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198
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199
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199
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199
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4
199
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6
199
7
199
8
199
9
200
0
200
1
200
2
200
3
200
4
Economically active population in agriculture Economically active population outside agriculture
The extent of this imbalance varies from country to country. Guyana and Nicaragua are the only
countries where the sector’s contribution to GDP outweighs the proportion of the population
that is economically dependent on it; in other words, agricultural productivity surpasses average
productivity in the economy as a whole. The most extreme cases in the other direction are Haiti,
Guatemala and Bolivia, where the proportions of the population whose main economic activity
is agriculture (60%, 44% and 43%, respectively) are among the highest, yet agricultural
contribution to overall output is very small (18%, 20% and 15%, respectively (see figure 85).
127
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Figure 85
5
10
15
20
25
30
35
40
45
50
10 20 30 40 50 60 70
Guy
Nic
Ecu
Bel
Par
Hon
Dom
Gua
Bol
Els
Per
Col
CosDmi
GraStl
StvJam
PanChi
MexAntStk
Bar Ven
Arg
Uru
Bra
Cub
Tri
Hai
55
60
65
70
0
Ag
ricu
ltu
ral G
DP
/ T
ota
l GD
P
EAP(AGR)/EAP
LAC: SHARE OF AGRICULTURE IN GDP AND THE ECONOMICALLY ACTIVEPOPULATION (2003)
SOURCE: FAO/RLC based on ECLAC.1) EAP(AGR)/EAP vs GDP(AGR) / GDP
The reduction in size of the population that is economically dependent on agriculture should not
mean the abandonment of the countryside, but instead a reappraisal of the rural domain involving
both coordination of agricultural activities with other productive endeavours in the rural area,
and greater linkage between rural development and small urban centres. A wide variety of economic
activities are possible in this regard, mostly involving commercial and service activities, construction
materials, handicraft, agribusiness and various combinations of waged employment for individual
members of rural families in the towns.
The share of employment in non-farm activities in the rural area is growing rapidly; and as this type
of work tends to be more productive and better paid, the proportion of rural income obtained from
non-farm activities is increasing even faster. In the coming years such activities are bound to grow
in importance, and linkages between the rural economy and urban centres should also strengthen.
Over the last few years, the trend towards diversification of economic activities in rural areas
has begun to be reflected in the region al population statistics. During the decades preceding
1980, agricultural population trends were similar to those of the rural population; in the early
years of the 1980s, the rural population amounted to approximately 126 million people, and was
practically synonymous with the “agricultural population”34. Since then, while the rural population34 Defined as the population in which agriculture is the main economic activity of the head of the family.
128
Nonetheless, one should not lose sight of the dynamic of the various economic activities carried
out in rural areas linked to specifically agricultural development. Employment in non-farm
activities in rural areas is growing faster and more equitably in places where agriculture is also
growing strongly—in other words where there is agricultural output to process and distribute,
inputs to sell and equipment to repair, and where cash incomes are spent on local goods and
services. This multiplier effect of the increase in agricultural income—through linkages in
production, expenditure or investment—is very important in the design of the rural development
strategy, and is essential for overcoming exclusion nationwide35.
Although Rural development implies a diversification of job sources and greater vertical
integration among economic activities in rural areas, there is a direct relation—a positive
dynamic—between agricultural and non-farm rural incomes. Moreover, in many cases the starting
point that enables today’s rural population to participate actively in development based on the
land depends largely on its capacity to generate incomes from farming activities. There can be
little doubt that progress in small-scale agricultural production would improve the chances for
small-scale producer families to participate in an inter-sectoral and territorially-based rural
development strategy; on the other hand, in circumstances where crop and livestock activity is
deteriorating, the difficulties of rural development tend to multiply, significantly increasing
the risk of exclusion and the abandonment of rural areas. Agricultural development alone is not
sufficient to achieve rural development; but, under the current circumstances, it is impossible
to establish a rural development process in the absence of vibrant agricultural growth.
From this standpoint—while recognizing that in the long-term it is normal for the share of
agriculture in GDP to decline—the need to tackle poverty and incorporate excluded regions into
the development process makes it essential to achieve faster rates of growth in agricultural
SOURCE: FAOSTAT.
LAC: AGRICULTURAL AND RURAL POPULATION (Thousand of people)Figure 8619
60
196
3
196
5
196
7
196
9
1971
1973
1975
1977
1979
198
1
198
3
198
5
198
7
198
9
199
1
199
3
199
5
199
7
199
9
200
1
200
3100,000
Total estimated rural population Estimated agricultural population
130,000
125,000
120,000
115,000
110,000
105,000
35 FAO, The State of Food and Agriculture, 1998.
has stabilized in absolute terms (while declining relatively as a result of urban demographic
growth) the population dependent on agriculture has been shrinking and currently amounts to
about 104 million. The population living in the countryside is thus expanding, but it is working
in activities other than agriculture (see figure 86).
129
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production, in order to keep pace with national economic growth driven by other sectors, and
reduce the social costs arising from gradual productive restructuring of the rural population
towards more diversified activities.
Under current conditions, potential economic activities at the country side are far from profitable
and competitive all over Latin American and Caribbean . The combination of large numbers of
rural poor, without training, education or minimum conditions for subsistence, and the absence
of a policy committed to the environmental sustainability of development, has generated in many
areas a negative dynamic in which poverty and loss of productive potential are becoming increasingly
serious across extensive areas, resulting in a disintegration of the national development base. It
is essential to reverse this longstanding process of deterioration. To enable many of these regions,
in the medium and long-term, to participate efficiently in crop and livestock, forestry, fishing or
agribusiness activities, in conjunction with commerce and services and other productive activities,
requires a major effort and long-term commitment. But the cost of failure would be enormous, in
terms of territorial disintegration of the economic system, loss of productive potential and exclusion
of a very large part of the population from the benefits of development. If the new development
model is to help overcome problems of mass poverty and exclusion, it must make progress in
incorporating the rural population into the economic growth process.
The economically active population engaged in agriculture has declined in all sub-regions, the
process has been particularly acute in Brazil, where the fraction of the EAP engaged in agriculture
declined from 37% in 1980 to 15% in 2003. The change has been smallest in the southern cone
countries, where the proportion of the population engaged in agriculture was already relatively
low in 1980 (16% and currently stands at 13%) (see figure 87).
SOURCE: FAO/RLC based on ECLAC.
LAC: SHARE OF AGRICULTURE IN THE ECONOMICALLY ACTIVE POPULATION,BY REGION (Percentage)
Figure 87
1980 1990 2003
15
0
5
10
20
25
30
35
40
45
50Brazil
Mexico
Southern Cone
Andean countriesCentral America
Latin Caribbean
CARICOM
130
The differences between the region’s countries in terms of agricultural productivity and
demographic pressure on agriculture cause wide dispersion in the average sectoral income of
the agricultural population. While several countries of the southern cone and Brazil have the
highest levels, the lowest levels generally correspond to the countries of lowest overall per capita
income, or those whose agriculture is very slow in relation to its development level (see figures
88 and 89).
Figure 88 AGRICULTURAL GDP PER CAPITAa (2003)
SOURCE: FAO/RLC based on ECLAC.a/ Agricultural GDP / Agricultural population.b/ Barbados is the country that has the largest agricultural GDP per capita, at US$ 6,498 in 1990 and US$ 9,607 in 2003. It is excluded fromthis figure for reasons of scale.
0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000
Haiti
Bolivia
Honduras
El Salvador
Guatemala
Saint Lucia
Jamaica
Peru
Trinidad and Tobago
Nicaragua
MexicoSaint Vincent and the Grenadines
Paraguay
Granada
Panama
EcuadorSaint Kitts and Nevis
Antigua and Barbuda
Dominican Republic
Cuba
Colombia
Venezuela
Dominica
Guyana
Costa Rica
Chile
Belize
Brazil
Argentina
Uruguayb
1990 2003
131
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Productivity in agriculture is normally lower than in other sectors. In the English-speaking
Caribbean, only Guyana has higher agricultural productivity than the average for its economy
as a whole. In Belize, Dominica, Saint Vincent and Grenadines, and Grenada, the gap between
agricultural and overall productivity is narrower than the CARICOM average. The largest
difference between the two measures corresponds to Antigua and Barbuda, Trinidad and Tobago,
and Saint Kitts and Nevis (see figure 90).
SOURCE: FAO/RLC based on data provided by ECLAC.
Figure 89 AGRICULTURAL PRODUCTIVITY IN RELATION TO GLOBAL PRODUCTIVITY (Percentage)
1980 1990 2003
0 50 100 150 200 250
Saint Vincent and the Grenadines
Antigua and Barbuda
Barbados
Trinidad and Tobago
Mexico
Grenada
Haiti
Peru
Bolivia
Belize
Chile
El Salvador
Cuba
Panama
Suriname
Guatemala
Saint Kitts and Nevis
Saint Lucia
Costa Rica
Brazil
Argentina
Honduras
Colombia
Uruguay
Venezuela
Paraguay
Ecuador
Jamaica
Dominican Republic
Nicaragua
Guyana
For Bahamas and Dominica there is no information available.For Barbados, Belize and Cuba there is no information available for 1980.
132
Nicaragua is the only Latin American country where agriculture achieves a productivity per
asset that exceeds the productivity of the economy overall; while Mexico shows the largest gap
between the two productivity measures (see figure 91).
SOURCE: FAO/RLC based on ECLAC.
AL: AGRICULTURAL PRODUCTIVITY vs. GLOBAL PRODUCTIVITY (Dollars)Figure 91
Ag
ricu
ltu
ral p
rod
uct
ivit
y
Global productivity
Nic
0 2,000 4,000 6,000 8,000 10,000 12,000 14,000
2,000
4,000
6,000
8,000
10,000
Hon
BolHai
Els
Gua
Par
EcuDmi
Col
Ven
Per
Pan
CubAL
Cos
Bra
Uru
Mex
Chi
SOURCE: ECLAC.
CARICOM: AGRICULTURAL PRODUCTIVITY vs. GLOBAL PRODUCTIVITY (Dollars 2003)Figure 90
Ag
ricu
ltu
ral P
rod
uct
ivit
y
Global Productivity
GuyDom
Bel
Stv
Gra
CARICOM
Jam Stl Tri
Stk
Ant
0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000
2,000
4,000
6,000
8,000
For Bahamas, Barbados and Suriname there is no information available.
133
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B. CROP AND LIVESTOCK PRODUCTION36
The value of crop and livestock production during the last two decades (1980 to 2003) has grown
at annual rate of 2.7%, broadly similar to that of the broader sectoral output. Nonetheless, the
details reveal several significant variations.
Regional gross crop and livestock production has expanded more rapidly since 1994. Whereas
the average growth rate was 2.2% per year between 1980 and 1993, since then up to 2003 the
growth has averaged 3.3%37.
The change is less pronounced in the trend of sectoral product (value-added), where growth rates
rose from 2.4% to 2.8%, suggesting that increases in the value of production have been achieved by
making relatively greater use of inputs (intermediate consumption)38. Rapid growth in the consumption
of some of the most important industrial inputs for agricultural production also support this
explanation. Between 1993 and 2001 (the latest year for which data are available), the consumption
of fertilizers in the region increased by an average of 5% per year. Pesticide consumption grew even
faster, at 21% per year. Input use thus seems to be comfortably outpacing output.
Over the last decade the growth has become stronger in both the crop and the livestock subsectors,
but the acceleration from 1993 onwards is more marked in crop production (see figure 92).
36 This section only covers crop and livestock production, because the information needed to include forestry andfishery production was not available.
37 The acceleration from 1994 onwards partly reflects the earlier slump in Cuban production.
38 The difference between the trends of sectoral GDP and crop and livestock production may also be partly explainedother activities included in sectoral GDP, as well as statistical issues or temporary mismatches.
SOURCE: FAO/RLC based on FAOSTAT.
LAC: VALUE OF AGRICULTURAL AND LIVESTOCK PRODUCTION (Billions of dollars)Figure 92
198
0
198
119
82
198
319
84
198
519
86
198
719
88
198
919
90
199
119
92
199
319
94
199
519
96
199
719
98
199
920
00
200
120
02
200
3
20
0
40
60
80
100
120
140
160
180
Livestock
Crop production
Crop and Livestock
134
The crop-producing sub-sector displays larger annual variations than livestock production;
nonetheless, in the medium term the relative shares of crop and livestock products in the value
of the region’s agricultural output change very slowly. In the mid-1980s, the share of the livestock
component had begun to expand relatively, increasing from 38% of total agricultural output in
1985 to 43% in 1993. Since then onwards, however, growth rates in both subsectors have been
similar, so the relative share of both in overall agricultural production has tended to stabilize:
58% crops and 42% livestock products (see figure 93).
SOURCE: FAOSTAT.
LAC: CROP AND LIVESTOCK PRODUCTS IN GROSS AGRICULTURAL PRODUCTION(Billions of dollars)
Figure 93
Crop production Livestock
The crop-growing component generally accounts for a majority of agricultural output; but
livestock production accounts for over half of the total in five of the region’s countries (Uruguay,
Antigua and Barbuda, Barbados, Venezuela and Panama). In Mexico, Nicaragua and Brazil, the
livestock sub-sector accounts for nearly half of all agricultural output (47%, 46% and 44%,
respectively). By contrast, in 10 Caribbean countries, crops account for over 80% of overall
agricultural production (see figure 94).
190
170
150
130
110
90
70
50
30
10
198
0
198
1
198
2
198
3
198
4
198
5
198
6
198
7
198
8
198
9
199
0
199
1
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2
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3
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4
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6
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7
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9
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2
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3
0
135
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LAC: GROWTH OF AGRICULTURAL PRODUCTION BY SUBREGIONS (Percentage)Table 29
1980-1993 1993-2003 Difference
Latin America and the Caribbean 2.2 3.3 1.0
Brazil 3.2 4.0 0.8
Mexico 1.4 2.6 1.2
Southern Cone 1.5 2.7 1.2
Andean countries 2.4 2.7 0.3
Central America 1.8 3.0 1.2
Latin Caribbean -0.0 2.9 2.9
CARICOM 0.8 0.3 -0.5
SOURCE: FAO/RLC based on FAOSTAT.
LAC: RATIO CROP GROWING VERSUS LIVESTOCK (Percentage)Figure 94
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Sai
nt
Lu
cia
Gu
yan
a
Sai
nt
Vin
cen
t an
d th
e G
ren
adin
es
Gre
nad
a
Hai
ti
Do
mic
a
Cu
ba
Sai
nt
Kit
ts a
nd
Nev
is
Bel
ize
Su
rin
ame
Gu
atem
ala
Cos
ta R
Ica
Par
agu
ay
Per
u
Jam
aica
Arg
enti
na
Bo
livia
Ho
ndu
ras
Ch
ile
Bah
amas
Ecu
ado
r
El S
alva
dor
Co
lom
bia
Do
min
ican
Rep
ubl
ic
Trin
idad
an
d To
bago
Bra
zil
Nic
arag
ua
Mex
ico
Pan
ama
Ven
ezu
ela
Bar
bado
s
Ant
igu
a an
d B
arbu
da
Uru
guay
LivestockCrop production
The faster pace of expansion over the last decade (1993-2003), following weak growth in the
1980s, is very widely distributed across the different sub-regions. The largest increases in the
average rate between the two periods were achieved by countries of the Latin Caribbean. Only
in CARICOM countries the growth rate was slower than in the previous decade. In both decades
Brazil presented the highest rate of growth (3.2% and 4.0%). (see table 29 and figure 95).
SOURCE: FAO/RLC based on FAOSTAT.
136
SOURCE: FAO/RLC based on FAOSTAT.
LAC: GROWTH OF AGRICULTURAL PRODUCTION BY SUBREGIONS (Percentage)Figure 95
1980-1993 1993-2003
Brazil
Mexico
Southern Cone
Andean countriesCentral America
Latin Caribbean
CARICOM
-1
0
1
2
3
4
SOURCE: FAO/RLC based on FAOSTAT.
LAC: ANNUAL GROWTH IN GROSS CROP AND LIVESTOCK PRODUCTION (Percentage)Figure 96
198
0-1
99
3
1993 - 2003
0
7.0-1.0-2.0-3.0-4.0 1.0 2.0 3.0 4.0 5.0 6.0
1.0
2.0
3.0
4.0
5.0
-1.0
-2.0
-3.0
-4.0
Dom
Stl
Stv
Col
Ant
Jam
PanDmi
UruEls
Hon
Chi
Ecu
Par
Bze
Bol
Gua
Ven
Mex
Arg
Bha Hai
CubNic
Per
Cos
GuyGrnTri
Stk
Sur
Bar
Bra
Some of the region’s countries have maintained relatively high positive rates in both periods
(1980-1993 and 1993-2003); these include Peru, Costa Rica, Belize, Brazil, Bolivia and Paraguay.
In contrast, more than half of the CARICOM countries posted negative growth in 1993-2003;
Saint Kitts and Nevis, Grenada, and Trinidad and Tobago registered negative average rates in
both decades (see figure 96).
137
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SOURCE: FAO/RLC based on FAOSTAT.
Figure 97 LAC: VALUE OF CROP AND LIVESTOCK PRODUCTION IN 1990 AND 2003BY COUNTRY (Billions of dollars)
1990 2003
10 20 30 40 50 60 70 80 90
Panama
El Salvador
Nicaragua
Haiti
Honduras
Dominican Republic
Costa Rica
Guatemala
Bolivia
Uruguay
Cuba
Paraguay
Ecuador
Venezuela
Chile
Peru
Colombia
Mexico
Argentina
Brazil
Antigua and Barbuda
Saint Kitts and Nevis
Grenada
Bahamas
Dominica
Barbados
Saint Lucia
Trinidad and Tobago
Suriname
Belize
Guyana
Jamaica
- 0,1 0,2 0,3 0,4 0,5
Saint Vincent andthe Grenadines
In Brazil, vigorous growth over a 23-year period based on a large initial volume of agricultural
production has caused a rapid increase in this country’s share in the regional total agricultural
output (see figure 97).
Changes in the various subregional and country shares of crop and livestock output of various
sub-regions and countries in 1980-2003, are naturally similar to the pattern seen in their shares
of the broader sectoral output. As in the case of overall output, the most notable change has been
the eight percentage point rise in Brazil’s share (from 37% to 45%). Nonetheless, the trend of the
Brazilian share in the crop and livestock components is different.
138
In crop production, Brazil’s share has grown relatively less, albeit still significantly, from 40%
to 43%. In this subsector, the share accounted for by the Southern Cone countries has also
increased, from 19% to 22%. The sharpest fall was experienced by Mexico, where the share of
regional agriculture declined from 15% in 1980 to 12% in 2003. The shares of Cuba and Central
American countries also dropped.
In livestock production, the expansion in Brazil has far outpaced the regional average, and its
share has risen accordingly. In 1980, this country contributed one third of the total (33%),
whereas in 2003 it was already producing nearly half of the region’s total livestock production
(48%). The relative share of all other subregions is declining, without exception, the sharpest
fall being recorded in the Southern Cone countries, which in 1980 contributed 30% of livestock
production, but currently account for 19% (see figure 98).
C. CROP PRODUCTION
Note: The analysis of the explanatory factors of the crop production growth, presented inthis section (page 138 a 142), considers informations up to 2002.
A historical analysis of crop production in Latin America and the Caribbean shows that the
growth rates recorded over the last two decades are significantly lower than those achieved
previously. Between 1980 and 2002, regional crop production grew at an average annual rate
of just 2.3%, compared to an expansion of between 3% and 4% per year in earlier decades.
Nonetheless, more detailed analysis reveals a change in this trend in 1993. Between 1980 and
1993, the region’s crop production expanded by less than 2% per year (1.96%), whereas since
1993 to 2002, the annual average growth rate rose to 3.4%.
SOURCE: FAO/RLC based on FAOSTAT.
LAC: SHARE OF THE VALUE PRODUCTION (Percentage)Figure 98
CARICOM 1%
Latin Caribbean 5%CentralAmerica 5%
Andeancountries14%
SouthernCone19%
Mexico 15%
SouthernCone29% Mexico 16%
Andeancountries14%
CentralAmerica 4%
Latin Caribbean 3%
CARICOM 1%
SouthernCone23% Mexico 15%
Andeancountries14%
AmericaCentral 5%
Latin Caribbean 4%
CARICOM 1%
CARICOM 1%
Latin Caribbean 2%AmericaCentral 5%
Andeancountries13%
SouthernCone22%
Mexico 12%
CARICOM 0,4%
Latin Caribbean 2%AmericaCentral 3%
Andeancountries13%
SouthernCone19%
Mexico 15%
CARICOM 1%
Latin Caribbean 3%AmericaCentral 4%
Andeancountries13%
SouthernCone21%
Mexico 13%
CROP PRODUCTION LIVESTOCK CROP AND LIVESTOCK
CROP PRODUCTION LIVESTOCK CROP AND LIVESTOCK
Brazil40%
Brazil33%
Brazil37%
Brazil43%
Brazil48%
Brazil45%
139
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The main factor explaining the general growth slowdown over the last two decades, and also its relative
recovery within this trend from 1993 onwards, is the behaviour of area cultivated (see figure 99)39.
39 When a large number of simultaneous yet different situations take place inside a global variable (crop production in LA/C),such as outcomes that increase in some countries and diminish in others,shifts in production that may be more importantin some countries than in others and, basically, casual factors with positive or negative changes in differentcrops and countries, it is useful to use an aggregated approach to find the relative importance of each of the inmediateexplanatory factors and thus organize the search for explicative variables in productions changes. For example, althoughthere are casual factors that act simultaneously through the changes in cultivated area as well as through land productivityand the composition of the crop production (a typical case in irrigation, that allows a larger sown area, better yieldsand the selection of economically intensive products), usually harvested area increases are more related to the expansion ofthe agriculyural frontier, better prices for agricultural products, increased land usage derived from investment incentives,agrarian reform, larger profitability in agriculture activities, among others. In contrast, if the growth in the agriculturalproduct is mainly originated in better yields, the explanation may be found mainly in technological changes, new seed varieties,changes of the price of inputs, improvements in credit access and credit conditions, technological transference systems, andothers. If the growth is because of a change in agriculturae production composition, it may be due to changes in the relativeprices, changes in international markets conditions and others.
The quantifications of explanatory factors in the changes of agricultural growth responds to the fact that any function thatis the product of two variables (in this case: output is a function of harvested area and land productivity). The growth rate ofthe function is always the same as the sum of the growth rate of the two variables plus the product of them. Also, the productivityeffect is calculated in two components, the change in the average yields by hectare (which is the progress in the average productivity by hectare in each crop) and the change in the monetary yield obtained by changes in the proportion of crops more or less intensive economically.
SOURCE: FAO/RLC based on FAOSTAT.
LAC: EXPLANATORY FACTORS FOR THE GROWTH OF CROP FORPRODUCTION (1950-2002)
Figure 99
5.0
4.0
3.0
2.0
1.0
0.0
-1.0
1950-1963 1963-1970 1970-1980 1980-1993 1993-2002
Period
Per
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Structure effect Combined effectArea effect Yield effectProduction
In the 1950s and early 1960s, total harvested area grew by 2.9% per year, which, combined with
modest annual growth of 1.0% in the yield index, allowed crop production to expand at an annual
rate of 3.8%.
In the 1960s and 1970s, cultivated areas expanded more slowly (by about 2.0% per year), but yields
per hectare improved by roughly 1.4% annually. Consequently, output continued to grow quite
strongly by some 3.2% per year. The rate of output growth was slightly less than the sum of the
two effects (land area and yield), because of the relative expansion of economically less intensive
crops, which resulted in lower monetary yield per hectare; in other words, changes in crop structure
had a negative effect amounting to roughly -0.2% per year.
Between 1980 and 1993, expansion of the area cultivated came to a virtual standstill (growth
of just 0.05% per year). Consequently, although hectare yields rose at least as fast as in the
earlier periods (by 1.45% per year), this was not enough to generate rapid growth in crop
production. As the standstill in cultivated area was most pronounced in basic crops, several
more intensive crops increased their shares, and the change in the composition of output had
140
LAC: EXPLANATORY FACTORS FOR THE GROWTH OF CROP PRODUCTION(Percentage)
Table 30
1950-1963 1963-1970 1970-1980 1980-1993 1993-2002
Rate of growth of production 3.80 3.11 3.20 1,96 3.35
Area effect 2.86 1.93 2.15 0.05 1.73
Yield effect 0,99 1.47 1.26 1.45 1.65
Crop structure effect -0,08 -0.29 -0.23 0.44 -0.12
Combined effect 0.03 0.02 0.02 0.00 0.03
SOURCE: FAO/RLC based on FAOSTAT.
AC: EXPLANATORY FACTORS FOR CROP PRODUCTION GROWTH BETWEEN 1980AND 1993, BY REGIONS (Percentage)
Table 31
Brazil Mexico countries Cone America Caribbean CARICOM
Rate of growth of production 2.28 1.25 2.11 2.68 0.99 1.42 0.94
Area effect -0.41 0.04 1.14 0.30 0.88 0.02 0.87
Yield effect 1.93 0.83 0.38 2.42 0.78 1.14 0.59
Crop structure effect 0.77 0.37 0.58 -0.05 -0.66 -0.31 -0.52
Combined effect -0.01 0.00 0.01 0.01 0.00 0.00 0.00
SOURCE: FAO/RLC based on FAOSTAT .
Andean Southern LatinCentral
a slightly positive effect (0.44%). Nonetheless, the lack of expansion in the area cultivated
seriously limited overall output growth and, as mentioned above, the resultant annual rate of
increase was just 2.0%.
Since 1993 onward, the cultivated area began to expand once more at an average annual rate
of 1.73%. The positive effect of this factor was combined with additional progress in terms of
average yields, which grew by 1.65% per year—productivity growth that outpaced that achieved
in any of the preceding periods. Changes in the structure of production had a slightly negative
effect because the expansion of areas cultivated was concentrated in basic products, which earn
less income per hectare. This factor slightly reduced the rate of output growth (-0.12% per year).
As a result of these changes, regional crop production grew at an annual rate of 3.35% in the
1993-2002 period (see again figure 99 and table 30).
The slowdown in the expansion of cultivated areas between 1980 and 1993 affected practically
all sub-regions; only the Andean countries registered a relatively favourable growth rate of 1.14%
per year, while the other subregions expanded by a few tenths of a percentage point annually,
and in Brazil the figure was negative. This degree of generalization clearly points to the existence
of common factors, transcending problems arising from weather patterns or specific constraints
in the different countries.
On the other hand, Brazil, and especially the Southern Cone countries, achieved a sharp increase
in productivity per hectare during this period, which enabled them to grow slightly faster, by
just over 2% per year. The Andean countries recorded a slightly lower rate, thanks to the larger
area cultivated, as mentioned above.
In Mexico, Central America and the CARICOM countries, the stagnation in output was very
profound, with annual growth of no more than 1.0%; and in the Latin Caribbean the figure was
negative (see table 31 and figure 100).
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The change that occurred from 1993 onward was also widespread throughout the region. With the
single exception of the Latin Caribbean, in all other subregions the area cultivated grew during
the period. In the Southern Cone countries, the area harvested expanded by 3.65% per year,
reflecting above all a larger cultivated area in Argentina—and also in Paraguay, albeit on a smaller
scale. In addition, yield growth per hectare has been positive in all sub-regions without exception.
Physical productivity per hectare is growing at 2.06% per year in Brazil, and the rate is slower,
1.56% and 1.67% in the Southern Cone and in the Andean countries, respectively. Productivity
growth per hectare is considerably weaker in Mexico, Central America, the Latin Caribbean and
the CARICOM countries (see table 32 and figure 101).
EXPLANATORY FACTORS FOR CROP PRODUCTION GROWTH BETWEEN 1993AND 2O02 BY REGION
Table 32
Brazil Mexico Countries Cone America Caribbean CARICOM
Rate of growth of production 3.52 2.21 2.94 4.62 1.99 -0.33 0.75
Area effect 1.48 1.19 1.03 3.65 0.36 -1.03 0.67
Yield effect 2.06 0.95 1.56 1.67 0.97 0.81 0.34
Crop structure effect -0.04 0.05 0.33 -0.73 0.65 -0.11 -0.26
Combined effect 0.03 0.01 0.02 0.03 0.01 -0.01 0.00
SOURCE: FAO/RLC based on FAOSTAT.
Andean Southern Central Latin
SOURCE: FAO/RLC based on FAOSTAT.
LAC: EXPLANATORY FACTORS FOR THE GROWTH OF CROP PRODUCTION BYREGION (1980-1993)
Figure 100
Period
Per
cen
tag
e
Area effect Yield effect Structure effect Combined effectProduction
3.0
2.0
1.0
0.0
-1.0
-2.0
Mexico Andeancountries
SouthernCone
LatinCaribbean
Brazil CentralAmerica
CARICOM
142
The trend in harvested area has had a decisive impact on the expansion of crop production in
Latin America and the Caribbean over recent decades. The behaviour of cultivated area is
influenced by many factors, including the availability of natural resources, the pace of development
of infrastructure works, access to financing, productive technologies, natural disasters, and so
forth. These and other factors—and the causal problems behind each one—are important in
explaining the behaviour of cultivated area in countries of the region. Nonetheless, the broad
and sustained increase in the growth rate throughout the region largely reflects changes in
agricultural competitiveness and profitability. Price changes and higher productivity are key
direct factors in explaining the faster pace of growth.
Harvested area
In early 1980s, the area annually harvested in Latin America and the Caribbean totalled 105.6
million hectares. The sluggish expansion of this variable is confirmed by the fact that in 1993 the
total harvested area was still just 105.6 million hectares. The recovery of the growth rate of harvested
area from this year onwards raised the total to 129.4 million hectares by 2003 (see figure 102).
Stagnation of the area cultivated during the 1980s in particular reflected weak performance in
terms of areas sown with cereal crops, which even contracted in absolute terms by roughly 9%.
The cotton growing area also shrank dramatically, by nearly two thirds; and, as mentioned above,
the area cultivated with other product groups was growing only slowly. These three factors again
suggest that the causes of the stagnation of cultivated area need to be sought in problems arising
from low profitability.
The recovery that began since 1993 onwards, although encompassing most product lines (except
cotton, tobacco and other relatively less important products), is highly concentrated in the
expansion of land areas devoted to oilseeds and, in particular, the explosive increase of roughly
13 million hectares of soybean. Zero tillage technology, complemented by the use of herbicide-
resistant transgenic varieties of soybean, has made it possible to generalize a low-cost high
SOURCE: FAO/RLC based on FAOSTAT.
LAC: EXPLANATORY FACTORS FOR THE GROWTH OF CROP PRODUCTION BYREGION (1993-2002)
Figure 101
5.0
4.0
3.0
2.0
1.0
0.0
-1.0
-2.0Period
Per
cen
tag
e
Production Area effect Yield effect Structure effect Combined effect
Mexico Andeancountries
Brazil CARICOMSouthernCone
CentralAmerica
LatinCaribbean
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yield technological setup, which increased profitability substantially and made it feasible to
give a new and profitable response to the very buoyant demand for protein sources in the
production of feed for poultry and pigs. The spectacular success of this production demonstrates
the existence of potential to restore agricultural expansion. Needless to say, there are many
technical and institutional requirements that have to be satisfied on this particular road to
progress, as on any other.
Although cereal crops continue to absorb the largest share of the total cultivated area, their
relative share has been declining, from 46% in 1980 to 39% in 2003. In contrast, the area sown
with oilseeds expanded from 16% to 29% in that period. Another notable aspect is the minimal
share of areas sown with cotton, which previously was very large (see table 33 and figure 103).
SOURCE: FAO/RLC based on FAOSTAT.
LAC: HARVESTED AREA BY MAIN PRODUCTS (Millions of hectares and percentages)Table 33
1980 1993 2003
Area % Area % Area %
Total 105.6 100.0 105.7 100.0 129.4 100.0
Cereals 49.0 46.4 46.2 43.7 51.0 39.4
Oilcrops 17.1 16.2 20.6 19.5 37.5 29.0
Fruit 5.7 5.4 7.5 7.1 8.4 6.5
Green vegetables 5.6 5.3 5.8 5.5 6.1 4.7
Pulses 8.2 7.8 7.6 7.2 8.0 6.2
Coffee, tea, cacao and spices 7.2 6.9 7.8 7.4 7.6 5.9
Sugar 6.3 6.0 7.5 7.1 8.6 6.6
Plant fibres and rubber 5.8 5.5 2.1 2.0 1.6 1.2
Tobacco 0.6 0.6 0.6 0.6 0.6 0.4
SOURCE: FAOSTAT.
LAC: TREND OF ANNUAL HARVESTED AREA (Hectares)Figure 102
198
0
198
1
198
2
198
3
198
4
198
5
198
6
198
7
198
8
198
9
199
0
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
200
0
200
120
02
200
3
0
20,000,000
40,000,000
60,000,000
80,000,000
100,000,000
120,000,000
140,000,000
Oilcrops
Cereals
Total
144
The concentration of increases in harvested area in countries with the largest cultivated areas,
especially the expansion of soybean cultivation in Argentina and Brazil, also led to greater
concentration of agricultural activity in these countries. The increase in Paraguay is significant
in percentage terms, but based on a small area.
As a regional average, the harvested area grew by 22% between 1993 and 2003, but this largely
reflected the sharp increase in two countries, Argentina and Brazil. With a lesser impact on the
regional average figures, the harvested area also increased strongly in Paraguay, Bolivia, Peru
and Nicaragua. In the Southern Cone, the index of area harvested, was 48% greater in that year
than in 1993; in Brazil, the increase was of 23%. In all the other sub-regions, the increase in land
area is relatively modest, between 5% and 11%. In the Latin Caribbean and the CARICOM countries
the cultivated area declined (-3% and -10% respectively).
Despite the positive trend in harvested area across the region since 1993, the annually harvested
area is still shrinking in 16 countries, especially in the Caribbean, Colombia, El Salvador, Paraguay
and Panama. By contrast, the largest relative increase occurred in Southern Cone countries (Argentina)
and also in Nicaragua, Bolivia and Peru (see figure 105).
The largest percentage increases in area harvested occurred in regions and countries that already
had relatively large areas of cultivation, which means that the share of agricultural production
will tend to concentrate still further (see figures 106 and 107).
SOURCE: FAOSTAT.
LAC: HARVESTED AREA PER YEAR BY MAIN PRODUCT CATEGORIES (Millions of hectares)Figure 103
1980 1993 2003
10
20
30
40
50
60
Plant fibres and rubber
Green vegetables
Coffee, tea, cacao and spices
Sugar
FruitCereals
Oilcrops
Pulses
Tobacco
AG
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Figure 105 LAC: CHANGE IN HARVESTED AREA BY COUNTRY IN 2003 (INDEX 1993=100)
-60 -40 -20 0 20 40 60 80
SOURCE: FAO/RLC based on FAOSTAT.
Dominican Republic
Saint Vincent and the Grenadines
Trinidad and Tobago
Saint Lucia
Belize
Suriname
Colombia
El Salvador
Grenada
Cuba
Barbados
Panama
Saint Kitts and Nevis
Haiti
Guatemala
Jamaica
Dominica
Ecuador
Honduras
Venezuela
Costa Rica
Chile
Antigua and Barbuda
Mexico
Uruguay
Bahamas
Brazil
Guyana
Peru
Argentina
Bolivia
Nicaragua
Paraguay
150
SOURCE: FAO/RLC based on FAOSTAT.
80
199
3
199
4
199
5
199
6
199
7
199
8
199
9
200
0
200
1
200
2
200
3
90
100
110
120
130
140
Latin Caribbean
LAC: INDEX OF HARVESTED AREA BY SUBREGION (1993=100)Figure 104
Andean countries
Brazil
Southern Cone
Mexico
Central America
CARICOM
145
146
SOURCE: FAOSTAT.
LAC: TREND OF HARVESTED AREA PER YEAR BY SUBREGION (Millions of hectares)Figure 106
1980 1993 2003
10
20
30
40
50
60
Brazil
Mexico
Southern Cone
Andean countriesCentral America
Latin Caribbean
CARICOM
Figure 107 LAC: TREND IN ANNUAL HARVESTED AREA BY COUNTRY (Millions of hectares)
SOURCE: FAOSTAT.
1993 2003
Dominican Republic
Costa Rica
El Salvador
Uruguay
Honduras
Nicaragua
Haiti
Chile
Guatemala
Venezuela
Cuba
Bolivia
Ecuador
Peru
Paraguay
Colombia
Mexico
Argentina
Brazil
- 10 20 30 40 50 60
0.00 0.05 0.10 0.15 0.20 0.25 0.30 0.35
Antigua and Barbuda
Saint Kitts and Nevis
Bahamas
Barbados
Saint Vincent and the Grenadines
Grenada
Dominica
Saint Lucia
Trinidad and Tobago
Suriname
Belize
Jamaica
Guyana
Panama
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Trends in crop production
The acceleration in the expansion of crop production after 1993, which raised the growth rate
from 2.0% to 3.3%40, was quite widespread among the different crop groups, but concentrated
particularly among oilseeds. Since the previous decade (1980-1993), the annual growth rate
of oilseed production (4.3% per year) was the highest among the various crop groups, and
practically doubles the average of all crops (2.0%). Between 1993 and 2002, however, oilseed
production grew exceptionally vigorously by 7.9% per year. The main cause for this was a
5.6% expansion of the harvested area of these crops, plus a 2.5% contribution from productivity
per hectare.
Growth in the area sown with oilseed crops, especially soybeans, is the main explanation for
the increase in the total harvested area in Latin America and the Caribbean. In all other product
lines or product groups, the harvested area continues to grow weakly or else shrink. This
situation firstly demonstrates the capacity of technical market-based responses to regain the
pace of growth, as it was the case of soybean cultivation in Argentina and Brazil; but it also
calls for a note of caution, because the growth of soybean has an enormous weight in the recovery
achieved in regional agriculture. This represents a problem of concentration, increases
vulnerability and highlights the fact that the rest of agriculture continues to suffer from lack
of competitiveness and low profitability (see table 34).
40 These rates may differ slightly from those estimated in connection with the explanatory factors (area, yield and cropstructure effects), because in that case the method uses data specifically from the start and end of the period, whereasin the rest of this chapter growth rates are calculated by linear regression over the whole series.
SOURCE: FAO/RLC based on FAOSTAT .a/ Calculated by linear regression.b/ Calculated at constant average 1999-2001 prices; The variation depends on the physical yields of the differentcrops and changes in the composition of crops within the same group.
LAC: GROWTH OF CROP PRODUCTION BY MAIN PRODUCT CATEGORIES(Annual average percentage ratea)
Table 34
Area Yieldb Productionb
1980-1993 1993-2003 1980-1993 1993-2003 1980-1993 1993-2003
Total crops 0.3 1.4 1.7 1.8 2.0 3.3
Cereals -0.7 0.3 1.6 2.3 1.0 2.6
Oilcrops 2.5 5.6 1.7 2.4 4.3 7.9
Fruit 2.3 1.0 0.3 1.1 2.6 2.1
Green vegetables 0.2 0.7 1.5 2.6 1.7 3.3
Coffee, tea, cocoa and spices 1.2 0.0 0.3 2.6 1.4 2.6
Pulses -0.2 -1.1 1.2 2.1 1.0 1.1
Sugar 1.7 1.0 0.5 1.2 2.2 2.1
Plant fibres and rubber -5.2 -4.9 3.8 5.1 -1.4 0.3
Tobacco -0.7 -0.1 2.0 1.4 1.3 1.3
Animal feed 2.4 0.5 -2.7 -2.0 -0.4 -1.5
Between 1993 and 2003, the cereal production increased 2.6% per year, following the weak
growth of just 1.0% achieved in the 1980s. The slowdown in the decrease in area cultivated,
which turned fall of 0.7% per year into positive growth of 0.2%, was the main factor behind the
recovery of growth in this crop category compared to the previous period. The rise in prices in
1995 and 1996 played a major role in achieving a positive rate of growth of the area harvested
during the period. This change was complemented by an increase in monetary productivity per
hectare in cereal crops.
148
Fruit production continued to expand (2.1% per year), although at a slightly slower rate than
in the 1980s (2.6%). The corresponding causal factors also changed: in the 1980s, production
was basically driven by an area expansion of 2.3% per year, while monetary yields per hectare
declined; in contrast, during 1993-2003, areas expanded by less, but monetary yields per hectare
dedicated to fruit growing intensified.
In the cases of coffee, vegetables and cotton, output growth strengthened compared to the
previous decade.
The recovery of crop production over the last 10 years is based on a renewed expansion of
harvested areas and faster productivity growth per hectare than in any other period in the last
decades. Nonetheless, improvements in productivity are being achieved on the basis of more
intensive production and increasing input use, thereby pushing up costs without solving
problems of low profitability in regional agriculture. This seems to be confirmed by various
indicators on input use. The consumption of pesticides grew eightfold in the past decade; and,
albeit to a lesser extent, the annual growth of fertilizer use (5%) is also way above the rate of
growth of production.
A large fraction of the expansion in cultivated area and growth in the regional crop production
reflects the exceptional expansion of soybean cultivation in Argentina, Brazil and a few other
countries, while general development of crops as a whole remains weak.
Composition of crop production
The composition of crop production in Latin America and the Caribbean has changed significantly
over the last two decades. In the 1980s, the expansion of fruit production had gained this group
first place in terms of output value, overtaking cereals which had traditionally been the region’s
most important crop group. Explosive growth of soybean production over the last few years,
however, has meant that oilseeds now account for the largest share of regional crop production
values, surpassing fruit and cereals. In 2003, each one of these three groups accounted for near
21% of the value of the region’s total crop production,
During the period, the value of green vegetable, sugar and coffee production also continued to grow,
while that of cotton and tobacco has stalled (see figure 108 and 109).
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SOURCE: FAOSTAT.
LAC: GROWTH OF CROP PRODUCTION BY MAIN PRODUCT CATEGORIES(Billions of dollars, at 1999-2001 prices)
Figure 108
1980 1993 2003
5
10
15
20
25Sugar
Coffee, tea, cocoa and spices
Cereals
Plant fibres and rubber
FruitsGreen vegetables
Pulses
Oilcrops
Tobacco
SOURCE: FAO/RLC based on FAOSTAT.The animal feed category is omited given its minor importance.
LAC: COMPOSITION OF CROP PRODUCTION (Percentage)Figure 109
1980
Tobacco 2%
Sugar 13%
Coffee, tea, cocoaand spices 6%
Oilcrops12%
Pulses3%
Greenvegetables
14%
Vegetal fibresand rubber 5%
Fruits23%
Cereals22%
1993
Tobacco 3%
Sugar 13%
Oilcrops14%
Pulses3%
Greenvegetables
13%Vegetal fibres
and rubber 2%Fruits24%
Cereals22%
2003
Tobacco 2%
Sugar 12%
Oilcrops21%
Pulses3%
Green vegetables13%
Vegetal fibresand rubber 2% Fruits
21%
Cereals21%
Coffee, tea, cocoaand spices 6%
Coffee, tea, cocoaand spices 5%
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LAC: GROWTH OF CEREAL PRODUCTION, 1993-2003(Percentagea)
Table 35
Area Yieldb Productionb
Total LAC 0.3 2.3 2.6
Brazil -0.3 2.9 2.6
Mexico 0.1 1.1 1.2
Southern Cone 1.6 1.8 3.4
Andean countries 0.4 2.8 3.2
Central America -0.9 0.9 0.0
Latin Caribbean 1.5 4.3 5.8
CARICOM -0.6 0.6 0.0
SOURCE: FAO/RLC based on FAOSTAT .a/ Calculated by linear regression.b/ Calculated at constant average 1999-2001 prices; The variation depends on the physical yields of the differentcrops and changes in the composition of crops within the same group.
LAC: GROWTH OF OILSEED PRODUCTION, 1993-2003 (Percentagea)Table 36
Area Yieldb Productionb
Total LAC 5.6 2.4 7.9
Brazil 4.9 2.6 7.5
Mexico -3.8 0.7 -3.1
Southern Cone 6.7 2.5 9.2
Andean countries 5.8 -0.6 5.2
Central America 1.0 2.6 3.6
Latin Caribbean -0.6 0.3 -0.3
CARICOM -4.6 1.7 -2.9
SOURCE: FAO/RLC based on FAOSTAT .a/ Calculated by linear regression.b/ Calculated at constant average 1999-2001 prices; The variation depends on the physical yields of the differentcrops and changes in the composition of crops within the same group.
The resumption of growth in cereal production starting in 1993 has been concentrated largely
in Southern Cone and Andean countries. Production also increased in the Latin Caribbean,
significantly in relative terms, albeit on a lower base. In all three cases the key factor driving
the recovery was the achievement of higher yields combined with a halt to the decline of harvested
areas. Growth was slower in the CARICOM countries, and in Brazil and Mexico; while in Central
America output decreased in absolute terms (see table 35).
Most of the increase in oilseed production between 1993 and 2003 was heavily concentrated
in the Southern Cone (mainly Argentina) and in Brazil. In the Southern Cone, annual growth
in this category climbed to 9.2%, and in Brazil it reached a level of 7.5%. The production of
oilseed crops also grew in Andean countries and Central America albeit at a slightly slower rate
of 5.2% and 3,6% respectively. In the other regions, production of this crop category either
diminished . In all cases of stronger growth, the key factor has been an increase in the area
harvested, while productivity per hectare has only grown significantly in Brazil, the Southern
Cone and Central America (see table 36).
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The production of fruit and green vegetables has continued to expand, but at relatively modest
rates (2.1% in the case of fruit, and 3.3% among vegetables). In this last group of products a huge
increment in green vegetables production in the Latin Caribbean aroused because of the
extraordinary increment of production per hectarea in Cuba (tomatoes and others). Mexico recorded
the fastest growth, as a positive outcome of its free trade agreement with the United States and
Canada. In the Andean countries, fruit and green vegetable production also grew strongly, linked
to the expansion of exports. In these two cases, the increase in output value resulted from a
combination of larger areas and higher productivity per hectare, with both factors playing a
significant role. Central America also displayed relatively high growth rates in these product
groups, particularly in the case of vegetables (see table 37).
LAC: GROWTH OF FRUIT PRODUCTION, 1993-2003(Percentagea)
Table 37
Area Yieldb Productionb
Total LAC 1.0 1.1 2.1
Brazil 0.3 1.3 1.6
Mexico 2.0 1.2 3.2
Southern Cone 1.4 0.7 2.1
Andean countries 1.7 0.4 2.2
Central America 1.9 -0.1 1.8
Latin Caribbean -0.1 2.9 2.8
CARICOM -0.9 1.3 0.4
LAC: GROWTH OF VEGETABLE PRODUCTION, 1993-2003(Percentagea)
Area Yieldb Productionb
Total LAC 0.7 2.6 3.3
Brazil -0.8 2.2 1.4
Mexico 1.8 2.9 4.7
Southern Cone 0.5 0.9 1.4
Andean countries 1.9 2.2 4.0
Central America 3.6 0.7 4.3
Latin Caribbean 1.4 11.3 13.3
CARICOM -0.6 -1.0 -1.5
SOURCE: FAO/RLC based on FAOSTAT .a/ Calculated by linear regression.b/ Calculated at constant average 1999-2001 prices; The variation depends on the physical yields of the differentcrops and changes in the composition of crops within the same group.
Regional distribution of crop productionThe developments described above have also caused a significant change in the composition
of crop production in the different regions. In general, changes in the structure of output are
tending towards greater specialization, with growth concentrated in a small number of product
lines. This seems consistent with the higher degree of integration in agricultural markets and
the role of exports in driving agricultural production in the region.
Brazil diverges from this trend, however, by maintaining extensive diversification in its crop
production, partly reflecting its great wealth of natural resources and the scope of its domestic
market. Nonetheless, the explosive growth of oilseed production between 1993 and 2003 meant
that the value of production of this crop pattern line virtually doubled, clearly accelerating away
from other product groups.
Until 1993, oilseed production had been roughly at the same level as that of fruit and cereals.
Over the last decade, however, the two latter groups have continued to grow, but considerably
less than oilseeds, and also less than sugar cane and coffee. Output in the other groups (green
152
vegetables, plant fibres, pulses and tobacco) hardly expanded at all. Consequently, in 2003,
oilseeds accounted for 26% of Brazil’s total crop production, while the other groups contributed
much smaller proportions: cereals 20%, sugar cane 18% and fruit 14% (see figure 110).
The fastest expanding crop categories in Mexico are fruit and green vegetables. These were
already buoyant in the 1980s, but have been further boosted by the free trade agreement with
United States and Canada. Cereal production also continues to expand, and it remains very
important within the country’s overall crop production, but less so than previously. In 2003, the
production of fruit and cereals each accounted for roughly 30% of the country’s total crop
production, with green vegetables contributing another 19%. Pulse production was also significant
(6%)—a feature that is exclusive to Mexico and Central America, as a result of bean production.
Both oilseeds and cotton have declined in importance since the 1980s (see figure 111).
The Southern Cone countries sharply increased their specialization in oilseeds, thanks to
increased soybean cultivation in Argentina and, to a lesser extent, in Paraguay. The previous
polygon formed by cereals, fruit, green vegetables and oilseeds has been greatly stretched, as
expansion of the oilseed group has intensified. In 2003, oilseed crops already accounted for 42%
of the sub-regional total crop production, far outpacing cereals (24%), fruit (18%), and green
vegetables (10%) (see figure 112).
SOURCE: FAOSTAT.
BRAZIL: GROWTH OF CROP PRODUCTION BY MAIN PRODUCTS CATEGORIES(Billion of dollars at 1999 - 2001 prices)
Figure 110
Sugar
Coffee, tea, cocoa and spices
Cereals
Fruits
Vegetal fibres and rubberGreen vegetables
Pulses
Oilcrops
Tobacco
2
4
6
8
10
12
1980 1993 2003
153
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The three most important crop groups in the agricultural production of Andean countries are
fruit, green vegetables and cereals. As these groups were also the fastest growing, specialization
clearly accentuated during the reporting period. Fruit and green vegetables accounted for over
half (54%) of the value of the sub-regional crop production in 2003, with cereals contributing
18% of the total (see figure 113).
SOURCE: FAOSTAT.
MEXICO: GROWTH OF CROP PRODUCTION BY MAIN PRODUCTS CATEGORIES(Billion of dollars at 1999 - 2001 prices)
Figure 111
Sugar
Coffee, tea, cocoa and spices
Cereals
Fruits
Vegetal fibres and rubberGreen vegetables
Pulses
Oilcrops
Tobacco
SOURCE: FAOSTAT.
SOUTHERN CONE: GROWTH OF CROP PRODUCTION BY MAIN PRODUCTS CATEGORIES(Billion of dollars at 1999 - 2001 prices)
Figure 112
Sugar
Coffee, tea, cocoa and spices
Cereals
Fruits
OilcropsGreen vegetables
Pulses
Vegetal fibres and rubber
Tobacco
1
2
3
4
1980 1993 2003
-1
1
3
5
7
9
11
1980 1993 2003
154
In Central America, fruit is the leading crop category in value terms, and as it was also the
fastest growing, specialization increased. Other sectors posting strong growth are coffee and
sugar. Following the demise of cotton production, the reduction in cereal production also helped
increase the level of specialization (see figure 114).
SOURCE: FAOSTAT.
ANDEANS COUNTRIES: GROWTH OF CROP PRODUCTION BY MAIN PRODUCTSCATEGORIES (Billion of dollars at 1999 - 2001 prices)
Figure 113
Sugar
Coffee, tea, cocoa and spices
Cereals
Fruits
Vegetal fibres and rubberGreen vegetables
Pulses
Oilcrops
Tobacco
1980 1993 2003
1
2
3
4
5
SOURCE: FAOSTAT.
CENTRAL AMERICA: GROWTH OF CROP PRODUCTION BY MAIN PRODUCTSCATEGORIES (Billion of dollars at 1999 - 2001 prices)
Figure 114
Sugar
Coffee, tea, cocoa and spices
Cereals
Fruits
Vegetal fibres and rubberGreen vegetables
Pulses
Oilcrops
Tobacco
1980 1993 2003
0,5
1,0
1,5
2,0
2,5
155
AG
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SOURCE: FAOSTAT.
LATIN CARIBBEAN: GROWTH OF CROP PRODUCTION BY MAIN PRODUCTSCATEGORIES (Billion of dollars at 1999 - 2001 prices)
Figure 115
2.0
Sugar
Coffee, tea, cocoa and spices
Cereals
Fruits
Vegetal fibres and rubberGreen vegetables
Pulses
Oilcrops
Tobacco
1980 1993 2003
2,0
1,5
1,0
0,5
Latin Caribbean production patterns reveal a steep drop in the production of sugar cane, and
a trend towards new specialization in fruit and green vegetables (see figure 115).
In 1993, the leading crop groups in the CARICOM countries were fruit and green vegetables.
Both of these have experienced negative growth rates, the most serious being the case of green
vegetables. As sugar production also declined, cereals were the only product group to record a
significant growth (see figure 116).
SOURCE: FAOSTAT.
CARICOM: GROWTH OF CROP PRODUCTION BY MAIN PRODUCTSCATEGORIES (Billion of dollars at 1999 - 2001 prices )
Figure 116
Sugar
Coffee, tea, cocoa and spices
Cereals
Fruits
Vegetal fibres and rubberGreen vegetables
Pulses
Oilcrops
Tobacco
1980 1993 2003
0,1
0,2
0,3
0,4
0,5
0,6
156
Figure 117 LAC: GROWTH OF CROP PRODUCTION BY COUNTRY (Billions of dollars)
SOURCE: FAOSTAT.
1993 200319800 5 10 15 20 25
33 Antigua and Barbuda32 Saint Kitts and Nevis
31 Bahamas30 Saint Vincent and the Grenadines
29 Dominica28 Grenada
27 Saint Lucia26 Barbados
25 Belize24 Trinidad and Tobago
23 Suriname22 Guyana
21 Jamaica20 Nicaragua
19 Panama18 Uruguay
17 Costa Rica16 Honduras
15 Haiti14 El Salvador
13 Bolivia12 Paraguay
11 Dominican Republic10 Guatemala
9 Venezuela8 Ecuador
7 Peru6 Chile5 Cuba
4 Colombia3 Argentina
2 Mexico1 Brazil
- 5 10 15 20 25 30
33 Antigua and Barbuda32 Saint Kitts and Nevis
31 Bahamas30 Grenada
29 Barbados28 Saint Lucia
27 Dominica26 Saint Vincent and the Grenadines
25 Belize24 Trinidad and Tobago
23 Suriname22 Guyana
21 Jamaica20 Nicaragua
19 Panama18 Uruguay
17 El Salvador16 Honduras
15 Haiti14 Bolivia
13 Costa Rica12 Dominican Republic
11 Guatemala10 Venezuela
9 Paraguay8 Ecuador
7 Peru6 Chile5 Cuba
4 Colombia3 Mexico
2 Argentina1 Brazil
- 10 20 30 40 50
33 Antigua and Barbuda32 Saint Kitts and Nevis
31 Grenada30 Bahamas29 Barbados
28 Saint Lucia27 Dominica
26 Saint Vincent and the Grenadines25 Trinidad and Tobago
24 Suriname23 Belize
22 Guyana21 Jamaica20 Panama
19 El Salvador18 Nicaragua17 Honduras16 Uruguay
15 Haiti14 Dominican Republic
13 Bolivia12 Costa Rica11 Guatemala10 Venezuela
9 Paraguay8 Ecuador
7 Cuba6 Chile5 Peru
4 Colombia3 Mexico
2 Argentina1 Brazil
Recent changes in the geographic distribution of crop cultivation in the region have made it
more concentrated. In 1980, output in Brazil alone accounted for 40% of the regional total; and
production by Brazil, Mexico and Argentina combined accounted for 69%. By 1993, concentration
had intensified further, with Brazilian production accounting for 42% and the three countries
together, 70%. But the expansion of soybean cultivation and other products in Brazil and
Argentina over the last decade has meant that Brazilian production accounted for 44% of the
regional total in 2003, while the three countries between them contributed 73% (see figure 117).
157
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This pattern of concentration is also present, albeit to a lesser extent, in terms of product lines,
especially oilseeds (see figures 118, 119, 120, 121, 122, 123, 124, 125, 126).
1993 2003
- 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000
Costa Rica
- 2 4 6 8 10
Figure 118 LAC: GROWTH OF CEREAL PRODUCTION BY COUNTRY (Millions of dollars)
Dominican Republic
Suriname
Haiti
Panama
Honduras
El Salvador
Guyana
Nicaragua
Guatemala
Paraguay
Cuba
Bolivia
Ecuador
Uruguay
Venezuela
Chile
Peru
Colombia
Mexico
Argentina
Brazil
Grenada
Saint Kittsand Nevis
Saint Lucia
Antigua and Barbuda
Dominica
Barbados
Bahamas
Saint Vincent and theGrenadines
Jamaica
Trinidad and Tobago
Belize
SOURCE: FAOSTAT.
158
Figure 119 LAC: GROWTH OF OILCROPS PRODUCTION BY COUNTRY (Millions of dollars)
SOURCE: FAOSTAT.
1993 2003
- 2,000 4,000 6,000 8,000 10,000 12,000
Honduras
Costa Rica
Nicaragua
Peru
Venezuela
Guatemala
Uruguay
Ecuador
Colombia
Mexico
Bolivia
Paraguay
Argentina
Brazil
- 5 10 15 20 25 30
Bahamas
Antigua and Barbuda
Saint Kitts and Nevis
Barbados
Saint Vincent and the Grenadines
Belize
Grenada
Suriname
Dominica
Saint Lucia
Trinidad and Tobago
Panama
Guyana
El Salvador
Chile
Cuba
Jamaica
Haiti
Dominican Republic
159
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Figure 120 LAC: GROWTH OF FRUIT PRODUCTION BY COUNTRY (Millions of dollars)
SOURCE: FAOSTAT.
1993 2003
Paraguay
Uruguay
Panama
Honduras
Bolivia
Dominican Republic
Cuba
Guatemala
Haiti
Venezuela
Costa Rica
Peru
Ecuador
Colombia
Chile
Argentina
Mexico
Brazil
1,000 2,000 3,000 4,000 5,000 6,000 7,000
20 40 60 80 100
Saint Kittsand Nevis
Barbados
Antigua and Barbuda
Grenada
Bahamas
Saint Vincent andthe Grenadines
Dominica
Trinidad andTobago
Suriname
Guyana
Saint Lucia
Nicaragua
Belize
El Salvador
Jamaica
Figure 121 LAC: GROWTH OF GREEN VEGETABLES PRODUCTION BY COUNTRY (Millions of dollars)
SOURCE: FAOSTAT.
1993 2003
DominicanRepublic
Haiti
Ecuador
Guatemala
Bolivia
Venezuela
Paraguay
Chile
Colombia
Cuba
Argentina
Peru
Mexico
Brazil
500 1,000 1,500 2,000 2,500 3,000 3,500 4,000
Saint Kitts and Nevis
Antigua and Barbuda
Grenada
Saint Lucia
Belize
Saint Vincent and the Grenadines
Barbados
Suriname
Dominica
Bahamas
Trinidad and Tobago
Guyana
Nicaragua
El Salvador
Panama
Honduras
Costa Rica
Uruguay
Jamaica
20 40 60 80 100
160
Figure 122 LAC: GROWTH OF COFFEE, TEA, CACAO AND SPICES PRODUCTION BY COUNTRY(Millions of dollars)
SOURCE: FAOSTAT.
1993 2003
500 1,000 1,500 2,000 2,500
Haiti
Paraguay
Jamaica
Nicaragua
El Salvador
Venezuela
DominicanRepublic
Honduras
Ecuador
Argentina
Guatemala
Peru
Mexico
Costa Rica
Colombia
Brazil
Chile
Uruguay
Antigua andBarbuda
Bahamas
Barbados
Saint Kittsand Nevis
Suriname
Belize
Dominica
Saint Vincent andthe Grenadines
Saint Lucia
Trinidad andTobago
Guyana
Grenada
Panama
Cuba
Bolivia
5 10 15 20 25 30
161
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162
Figure 123 LAC: GROWTH OF PULSES PRODUCTION BY COUNTRY (Millions of dollars)
SOURCE: FAOSTAT.
1993 2003
Saint Vincent and the Grenadines
Antigua and Barbuda
Saint Lucia
Dominica
Suriname
Bahamas
Saint Kitts and Nevis
Grenada
Guyana
Barbados
Jamaica
Trinidad and Tobago
Uruguay
Belize
Panama
Costa Rica
Venezuela
Bolivia
Dominican Republic
Chile
Ecuador
Haiti
Paraguay
Honduras
El Salvador
Guatemala
Peru
Cuba
Colombia
Nicaragua
Argentina
Mexico
Brazil
200 400 600 800 1,000 1,200 1,400 1,600
163
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Figure 124 LAC: GROWTH OF SUGAR PRODUCTION BY COUNTRY (Millions of dollars)
SOURCE: FAOSTAT.
1993 2003
1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000
Paraguay
Nicaragua
Costa Rica
Honduras
El Salvador
Chile
Bolivia
Dominican Republic
Ecuador
Venezuela
Peru
Guatemala
Argentina
Cuba
Colombia
Mexico
Brazil
10 20 30 40 50 60 70
Antigua andBarbuda
Saint Lucia
Saint Vincent andthe Grenadines
Dominica
Grenada
Bahamas
Suriname
Uruguay
Saint KittsNevis
Barbados
Trinidad andTobago
Haiti
Belize
Panama
Jamaica
Guyana
SOURCE: FAOSTAT.
1993 2003
200 400 600 800 1,000 1,200 1,400
5 10 15 20 25 30
Venezuela
Figure 125 LAC: GROWTH OF VEGETAL FIBRES AND RUBBER PRODUCTION BY COUNTRY(Millions of dollars)
Antigua and Barbuda
Uruguay
Panama
Bahamas
Barbados
Belize
Dominica
Guyana
Saint Vincent and the Grenadines
Saint Lucia
Suriname
Trinidad and Tobago
Saint Kitts and Nevis
Grenada
Dominican Republic
Jamaica
Costa Rica
Honduras
Haiti
El Salvador
Nicaragua
Chile
Cuba
Venezuela
Ecuador
Guatemala
Bolivia
Colombia
Peru
Paraguay
Argentina
Mexico
Brazil
164
SOURCE: FAOSTAT.
200 400 600 800 1,000 1,200 1,400
Brazil
1993 2003
Argentina
Cuba
Colombia
Mexico
Guatemala
Dominican Republic
Peru
Paraguay
Chile
Ecuador
Venezuela
Honduras
Uruguay
Panama
Nicaragua
Jamaica
El Salvador
Bolivia
Haiti
Costa Rica
Trinidad and Tobago
GuyanaSaint Vincent and
the GrenadinesSuriname
Saint Lucia
San Kitts and Nevis
Grenada
Dominica
Belize
Barbados
Bahamas
Antigua and Barbuda
40302010
LAC: TOBACCO PRODUCTION (Millions of dollars)Figure 126
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D. LIVESTOCK PRODUCTION
Livestock production in Latin America and the Caribbean grew by just 2.4% in 2003, having
averaged around 2% over the last eight years, with higher rates recorded only in 1999, 2000,
and 2002 (6.2%, 3.3% and 4,1%). As a result, the average rate of growth in 1995-2003 period was
3.0% per year, compared to 4.2% in the first half of the 1990s. The factors impeding stronger
growth include problems affecting livestock production in the Southern Cone, mainly in Argentina
and Uruguay, arising from market conditions, compounded by health problems and the effects
of drought.
Despite this uneven performance, over the last decade livestock production (1990-2003) has grown at
3.4% per year, compared to just 2.2% per year in the 1980s (see table 38).
In an eloquent illustration of the intensification of competition on livestock production markets,
the growth rates of the different product categories are tending to accelerate, but also to diverge
increasingly one from another. During the 1980s, the fastest growing category, chicken meat, grew
by 40%, while the slowest growing product line was pig meat, which declined by 10%. The difference
between the trend of the indices of the two products widened to 50 percentage points, with relatively
smaller gaps appearing in the other product lines (see figure 127).
Between 1990 and 2003, variations in the indices were much wider. Production of poultry meat
almost tripled (an increase of 184%) and pig meat production doubled (a 100% increase), while
wool production declined by 48%. Other products that experienced rapid growth and achieved
significant increases compared to their 1990 production levels, were eggs (46%) and milk (45%).
Production of bovine meat and goat meat grew more moderately (32% and 18% respectively),
while sheep meat production declined in absolute terms (13%). The changes in this latter period
have been much more rapid, and the divergence between production categories has widened
significantly (see figure 127).
LAC: GROWTH OF LIVESTOCK PRODUCTION, ANNUAL RATE (Percentage)Table 38
SOURCE: FAO/RLC based on FAOSTAT.
1980-90 1990-03 1990-95 1995-03
Latin American & Caribean 2.2 3.4 4.2 3.0
Brazil 3.7 4.8 6.4 4.3
Mexico 1.4 3.5 5.0 3.5
Southern Cone 0.6 1.2 2.4 0.3
Andean countries 2.5 2.9 2.0 2.8
Central America 2.1 3.2 3.6 2.6
Latin Caribbean 1.6 0.3 -3.3 1.3
CARICOM 1.6 1.0 -2.2 2.2
30
198
0
198
1
198
2
198
3
198
4
198
5
198
6
198
7
198
8
198
9
199
0
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
200
0
200
1
200
2
200
3
80
130
180
230
280
SOURCE: FAO/RLC based on FAOSTAT.
LAC: INDEX OF LIVESTOCK PRODUCTION BY PRODUCT CATEGORY (1990=100)Figure 127
Eggs: 146
Pig meat: 200
Poultry meat: 285
Milk: 145
Bovine meat: 132
Other meats: 119
Goat meat: 118
Sheep meat: 87
Animal fibre: 52
166
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Composition of livestock production
Bovine livestock products (meat and milk) account for a large majority of the total value of
livestock production in Latin America and the Caribbean; consequently, relatively lower growth
rates in this product category still mean substantial increases in absolute terms, within the
total value. For that reason, despite the widely differing rates of expansion in the different
livestock categories, the composition of output remains quite stable. Between 1990 and 2003,
the key change was the increase in the share of chicken meat, as a result of the successful
development of production in Brazil, which expanded from 12% to 22%, just overtaking the value
of milk output, which also accounted for 21% of the total. As a counterpart, the share of bovine
meat production fell from 49% to 41%. With minor variations, production in the other categories
maintained roughly the same proportions as in 1990.
Bovine meat remained the regional leading livestock product, but with downward trend. Chicken
meat is on the second place, with a value similar to that of milk, which is now in third place.
Apart from these three products, pig meat (8%) and eggs (6%) also attain significant levels in
the total value of livestock production (see table 39 and figure 128).
SOURCE: FAO/RLC based on FAOSTAT.
LAC: COMPOSITION OF LIVESTOCK PRODUCTION BY PRODUCT CATEGORY (Percentage)Figure 128
1990
Animal fibre2%
Eggs 6%Other meats 1%
Milk23%
Poultrymeat 15%
Pig meat 7%Bovine meat44%Goat meat 0.4%
Sheep meat 1%
Poultry meat 22%
Milk21%
Bovinemeat42%
Eggs 6%
Animal fibre0.4%
Other meats 0.5%
Pig meat 8%
Goat meat 0.3%
Sheep meat 1%
2003
SOURCE: FAO/RLC based on FAOSTAT.
LAC: VALUE OF LIVESTOCK PRODUCTION BY PRODUCT CATEGORY(Billions of dollars and percentage)
Table 39
1980 1990 2003
MUS$ % MUS$ % MUS$ %
Total livestock 38.3 100 48.0 100 75.2 100
Poultry meat 3.7 9.6 5.8 12.2 16.6 22.1
Bovine meat 18.3 47.8 23.3 48.5 30.7 40.8
Goat meat 0.1 0.4 0.2 0.4 0.2 0.3
Pig meat 3.2 8.4 2.9 6.1 5.8 7.7
Sheepmeat 0.5 1.4 0.6 1.3 0.6 0.7
Animal fibre 0.6 1.5 0.6 1.2 0.3 0.4
Other meats 0.3 0.8 0.3 0.6 0.4 0.5
Milk 9.3 24.4 11.1 23.1 16.0 21.3
Eggs 2.2 5.8 3.2 6.6 4.6 6.1
168
3.0
2.5
2.0
1.5
1.0
0.5
0.0
-1.0
1990 - 20021980 - 1990
LAC: EXPLANATORY FACTORS FOR THE GROWTH OF BOVINE MEAT PRODUCTION(1980-2002)
Figure 129
SOURCE: FAO/RLC based on FAOSTAT.
Change in production (in %) Stock effects Yield effects
LAC: BOVINE PRODUCTION (Million of dollars and percentage)Table 40
SOURCE: FAO/RLC based on FAOSTAT.
1980 1990 2002 1980-1990 1990-2002
US$ % US$ % US$ % % %
LAC 20,767 100 24,714 100 33,404 100 2.4 2.0
Brazil 6,670 32.1 9,619 38.9 16,542 49.5 3.9 4.2
Mexico 1,816 8.7 3,244 13.1 3,464 10.4 6.4 0.6
Southern Cone 8,092 39.0 8,864 35.9 8,245 24.7 0.1 -0.4
Andean countries 2,848 13.7 3,538 14.3 3,817 11.4 1.5 1.5
Central America 775 3.7 822 3.3 846 2.5 0.7 0,9
Latin Caribbean 517 2.5 569 2.3 434 1.3 1.2 -1.0
CARICOM 49 0.2 59 0.2 55 0.2 1.6 -1.5
Period
Production trends by products graps
Note: The analysis of the explanatory factors of livestock production growth ( pages 168 to174) considers information up to 2002.
Bovine meat
Over the past decade (including the first few years of the new millennium, i.e. 1990-2002) the
production of bovine meat grew slowly, by just 2.2% per year. As this followed an annual expansion
averaging 2.3% per year during the 1980s, there have now been 22 years of weak growth. The
livestock herd grew by as little as 1.1% in the 1980s, and even more slowly (0.9%) during the
more recent period (1990-2002). The yield index, measured as the trend rate of extraction and
changes in average weight per animal, has increased at the same rate in both decades, 1.2% per
year (see figure 129)
This average growth is the net result of situations that differ widely among countries and subregions.
In 1990-2002, production in Brazil grew rapidly (4.6% per year), mainly because of an increase in
the extraction rate, which allowed for a 3.1% annual increase in yields. This higher productivity
was complemented by growth of 1.5% in the livestock herd (see table 40 and figure 130).
169
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SOURCE: FAO/RLC based on FAOSTAT.
LAC: EXPLANATORY FACTORS FOR THE GROWTH OF BOVINE MEAT PRODUCTIONBY SUBREGION (1990-2002)
Figure 130
5.0
4.0
3.0
2.0
1.0
0.0
-1.0
-2.0
-3.0Period
Stock effects Yield effects
MexicoBrazil CentralAmerica
LatinCaribbean
Andeancountries
Southern Cone
Change in production (in %)
CARICOM
Milk
Milk production increased substantially between 1990 and 2002, and annual growth was stronger
than in the 1980s (3.1% per year compared to 1.8%). In both periods, the livestock herd expanded
a similar rates, 1.1% in the 1980s and 1.0% in the 1990s; but yields grew faster in the latter period
(2.1% per year) than in the 1980s (0.7%) (see figure 131).
Milk production increased in most sub-regions, but the strongest growth was seen in Brazil,
Central America and Mexico (3.8%, 3.7% and 3.5%, respectively). In the two latter cases, the
expansion was based on stronger yields, 4.2% in Central America and 3.9% in Mexico. Although
yields increased more slowly in Brazil, production grew by more, reflecting an increase in the
number of animals.
Although at slower rates than in Brazil, bovine meat production in Mexico also expanded during
the same period. Annual growth averaged 2.2% and was based exclusively on a higher extraction
rate, as the number of head of cattle declined by 0.4% per year.
The Southern Cone, however, experienced stagnation that actually caused production to
decline slightly (-0.3% per year). Both the livestock herd and yields maintained their levels.
The number of animals increased by 0.3% per year, but this was offset by a reduction (-0.6%)
in the extraction rate.
Bovine meat production in the other sub-regions was either static or declined. In the Andean
countries, the effect of 1.3% annual expansion in the livestock herd was reduced by a drop in
the extraction rate of 0.5%. In Central America, slow growth in yields (0.6% per year) was offset
by a 0.5% annual reduction in the number of animals. Output declined as result of lower yields
in the Latin Caribbean and the CARICOM countries.
170
MILK PRODUCTION (Millions of dollars and percentage)Table 41
1980 1990 2002 1980-1990 1990-2002
US$ % US$ % US$ % % %
LAC 8,867 100 10,607 100 15,231 100 1.8 3.2
Brazil 3,075 34.7 3,841 36.2 5,984 39.3 2.5 3.8
Mexico 1,786 20.1 1,629 15.4 2,459 16.2 -0.9 3.5
Southern Cone 1,904 21.5 2,277 21.5 3,126 20.6 1.8 2,7
Andean countries 1,360 15.3 2,048 19.3 2,750 18.1 4.2 2.5
Central America 342 3.9 408 3.9 634 4.2 1.8 3.7
Latin Caribbean 373 4.2 365 3.4 274 2.0 -0.2 -2.4
CARICOM 23 0.3 34 0.3 26 0.2 -2.4 -1.9
SOURCE: FAO/RLC based on FAOSTAT .
SOURCE: FAO/RLC based on FAOSTAT.
LAC: EXPLANATORY FACTORS FOR THE GROWTH OF MILK PRODUCTION (1980-2002)Figure 131
Change in production tonnage (in %) Stock effects Yield effects
In the Southern Cone and in the Andean countries, the production increased more modestly, by
2.7% and 2.5% per year respectively. In the first of these sub-regions, growth largely reflected
higher yields, while in the second, the positive effect of higher yields was combined with an
increase in the number of animals.
The trend of milk production among the Caribbean countries diverged from the pattern in the
rest of the region. In the Latin Caribbean and in the CARICOM countries output diminished
between 1990 and 2002, mainly as a result of lower average yields (see table 41 and figure 132).
4.0
3.0
2.0
1.0
0.0
-1.0
1990 - 20021980 - 1990
Period
171
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Poultry meat
The production of chicken meat has increased at an extraordinary rate over the last few decades—
5.1% per year in the 1980s and accelerating to 8.2% per year in the 1990s. The number of birds
increased by 5.6% per year, and faster turnover has also meant higher yields (2.4% per year)
(see figure 133).
5.0
4.0
3.0
2.0
1.0
0.0
-1.0
-2.0
-3.0
Brazil Mexico Southern Cone CARICOM
Figure 132
SOURCE: FAO/RLC based on FAOSTAT.
Andeancountries
CentralAmerica
LatinCaribbean
Change in production tonnage (in %) Stock effects Yield effects
LAC: EXPLANATORY FACTORS FOR THE GROWTH OF MILK PRODUCTIONBY SUBREGIONS (1990-2002)
SOURCE: FAO/RLC based on FAOSTAT.
LAC: EXPLANATORY FACTORS FOR THE GROWTH OF POULTRY MEAT PRODUCTION(1980-2002)
Figure 133
10
9
8
7
6
5
4
3
2
1
01990 - 20021980 - 1990
Change in production tonnage (in %) Stock effects Yield effects
Period
Period
172
The growth of chicken production was widespread across the region, though relatively at a
slower rate in the Caribbean. The strongest annual growth occurred in the Southern Cone (9.3%
per year), followed by Brazil (9.1%), Mexico (8.1%), Central America (7.7%) and the Andean
countries (6.6%). The high growth rates achieved by Brazilian production during the past decade,
based on a large initial volume, meant a substantial increase in absolute quantities. In all cases,
increases in the number of birds had a greater effect on output than variations in yields.
Nonetheless, the relation between the two factors differed in each subregion. In the Southern
Cone, better yields generated nearly half of the production expansion; in Brazil, yields explained
nearly one third; in Mexico and Central America, yields only accounted for 20% of output growth;
and in the Andean countries, nearly all the increase in production was the result of a larger
number of birds, with yields remaining virtually unchanged (see figure 134 and table 42).
POULTRY MEAT PRODUCTION (Millions of dollars and percentage)Table 42
1980 1990 2002 1980-1990 1990-2002
US$ % US$ % US$ % % %
LAC 3,763 100 6,187 100 15,785 100 4.58 7.82
Brazil 1,681 44.7 2,891 46.7 8,174 51.8 4.62 8.77
Mexico 489 -13.0 918 14.8 2,343 14.8 6.04 8.16
Southern Cone 517 -13.7 610 9.9 1,765 11.2 1.57 8.55
Andean countries 678 18.0 1,122 18.1 2,387 15.1 5.06 5.85
Central America 116 3.1 250 4.0 585 3.7 7.37 6.78
Latin Caribbean 175 4.7 254 4.1 332 2.1 4.43 3.57
Caricom 104 2.8 139 2.2 196 1.2 1.87 3.39
SOURCE: FAO/RLC based on FAOSTAT.
SOURCE: FAO/RLC based on data FAOSTAT.
LAC: EXPLANATORY FACTORS FOR THE GROWTH OF POULTRY MEAT PRODUCTIONBY SUBREGIONS (1990-2002)
Figure 134
10
9
8
7
6
5
4
3
2
1
0Brazil Mexico Southern Cone Andean
countriesCentralAmerica
CARICOMLatinCaribbean
Change in production tonnage (in %) Stock effects Yield effects
Pig meat
In a clear recovery from the reduction suffered in the 1980s (-0.9% per year), the production
of pig meat in Latin America and the Caribbean grew by 4.0% per year between 1990 and 2002.
The main factor was progress stemming from quicker turnover, which boosted yields by 3.2%
per year. The total number of animals also increased by 0.9% annually (see figure 135).
173
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LAC: PIG MEAT PRODUCTION (Millions of dollars and percentage)Table 43
1980 1990 2002 1980-1990 1990-2002
US$ % US$ % US$ % % %
LAC 4,238 100 3,866 100 6,152 100 -1.20 3.80
Brazil 1,315 31.0 1,409 36.4 2,684 43.6 1.70 5.50
Mexico 1,678 39.6 1,013 26.2 1,448 23.5 -7.00 2.90
Southern Cone 567 13.4 542 14.0 960 15.6 0,00 4.40
Andean countries 449 10.6 594 15.4 624 10.1 3.50 0.20
Central America 94 2.2 100 2.6 135 2.2 0.30 2.50
Latin Caribbean 106 2.5 180 4.7 273 4.4 6.60 4.40
CARICOM 27 0.6 26 0.7 24 0.4 -0.60 0.10
SOURCE: FAO/RLC based on FAOSTAT .
SOURCE: FAO/RLC based on FAOSTAT.
LAC: EXPLANATORY FACTORS FOR THE GROWTH OF PIG MEAT PRODUCTION(1980-2002)
Figure 135
5
4
3
2
1
0
-1
-2
1990 - 20021980 - 1990
Change in production tonnage (in %) Stock effects Yield effects
From 1990 to 2002, the strongest growth in the production of pig meat occurred in Brazil (6.0%).
This is entirely explained by better yields (7.0% per year), as the number of animals actually fell
(-1.0% per year). The Southern Cone countries also achieved strong growth averaging 4.3% per
year. In this case, the chief expansionary factor was a 3.6% annual increase in the number of
animals.
In Mexico, Central America and the Latin Caribbean, pig meat production grew at very similar
rates (2.9%, 2.8% and 2.6%). The first two cases are explained by a combination of a larger
number of animals and better yields, although the latter accounted for a larger share in Central
America. In the Latin Caribbean, production grew because of an increase in the number of
animals.
In the Andean countries, production expanded slowly (1.1% per year), because yields decreased
despite the number of animals increasing (2.4% annually). In the CARICOM countries, the production
of pig meat failed to expand during the decade; a small reduction in the number of animals (-0.9%
per year) was offset by a 0.7% annual increase in yields (see table 43 and figure 136).
Period
174
Other products
Output growth has been relatively slower in the “other products” category. Between 1990 and
2002, regional egg production expanded by 3.1% per year, slightly less than in the 1980s when
it had grown at an average rate of 3.5%. The pace of growth is roughly similar in all subregions,
except the Caribbean, where production actually diminished (-1.5% per year in the Latin
Caribbean, and -0.5% in CARICOM).
Over the past decade (1990-2002), the production of goat meat grew by just 0.8% per year,
while sheep meat production dropped by an annual 1.1%. Wool output declined drastically by
5.7% per year.
Composition of livestock production in each subregion
The changes discussed above meant significant alterations in the structure of the region’s
livestock output—the most notable being the increased production of chicken meat, which
helped to diversify from the previous heavy concentration in the bovine category (meat and
milk) (see figure 137).
SOURCE: FAO/RLC based on FAOSTAT.
LAC: EXPLANATORY FACTORS FOR THE GROWTH OF PIG MEAT PRODUCTIONBY REGIONS (1990-2002)
Figure 136
8
9
7
6
5
4
3
2
1
0
-1
-2Brazil Mexico Southern Cone Andean
countriesCentralAmerica
CARICOMLatinCaribbean
Change in production tonnage (in %) Stock effects Yield effects
175
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SOURCE: FAOSTAT.
LAC: CHANGES IN THE STRUCTURE OF LIVESTOCK PRODUCTION(Billions of dollars at constant 1999-2001 prices)
Figure 137
1980 1993 2003
5
10
15
20
25
30
35Poultry meat
Bovine meat
Goat meat
Pig meat
Sheep meat
Animal fibre
Milk
Eggs
SOURCE: FAOSTAT.
BRAZIL: CHANGES IN THE STRUCTURE OF LIVESTOCK PRODUCTION(Billions of dollars at constant 1999-2001 prices)
Figure 138
Poultry meat
Bovine meat
Goat meat
Pig meat
Sheep meat
Animal fibre
Milk
Eggs
2
4
6
8
10
12
14
16
1980 1990 2003
The change in the structure of livestock production in Brazil was very similar to the pattern in Latin America
and the Caribbean as a whole (partly reflecting that country’s share in the regional averages). Nonetheless,
the structure of output in Brazil also reflects a significant expansion in the production of bovine meat,
relatively slower growth in milk production and an exceptional increase in the production of poultry meat.
Although this latter category recorded the fastest growth, the bovine meat segment also expanded
significantly during the decade, reflecting greater participation in markets, based on better technical
responses in solving production problems, supported by more dynamic marketing (see figure 138).
176
SOURCE: FAOSTAT.
MEXICO: CHANGES IN THE STRUCTURE OF LIVESTOCK PRODUCTION(Billions of dollars at constant 1999-2001 prices)
Figure 139
1980 1990 2003
Poultry meat
Bovine meat
Goat meat
Pig meat
Sheep meat
Animal fibre
Milk
Eggs
0.5
1.0
1.5
2.0
2.5
3.0
3.5
In Mexico, the bovine meat share is less than the regional average, having hardly grown at all
during the decade. In contrast, there is significant output of pig meat. (Egg and chicken
production has also increased very fast (see figure 139).
The Southern Cone used to be highly specialized in bovine meat, but it has recently become
relatively more diversified as a result of increased production of chicken meat, albeit on a small
initial base. Nonetheless, bovine meat specialization could expand as a result of little change
in other comodity groups, and the drastic decline in wool production (see figure 140).
SOURCE: FAOSTAT.
SOUTHERN CONE: CHANGES IN THE STRUCTURE OF LIVESTOCKPRODUCTION (Billions of dollars at constant 1999-2001 prices)
Figure 140
1980 1990 2003
Poultry meat
Bovine meat
Goat meat
Pig meat
Sheep meat
Animal fibre
Milk
Eggs
1
2
3
4
5
6
7
8
177
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SOURCE: FAOSTAT.
CENTRAL AMERICA: CHANGES IN THE STRUCTURE OF LIVESTOCK PRODUCTION(Billions of dollars at constant 1999-2001 prices)
Figure 142
Poultry meat
Bovine meat
Goat meat
Pig meat
Sheep meat
Animal fibre
Milk
Eggs
1980 1990 2003
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
As in other regions, production in the Andean countries is diversifying as a result of increased
output of poultry meat. In contrast, egg production remains relatively small. (see figure 141).
In Central America, chicken and egg production are both expanding strongly; as, to a lesser extent,
is milk output. In contrast, bovine meat is growing relatively more slowly (see figure 142).
SOURCE: FAOSTAT.
ANDEAN COUNTRIES: CHANGES IN THE STRUCTURE OF LIVESTOCKPRODUCTION (Billions of dollars at constant 1999-2001 prices)
Figure 141
1980 1990 2003
Poultry meat
Bovine meat
Goat meat
Pig meat
Sheep meat
Animal fibre
Milk
Eggs
0.5
1.0
1.5
2.0
2.5
3.0
3.5
178
Livestock production in Latin Caribbean countries slumped badly during the past decade, with
the bovine meat segment in particular mainly because of a drastic decline in Cuba and Dominican
Republic. Milk output has also fallen sharply, though to a lesser extent. Pig meat was the only
category to increase substantially, and this already held a major share in 1990. Eggs also
accounted for a large share in that year, but production of eggs did not fail to expand during
the decade. There were no major changes in poultry meat or milk production (see figure 143).
Over the past decade (1990-2003) livestock production in the CARICOM countries stagnated
seriously. Poultry was the only segment to record positive growth, thanks to the strong
specialization since 1990 (see figure 144).
SOURCE: FAOSTAT.
LATIN CARIBBEAN: CHANGES IN THE STRUCTURE OF LIVESTOCK PRODUCTION(Billions of dollars at constant 1999-2001 prices)
Figure 143
Poultry meat
Bovine meat
Goat meat
Pig meat
Sheep meat
Animal fibre
Milk
Eggs
1980 1990 2003
7.0
0.1
0.2
0.3
0.4
0.5
0.6
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SOURCE: FAOSTAT.
CARICOM: CHANGES IN THE STRUCTURE OF LIVESTOCK PRODUCTION(Billions of dollars at constant 1999-2001 prices)
Figure 144
Poultry meat
Bovine meat
Goat meat
Pig meat
Sheep meat
Animal fibre
Milk
Eggs
SOURCE: FAOSTAT.
LAC: GEOGRAPHIC DISTRIBUTION OF BOVINE MEAT PRODUCTION(Billions of dollars)
Figure 145
Brazil
Mexico
Southern Cone
Andeans countriesCentral America
Latin Caribbean
CARICOM
1980 1990 2003
0.01
0.04
0.09
0.14
0.19
1980 1990 2003
2
4
6
8
10
12
14
16
Geographic distribution of livestock production
During the last decade (1990-2003) the most significant change in the location of bovine meat
production has been the extraordinary expansion of output in Brazil, in contrast to relative
stagnation in the other subregions (see figures 145 and 146).
180
LAC: GEOGRAPHIC DISTRIBUTION OF BOVINE MEAT PRODUCTION BY COUNTRY(Millions of dollars)
Figure 146
1990 2003
0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000
El Salvador
Haiti
Honduras
Panama
Cuba
Guatemala
Costa Rica
Dominican Republic
Nicaragua
Peru
Bolivia
Chile
Paraguay
Ecuador
Uruguay
Venezuela
Colombia
Mexico
Argentina
Brazil
0 10 20 30 40
Bahamas
Saint Kitts and Nevis
Grenada
Saint Vincent andthe Grenadines
Barbados
Antigua and Barbuda
Saint Lucia
Dominica
Trinidad and Tobago
Guyana
Belize
Suriname
Jamaica
SOURCE: FAOSTAT.
The geographic distribution of milk production in Latin America and the Caribbean in 2003 was
similar to the pattern prevailing in 1990, although with greater concentration in Brazil, and a
reduction in the Caribbean (see figures 147 and 148).
Over the past decade (1990-2003), poultry meat production has been heavily concentrated in
Brazil; while output has grown by more than in the previous decade in all subregions, apart from
CARICOM, the increase in Brazil has been much greater than in the other subregions (see figures
149 and 150).
181
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LAC: GEOGRAPHIC DISTRIBUTION OF MILK PRODUCTION BY COUNTRY(Millions of dollars)
1,000 2,000 3,000 4,000 5,000 6,000 7,000
Guatemala
Nicaragua
Bolivia
Paraguay
El Salvador
Dominican Republic
Honduras
Cuba
Costa Rica
Peru
Venezuela
Uruguay
Chile
Ecuador
Colombia
Argentina
Mexico
Brazil
Figure 148
SOURCE: FAOSTAT.
1990 2003
20 40 60
Saint Kitts and Nevis
Grenada
Saint Lucia
Saint Vincent and the Grenadines
Bahamas
Belize
Antigua and Barbuda
Dominica
Barbados
Suriname
Trinidad and Tobago
Jamaica
Guyana
Haiti
Panama
SOURCE: FAOSTAT.
LAC: GEOGRAPHIC DISTRIBUTION OF MILK PRODUCTION (Billions of dollars)Figure 147
1980 1990 2003
Brazil
Mexico
Southern Cone
Andeans countriesCentral America
Latin Caribbean
CARICOM
1
2
3
4
5
6
7
182
SOURCE: FAOSTAT.
LAC: GEOGRAPHIC DISTRIBUTION OF POULTRY MEAT PRODUCTION (Billions of dollars)Figure 149Brazil
Mexico
Southern Cone
Andeans countriesCentral America
Latin Caribbean
CARICOM
1980 1990 2003
9
8
7
6
5
4
3
2
1
LAC: GEOGRAPHIC DISTRIBUTION OF POULTRY MEAT PRODUCTION BY COUNTRY(Millions of dollars)
Figure 150
SOURCE: FAOSTAT.
1990 20030 2,000 4,000 6,000 8,000 10,000
Cuba
Uruguay
Paraguay
Nicaragua
El Salvador
Costa Rica
Honduras
Jamaica
Panama
Colombia
Bolivia
Guatemala
Dominican Republic
Ecuador
Chile
Peru
Venezuela
Argentina
Mexico
Brazil
0 10 15 20 25 30
Antigua and Barbuda
Saint Kitts and Nevis
Dominica
Saint Vincent andthe Grenadines
Grenada
Saint Lucia
Haiti
Suriname
Bahamas
Guyana
Barbados
Belize
Trinidad and Tobago
183
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SOURCE: FAOSTAT.
LAC: GEOGRAPHIC DISTRIBUTION OF PIG MEAT PRODUCTION (Billions of dollars)Figure 151
1980 1990 2003
Brazil
Mexico
Southern Cone
Andeans countriesCentral America
Latin Caribbean
CARICOM
0.5
1.0
1.5
2.0
2.5
3.0
3.5
The fastest growth in the production of pig meat over the last decade (1990-2003) occurred in
Brazil. As a result, while output is broadly maintaining its 1990 distribution, concentration in
Brazil is increasing (see figures 151 and 152).
184
LAC: GEOGRAPHIC DISTRIBUTION OF PIG MEAT PRODUCTION BY COUNTRY(Millions of dollars)
Figure 152
1990 2003
SOURCE: FAOSTAT.
0.0 500 1,000 1,500 2,000 2,500 3,000 3,500
Jamaica
Nicaragua
El Salvador
Honduras
Uruguay
Panama
Guatemala
Haiti
Costa Rica
Dominican Republic
Peru
Cuba
Bolivia
Colombia
Venezuela
Ecuador
Paraguay
Argentina
Chile
Mexico
Brazil
0 1 2 3 4
Bahamas
Antigua and Barbuda
Grenada
Saint Kitts and Nevis
Dominica
Guyana
Saint Vincent and
the Grenadines
Saint Lucia
Belize
Suriname
Barbados
Trinidad and Tobago
185
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SOURCE: FAOSTAT.
LAC: GEOGRAPHIC DISTRIBUTION OF EGGS PRODUCTION (Billions of dollars)Figure 153
1980 1990 2003
Brazil
Mexico
Southern Cone
Andean countriesCentral America
Latin Caribbean
CARICOM
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
Mexico recorded the region’s largest increase in egg production between 1990 and 2003
period, while production also expanded strongly in the Andean countries and Brazil (see
figures 153 and 154).
186
LAC: GEOGRAPHIC DISTRIBUTION OF EGGS PRODUCTION BY COUNTRY(Millions of dollars)
Figure 154
1990 2003
SOURCE: FAOSTAT.
Nicaragua
Panama
Bolivia
Uruguay
Honduras
Costa Rica
El Salvador
Paraguay
Ecuador
Cuba
Dominican Republic
Guatemala
Chile
Venezuela
Peru
Colombia
Argentina
Brazil
Mexico
200 400 600 800 1,000 1,200 1,400 1,600 1,800
2 4 6 8
Saint Kitts and Nevis
Dominica
Antigua and Barbuda
Saint Lucia
Saint Vincent and
the Grenadines
Bahamas
Grenada
Belize
Guyana
Barbados
Suriname
Trinidad and Tobago
Haiti
Jamaica
187
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LAC: GEOGRAPHIC DISTRIBUTION OF SHEEP MEAT PRODUCTION BY COUNTRY(Millions of dollars)
Figure 155
1990 2003
SOURCE: FAOSTAT.
Barbados
DominicanRepublic
Guyana
Haiti
Guatemala
Venezuela
Paraguay
Cuba
Colombia
Ecuador
Chile
Bolivia
Mexico
Peru
Uruguay
Argentina
Brazil
50 100 150 200
0.1 0.15 0.2 0.25 0.3
Panama
Jamaica
Costa Rica
Belize
Nicaragua
Dominica
Bahamas
Trinidad and Tobago
Suriname
El Salvador
Antigua and Barbuda
Saint Vincent and the Grenadines
Saint Kitts and Nevis
Grenada
Honduras
Saint Lucia
The Southern Cone is the region with largest production of sheep meat. Nonetheless, during
1990-2003, production in this sub-region contracted sharply, while there were significant
increases in Mexico and in the Andean countries (see figure 155).
188
LAC: GEOGRAPHIC DISTRIBUTION OF GOAT MEAT PRODUCTION BY COUNTRY(Millions of dollars)
Figure 156
1990 2003
SOURCE: FAOSTAT.
Antigua and Barbuda
Honduras
Guyana
Guatemala
Paraguay
Dominican Republic
Ecuador
Jamaica
Cuba
Venezuela
Bolivia
Peru
Colombia
Haiti
Chile
Argentina
Brazil
Mexico
0 10 20 30 40 50 60 70
0 0.05 0.10 0.15
Panama
Uruguay
Belize
Costa Rica
Saint Vincent andthe Grenadines
Grenada
Suriname
Barbados
Nicaragua
Dominica
Trinidad and Tobago
Saint Lucia
Bahamas
Saint Kitts and Nevis
El Salvador
The production of goat meat is highly concentrated in Mexico and Brazil. Despite the slow
growth of this product in the region generally, over the past decade (1990-2003) there were
significant increases in the Southern Cone countries, thereby expanding the geographic
diversification of production. Output also increased in Mexico and Brazil (see figure 156).
189
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VOLUME OF FISHERY PRODUCTIONTable 44
Category 1980 1990 2001 1980-90 1990-01 1980-01
Metric tons Rate of growth %
Pelagic fish 6,967,236 12,507,230 12,845,172 7.3 - 1.0 3.2
Demersal fish 1,200,510 1,526,509 1,624,314 3.0 1.0 2.7
Diadromousa and freshwater fish 322,725 517,617 1,283,077 4.5 8.0 5.4
Crustaceans 281,865 382,296 562,739 3.1 3.0 2.9
Cephalopods 44,848 89,552 437,939 7.5 15.0 14.5
Molluscs 211,582 301,545 368,007 4.9 3.5 2.3
Aquatic animals and mammals 39,034 35,516 54,488 4.3 4.4 3.4
Aquatic plants 124,321 295,386 352,266 4.6 3.8 3.5
Other marine products 485,725 1,000,565 713,890 7.4 -2.0 1.8
SOURCE: FAO/RLC based on FISHSTAT plusa/ Salmons.
The production of animal fibres is highly concentrated in the Southern Cone, as a result of wool
production in Argentina and Uruguay, although there is also significant production in Brazil and
the Andean countries. The dramatic collapse of wool production in Argentina, Uruguay and Brazil
has drastically reduced the importance of this product in the region.
E. FISHERY PRODUCTION
The regional main fishery zone is the eastern Pacific, where fish catches have varied between
9.5 million and 21.5 million tons per year. In the western Atlantic, annual landings have amounted
to between 1 million and 2 million tons, representing about 20% of the world’s total fish catch.
In inland waters, production varies between 0.7 and 1.4 million tons.
Catch volumes fluctuate widely from year to year, mainly depending on weather conditions.
Over 60% of the total catch consists of small pelagic species, which are mostly sent to the
fishmeal industry; while the second largest category consists of demersal fish (hake and similar
species), which produce between 0.8 and 1.6 million tons per year.
In Latin America and the Caribbean, as in the rest of the world generally, fishery activity is
causing an alarming overexploitation of stocks. Unlike crop and livestock production, increases
in fishery output are not always good news. In some cases, lower production levels may improve
long-term sustainability.
In the 1980s, output grew rapidly in all product categories. Although this meant higher incomes
for fishermen and greater availability of food and fishery products, the rate of growth of the fish
catch far outstripped the limits of resource sustainability under current management conditions.
Following the reduction in landings in 1998 imposed by the El Niño weather pattern, the growth
rate of catches has recovered, albeit more moderately (see table 44).
The pelagic species catch grew strongly from 1980 to 1990, when the total volume virtually
doubled reaching levels of 12.5 millions tons ; but production levels since 1990 have remained
virtually unchanged. The bulk of the region’s fish catch consists of pelagic species in 2001 total
landings in this category amounting to nearly 12.5 million tons . Volumes in other categories
are very small by comparison (see figure 157).
190
SOURCE: FISHSTAT plusa/ Salmons.
LAC: VOLUME OF FISHERY PRODUCTION (Thousand of metric tons)Figure 157
Other marine products
Demersal fish
Diadromousa and freshwater fish
Pelagic fish
Aquatic plantsAquatic animals and mammals
Cephalopods
Crustaceans
Mollusc
SOURCE: FISHSTAT plusa/ Salmons.
LAC: VOLUME OF FISHERY PRODUCTION EXCLUDING PELAGIC(Thousand of metric tons)
Figure 158
1980 1990 2001
Other marine products
Demersal fish
Diadromousa and freshwater fish
Aquatic plants
Aquatic animals and mammals
Cephalopods
Crustaceans
Mollusc
200
400
600
800
1,000
1,200
1,400
1,600
1,800
1980 1990 2001
2,000
4,000
6,000
8,000
10,000
12,000
14,000
On a different scale, and excluding pelagic species, the structure of fishery production in LatinAmerica and the Caribbean has changed significantly over the last decade as a result of increasedproduction of diadromous fish, mainly caused by the rapid rise of salmon farming in Chile. Thecephalopod segment (squid and octopus) is actually growing even faster, but from a very incipientbase, which means smaller absolute volumes. There has also been an increase in the productionof crustaceans (shrimp) (see figure 158).
191
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LAC: VOLUME OF AQUACULTURE PRODUCTION (Metric tons)Table 45
Product 1980 1990 2001 1980-90 1990-01 1980-01
(Tons) (Growth rates %)
Pelagic fish 0 1000 532 n.a. -13.4 n.a.
Demersal fish 0 3 2,224 n.a. 62.9 n.a.
Diadromousa and freshwater fish 14,054 80,595 831,499 14.5 20.6 19.8
Crustaceans 10,992 102,628 193,751 21.9 5.0 12.6
Aquatic animals and mammals 0 140 848 n.a. 19.6 n.a.
Aquatic plants 1,455 38,122 65,578 34.3 0.7 19.3
Molluscs (excl. cephalopods) 1,873 7,343 83,316 11.3 23.7 17.5
Others 0 484 25 -5.2 -36.3 -26.2
SOURCE: FAO/RLC based on FISHSTAT plusa/ Salmons.
Aquaculture
Aquaculture accounts for a very small share of total fishery production. Although it has been
growing very rapidly in recent years, the initial base is small, so rapid percentage increases are
often modest in absolute terms. In global terms, where aquaculture is also growing rapidly, the
region’s contribution was just 2.8% in 1984. The rapid growth of aquaculture production in the
region in recent years had raised its share to 6.4% of the world total by 2001 (see table 45).
The main species farmed in Latin America and the Caribbean are salmon and shrimps, which
between them account for 95% of the total value of aquaculture production in the region. In
addition, tilapia, carp and a number of other relatively less important species are also farmed.
During the past decade (1990-2001) shrimp production virtually doubled, while salmon production
multiplied tenfold, thanks essentially to the successful development of the production and
marketing system in Chile.
In Latin America and the Caribbean, production is highly concentrated in a few countries. Until the
late 1980s the leading product was shrimp, which was produced mainly in Ecuador and accounted
for nearly 80% of the total value of the regional aquaculture. Nonetheless, the extraordinary
development of salmon production since 1988—particularly in Chile, and in other countries indicates
that this product now contributes to the most of the value of the region’s aquaculture: 64% compared
to the 31% share of shrimp production (see figures 159 and 160).
192
SOURCE: FISHSTAT plus.
LAC: VALUE OF AQUACULTURE PRODUCTION (Millions of dollars)Figure 159
1984 1990 2001
Colombia
Mexico
Ecuador
Brazil
Chile
Others
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
SOURCE: FISHSTAT plusa/ Salmons.
LAC: VALUE OF AQUACULTURE PRODUCTION OF DIADROMOUSa AND FRESHWATERFISH (Millions of dollars)
Figure 160
1980 1990 2001
1.700
1.500
1.300
1.100
900
700
500
300
100
-100
Brazil
ChileOthers
193
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LOP
ME
NT
SOURCE: FISHSTAT plusa/ Salmons.
LAC: VALUE OF AQUACULTURE PRODUCTION OF DIADROMOUSa AND FRESHWATERFISH (Thousands of tons)
Figure 161
1984 1990 2001
Mexico
Cuba
Colombia
Brazil
Chile
Others
-50
50
150
250
350
450
550
At the same time, aquaculture production of crustaceans has undergone strong regional
diversification. Although Ecuadorian production is still the largest, other countries have rapidly
increased their shares, mainly as a result of sharp increases in production in Mexico in Brazil,
and to a lesser extent in Colombia and Honduras (see figure 161).
194
Figure 162 LAC: VALUE OF AQUACULTURE PRODUCTION (Millions of dollars)
SOURCE: FISHSTAT plus.
1990 2001
Saint Kitts and Nevis
Saint Lucia
Trinidad and Tobago
Dominica
Uruguay
Bahamas
Paraguay
Bolivia
Guyana
El Salvador
Suriname
Argentina
Panama
Jamaica
Guatemala
Nicaragua
Belize
Costa Rica
Peru
Venezuela
Cuba
Honduras
Colombia
Mexico
Ecuador
Brazil
Chile
Republica
0 200 400 600 800 1,000 1,200 1,400 1,600 1,800
Despite this relative diversification, the region’s aquaculture remains concentrated in just a
few countries—chiefly Chile, given the huge development of salmon production in that country
(see figures 162, 163 and 164).
195
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Figure 163 LAC: VALUE OF PRODUCTION OF DIADROMOUSa AND FRESHWATER FISH(Millions of dollars)
SOURCE: FISHSTAT plusa/ Salmons.
1990 2001
0 200 400 600 800 1,000 1,200 1,400 1,600
Saint Lucia
Dominica
Trinidad and Tobago
Uruguay
El Salvador
Suriname
Paraguay
Bolivia
Guyana
Honduras
Panama
Dominican Republic
Ecuador
Argentina
Guatemala
Peru
Jamaica
Venezuela
Costa Rica
Mexico
Cuba
Colombia
Brazil
Chile
196
0 50 100 150 200 250 300 350
Saint Kitts and Nevis
Dominica
Jamaica
Bahamas
Argentina
Guyana
El Salvador
Suriname
Peru
Cuba
Dominican Republic
Panama
Guatemala
Costa Rica
Nicaragua
Belize
Venezuela
Honduras
Colombia
Brazil
Mexico
Ecuador
LAC: VALUE OF PRODUCTION OF CRUSTACEANS (Millions of dollars)Figure 164
SOURCE: FISHSTAT plus.
20011990
Trends in fishery production
Between 1990 and 2001, the largest relative increases occurred in the capture of cephalopods
(15% per year); but this was based on very small initial quantities, so the increases in absolute
terms are modest. Diadromous fish production also grew rapidly (8%), while the pelagic fish
capture is holding steady slightly below the level achieved in 1990 (see figure 165).
AG
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197
In Brazil, diadromous and freshwater fish account for the most important fishery product in
volume terms, and were also fastest-growing over the last decade (5.2% per year), followed by
demersal and pelagic species and crustaceans. The pelagic fish capture declined sharply in the
1980s, and only managed a partial recovery in the 1990s. The production of demersal fish and
crustaceans expanded very slowly (see figure 166).
Fishery production in Mexico is widely diversified. The leading category in volume terms consists
of pelagic fish, but there is also significant production of demersal and diadromous species,
crustaceans, cephalopods and other molluscs. During the past decade, the capture of pelagic
fish revived from stagnation in the 1980s to grow by 3.9% per year. Shrimp production also grew
rapidly during the decade (4.5% per year). The fastest growth occurred in cephalopod production
(14.8% per year), but based on a small initial quantity (see figure 167).
In the Southern Cone, fishery production has become more diversified over the last decade.
Pelagic fish account for the largest volumes, but captures in this category declined during
the period, mainly because of smaller captures in Chile. In contrast, the production of
diadromous fish grew at an exceptional rate of 17.4% yearly, thus reflecting the increase in
Chilean production. Based on small volumes, cephalopod and crustaceans both expanded very
vigorously in percentage terms (18.0% and 8.1%, respectively). Seaweed production also
attained significant volumes, growing rapidly during the decade (5.9%). However demersal
fish production stalled, however (see figure 168).
SOURCE: FAO/RLC based on FISHSTAT plusa/ Salmons.
LAC: INDEX OF FISHERY PRODUCTS (1990=100)Figure 165
0
198
0
198
1
198
2
198
3
198
4
198
5
198
6
198
7
198
8
198
9
199
0
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
200
0
200
1
100
200
300
400
500
600
700
Aquatic animalsand mammals
Diadromousa andfreshwater fish
Cephalopods
Crustaceans
Molluscs
Aquatic plants
Demersal fish
Pelagic fish
Other products
198
SOURCE: FISHSTAT plusa/ Salmons.
MEXICO: VOLUME OF FISHERY PRODUCTION (Thousands of metric tons)Figure 167
Other marine products
Demersal fish
Diadromousa andfreshwater fish
Pelagic fish
Aquatic plantsAquatic animals and mammals
Cephalopods
Crustaceans
Molluscs
1980 1990 2001
100
200
300
400
500
600
700
800
3
SOURCE: FISHSTAT plusa/ Salmons.
BRAZIL: VOLUME OF FISHERY PRODUCTION (Thousands of metric tons)Figure 166
1980 1990 2001
Other marine products
Demersal fish
Diadromousa andfreshwater fish
Pelagic fish
Aquatic animals and mammals
Cephalopods
Crustaceans
Molluscs
50
100
150
200
250
300
350
400
199
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LOP
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SOURCE: FISHSTAT plusa/ Salmons.
SOUTHERN CONE: VOLUME OF FISHERY PRODUCTION (Thousands of metric tons)Figure 168
1980 1990 2001
Other marine products
Demersal fish
Diadromousa andfreshwater fish
Pelagic fish
Aquatic plantsAquatic animals and mammals
Cephalopods
Crustaceans
Molluscs
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
In the Andean countries, the structure of fishery production in volume terms is highly
concentrated in pelagic fish destined for the manufacture of fish meal, which absorbs almost
the entire catch (see figure 169).
Apart from pelagic species, the production of demersal and diadromous fish is also important
for the fishery industry in Andean countries, along with crustaceans, cephalopods and other
molluscs. The strongest growth occurred in the production of cephalopods (11.7% per year) and
other molluscs (6.0%) (see figure 170).
In Central American countries, pelagic species generate the largest volume, while crustacean
production is also significant. Both categories grew relatively fast between 1990 and 2001, at
3.3% and 4.4%, respectively (see figure 171).
In the Latin Caribbean, fishery production declined sharply during the decade, as a result
of a drastic slump in fishing activities in Cuba. The only product category of any significance
is diadromous fish, production of which grew by 9.7% per year (see figure 172).
200
SOURCE: FISHSTAT plusa/ Salmons.
ANDEAN COUNTRIES: VOLUME OF FISHERY PRODUCTION (Thousands of metric tons)Figure 169
1980 1990 2001
Diadromousa andfreshwater fish
Other marine products
Demersal fish
Pelagic fish
Aquatic plantsAquatic animals and mammals
Cephalopods
Crustaceans
Molluscs
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
SOURCE: FISHSTAT plusa/ Salmons.
ANDEAN COUNTRIES: VOLUME OF FISHERY PRODUCTION EXCLUDING PELAGIC(Thousands of metric tons)
Figure 170
1980 1990 2001
Other marine products
Demersal fish
Diadromousa andfreshwater fish
Aquatic plants
Aquatic animals and mammals
Cephalopods
Crustaceans
Molluscs
100
150
200
250
300
50
201
AG
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SE
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DE
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LOP
ME
NT
SOURCE: FISHSTAT plusa/ Salmons.
CENTRAL AMERICA: VOLUME OF FISHERY PRODUCTION (Thousands of metric tons)Figure 171
1980 1990 2001
Other marine products
Diadromousa andfreshwater fish
Pelagic fish
Aquatic animals and mammals
Crustaceans
Molluscs
50
100
150
200
250
SOURCE: FISHSTAT plusa/ Salmons.
LATIN CARIBBEAN: VOLUME OF FISHERY PRODUCTION (Thousands of metric tons)Figure 172
1980 1990 2001
Other marine products
Demersal fish
Diadromousa andfreshwater fish
Pelagic fishAquatic animals and mammals
Cephalopods
Crustaceans
20
40
60
80
100
120
202
SOURCE: FISHSTAT plusa/ Salmons.
CARICOM: VOLUME OF FISHERY PRODUCTION (Thousands of metric tons)Figure 173
1980 1990 2001
Other marine products
Demersal fish
Diadromousa andfreshwater fish
Pelagic fishAquatic animals and mammals
Crustaceans
Molluscs
10
20
30
40
50
60
70
Fishery activity in the CARICOM countries expanded rapidly during the last decade, but based
on very small volumes. The two categories contributing the largest volumes are pelagic fish
and crustaceans; both categories grew at very high annual rates during the decade (20.5% and
11.8%, respectively) (see figure 173).
Geographic distribution of fishery production
The pelagic species capture in 1990 almost doubled the 1980 figure, mainly due to increases
in Peru, and to a lesser extent in Chile. These two countries account for most production in this
fish. The catch declined substantially in the wake of the “El Niño” event, but has since stabilized
relatively. Levels in 2001 were similar to those in 1990; only Peru saw new increases in the size
of the catch, and these were partially offset by a reduction in landings in Chile. Production in
the other sub-regions is much smaller, and has remained virtually flat during the last two
decades. The trend described above has resulted in heavy concentration of pelagic fish capture
in Peru (see figures 174 and 175).
203
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SOURCE: FISHSTAT plus.
LAC: VOLUME OF PELAGIC FISH PRODUCTION (Thousands of metric tons)Figure 174
1980 1990 2001
LAC: VOLUME OF PELAGIC FISH PRODUCTION (Thousands of metric tons)Figure 175
SOURCE: FISHSTAT plus.
20011990
1 2 3 4 5 6 7
Bahamas
Dominica
Honduras
Bolivia
Saint Lucia
Grenada
Dominican Republic
Uruguay
Barbados
Trinidad and Tabago
Cuba
Argentina
Costa Rica
Saint Vincent and the Grenadines
Colombia
Brazil
Panama
Venezuela
Ecuador
Mexico
Chile
Peru
-1,500
3,500
8,500
Brazil
Mexico
Southern Cone
Andean countriesCentral America
Latin Caribbean
CARICOM
204
SOURCE: FISHSTAT plus.
LAC: VOLUME OF DEMERSAL FISH PRODUCTION (Thousands of metric tons)Figure 176
1980 1990 2001
Brazil
Mexico
Southern Cone
Andean countries
Latin Caribbean
CARICOM
100
200
300
400
500
600
700
800
900
1,000
The demersal fish catch is highly concentrated in the southern cone countries; Moreover,
concentration accentuated still further since this was the only subregion in which landings
grew significantly over the last decade (see figures 176 and 177).
205
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LAC: VOLUME OF DEMERSAL FISH PRODUCTION (Thousands of metric tons)Figure 177
SOURCE: FISHSTAT plus.
20011990
100 200 300 400 500 600
Dominican Republic
Barbados
Guatemala
Grenada
Honduras
Saint Vincent and the Grenadines
Bahamas
C o l o m b i a
Trinidad and Tobago
Ecuador
Cuba
Costa Rica
Panama
Venezuela
Uruguay
Mexico
Peru
Brazil
Chile
Argentina
Since the late 1980s , production of diadromous fish has grown tremendously in Chile,
with the result that regional production is now heavily concentrated in this country.
Until the 1990s, Brazil was the main producer, and output there continued to grow
rapidly, although not as fast as in Chile; these two countries thus account for the vast
majority of regional output (see figures 178 and 179).
206
SOURCE: FISHSTAT plus.a/ Salmons.
LAC: VOLUME OF PRODUCTION OF DIADROMOUSa AND FRESHWATER FISH(Thousands of metric tons)
Figure 178
1980 1990 2001
Brazil
Mexico
Southern Cone
Andeans countriesCentral America
Latin Caribbean
CARICOM
200
400
600
LAC: VOLUME OF PRODUCTION OF DIADROMOUSa AND FRESHWATER FISH (Metric tons)Figure 179
SOURCE: FISHSTAT plus.a/ Salmons.
20011990100,000 200,000 300,000 400,000 500,000
Saint Lucia
Dominica
Trinidad and Tobago
Suriname
Uruguay
Haiti
Nicaragua
Honduras
Panama
Guyana
El Salvador
Dominican Republic
Jamaica
Bolivia
Ecuador
Costa Rica
Guatemala
Argentina
Paraguay
Venezuela
Peru
Cuba
Colombia
Mexico
Brazil
Chile
207
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LOP
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SOURCE: FISHSTAT plus.
LAC: VOLUME OF CRUSTACEAN PRODUCTION (Thousands of metric tons)Figure 180
1980 1990 2001
Brazil
Mexico
Southern Cone
Andean countriesCentral America
Latin Caribbean
CARICOM
-10
10
30
50
70
90
110
130
The geographic distribution of crustacean production has changed greatly over the last two
decades. In the early 1980s, the largest production volumes were achieved by Mexico and Brazil,
but rapid growth in Ecuador during the 1980s then made this country the leading producer. In
2000, a steep fall in production in Ecuador (and also in Peru, albeit based on a smaller volume),
caused by the serious incidence of diseases that have impaired shrimp production, alongside
an increase in production in Mexico, and the exceptional increase in Argentina, Guyana,
Suriname and other CARICOM countries, have once again altered the distribution of production
in this category (see figures 180 and 181).
208
LAC: VOLUME OF CRUSTACEAN PRODUCTION (Thousands of metric tons)
20,000 40,000 60,000 80,000 100,000 120,000 140,000
Grenada
Saint Lucia
Saint Kitts and Nevis
Antigua and Barbuda
Haiti
Jamaica
Trinidad and Tobago
Dominican Republic
Uruguay
El Salvador
Guatemala
Costa Rica
Belize
Peru
Bahamas
Suriname
Panama
Honduras
Nicaragua
Cuba
Colombia
Chile
Venezuela
Guyana
Ecuador
Argentina
Brazil
Mexico
Figure 181
SOURCE: FISHSTAT plus.
20011990
The production of cephalopods grew rapidly in Argentina, especially before until or, 1997, making
this country the region’s leading producer. Otherwise, output only grew significantly in the two
other countries that were already major producers in 1990, namely Mexico and Peru. Production
is thus heavily concentrated in the three countries mentioned (see figures 182 and 183).
209
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LAC: VOLUME OF CEPHALOPOD PRODUCTION (Thousands of metric tons)Figure 182
SOURCE: FISHSTAT plus.
1980 1990 2001
Latin Caribbean
Andean countries Southern Cone
Mexico
Brazil250
200
150
100
50
The production of molluscs grew rapidly in Southern Cone countries during the last decade,
particularly in Argentina and Chile, while decreasing in Mexico and, to a lesser extent, in Peru.
The geographic distribution of mollusc production is consequently heavily concentrated in the
Southern Cone (see figures 184 and 185).
LAC: VOLUME OF CEPHALOPOD PRODUCTION (Thousands of metric tons)Figure 183
SOURCE: FISHSTAT plus.
20011990
50 100 150 200
El Salvador
Costa Rica
Colombia
Ecuador
Dominican Republic
Guatemala
Saint Vincent and the Grenadines
Brazil
Venezuela
Chile
Uruguay
Peru
Mexico
Argentina
210
LAC: VOLUME OF MOLLUSC PRODUCTION (Thousands of metric tons)Figure 184
SOURCE: FISHSTAT PLUS.
1980 1990 2001
170
150
130
110
90
70
50
30
10
-10
Brazil
MexicoCARICOM
Latin Caribbean
Central America Andean countries
Southern Cone
LAC: VOLUME OF MOLLUSC PRODUCTION (Thousands of metric tons)Figure 185
20 40 60 80 100 120 140
SOURCE: FISHSTAT plus.
20011990
Jamaica
Ecuador
Saint Lucia
Haiti
El Salvador
Panama
Uruguay
Brazil
Argentina
Mexico
Chile
Venezuela
Peru
Cuba
Belize
DominicanRepublic
Bahamas
Colombia
Antigua andBarbuda
Grenada
211
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Fisheries are a major productive sector in Latin America and the Caribbean, creating income
and employment, and making a significant contribution to food security and the generation of
foreign exchange. Nonetheless, production needs to take place in a framework of sustainable
resource management; and recent efforts to achieve effective management of fishing and
aquaculture activity need to be continued. Modernization of the legal and institutional framework,
and an efficient system of monitoring, control and surveillance of fishery activities are crucial.
In particular, it is essential to create a framework that stimulates the conservation of fishery
resources and related ecosystems, ensure diversified use of resources, generate greater value
added, and develop coastal fisheries and aquaculture.
Over 95% of the output of the region’s marine fisheries is obtained in coastal habitats. One of
the features of fishery communities in such zones tends to be strong competition for scarce
resources, often in the absence of regulatory mechanisms. In some countries, conflicts are
starting to arise with small-scale fishing activities and indigenous community groups, whose
opportunities to fish in areas that in practice were once their exclusive preserve are now being
restricted.
Some of the region’s leading fishing countries have tried to introduce the individual-transferable-
quota system within a fishery resource management regime that grants “property rights”, allowing
purchase, sale or rental of the right to participate in a regulated fishery area. This system assumes
that those who hold the right to use a fishery should also be concerned to ensure that it is correctly
managed, since the economic value of their right depends directly on the performance of the
fisheries. Nonetheless, efforts to introduce this quota system have been opposed by small-scale
fishermen, labour organizations, boat owners and fish processors. Efforts to reach consensus
need to be continued, however, based on detailed multidisciplinary technical knowledge covering
the various environmental, social and economic aspects of the activity.
Integrated management measures for coastal zones are being adopted in the region; and in several
countries fishery resource allocation systems are being implemented by defining exclusive zones
for small-scale fishing activity, concessions granting exclusive use of fishery resources by certain
groups of fishermen, and establishment of fishery management areas guaranteeing exclusive
rights for small-scale operators. This management process requires a number of new mutual
concessions between different alternative and exclusive uses, together with a transparent
consultation process in which users and potentially affected groups participate. Supervision of
the subsequent effects on development is also essential.
The problem of low-volume fish capture, which means that small-scale fishermen currently
participate under unfair commercial conditions, could be partially overcome if existing organizations
were to expand their functions in terms of product marketing and financing. Various association
modalities could be developed that would allow for economies of scale and at the same time
encourage the establishment of social protection networks.
Alongside efforts to modernize the institutional framework of fishing activity, there is also
a need to modernize fishing fleets, improve on-board preservation systems and hygiene,
guarantee the quality of products in processing plants, and develop more efficient distribution
channels. Policies to promote diversified use of fishery products also include actions to
increase exploitation for direct human consumption of the large quantities of raw materials
that are used in fish meal and fish oil production, and to increase exploitation of the attendant
212
fauna, which is thrown put back into the sea after being caught in shrimp fisheries and other
trawl-based fishing activities.
In some countries of the region, serious problems are developing as a result of pollution of coastal
marine environments, including industrial effluents and agro-chemicals caused by human activity.
This requires urgent action to address the underlying causes.
The use of bottom trawling techniques and explosives, and lack of care when anchoring vessels
are examples of fishing practices which have a negative impact in aquatic habitats. Sometimes
these cause harm to the fauna of seabed, as well as to underwater meadows and coral reefs. A
number of aquaculture practices have also caused the destruction of mangroves, excessive
accumulation of organic material and nutrients in the water and on the seabed, the introduction
of harmful exotic species, and the escape of genetically modified cultivated species into the
wild. Ecological groups also claim that the expansion of salmon farming is harming the marine-
coastal environment.
In recent years, shrimp and salmon production has been hit by a series of diseases that have
caused major damage. Special care needs to be taken to prevent these from spreading.
F. FORESTRY PRODUCTION
Forestry area
Latin America and the Caribbean contain 956 million hectares of forests, i.e. roughly one quarter
of the world’s total, and the largest proportion among developing regions. In contrast, there are
only 11.7 million hectares of forest plantations in the region, representing just 6% of the world’s
total (see table 46).
This difference between the relative abundance of natural resources and scarce investment in
forest plantations is a first sign that in this subsector, possibly more than in crop and livestock
production, productive development problems include a major supply-side component, where
investment, competitive technology, vertical integration, and the legal and administrative
framework all have key roles to play.
Forests are widely distributed throughout the region. The Amazon basin contains over 750
million hectares of tropical forest, three quarters of which are located in Brazil. Central America
and Mexico account for just over 67 million hectares, 80% of which are in Mexico. In the
Southern Cone, there are 71 million hectares of cold and subtropical forests, half of them in
Argentina. Lastly, the Caribbean countries contain over 36 million hectares, half of which are
located in Guyana (see figure 186).
In the case of planted forests, while Brazil again has the largest share (43%), Chile also accounts
for a significant fraction (18%). Argentina, Venezuela, Uruguay, Peru and Cuba also have sizeable
areas of forest plantations (see figure 187).
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FORESTRY AREATable 46
Total Forest Forest plantations
Country/Area forests plantations as a percentage of
(Thousand Ha.) (Thousand Ha.) total forest area
Latin America and the Caribbean 956,040 11,742 1.2
Brazil 543,905 4,982 0.9
Mexico 55,205 267 0.5
Southern Cone 74,848 3,592 4.8
Argentina 34,648 926 2.7
Chile 15,536 2,017 13.0
Paraguay 23,372 27 0.1
Uruguay 1,292 622 48.1
Andean countries 227,947 1,857 0.8
Bolivia 53,068 46 0.1
Colombia 49,601 141 0.3
Ecuador 10,557 167 1.6
Peru 65,215 640 1.0
Venezuela 49,506 863 1.7
Central America 16,476 459 2.8
Costa Rica 1,968 178 9.0
El Salvador 121 14 11.6
Guatemala 2,850 133 4.7
Honduras 5,383 48 0.9
Nicaragua 3,278 46 1.4
Panama 2,876 40 1.4
Latin Caribbean 3,812 532 14.0
Cuba 2,348 482 20.5
Haiti 88 20 22.7
Dominican Republic 1,376 30 2.2
CARICOM 33,847 53 0.2
Antigua and Barbuda 9 0 0.0
Bahamas 842 n.a. n.a.
Barbados 2 0 0.0
Belize 1348 3 0.2
Dominica 46 n.s. n.s.
Grenada 5 n.s. n.s.
Guyana 16,879 12 0.1
Jamaica 325 9 2.7
Saint Kitts and Nevis 4 0 0.0
Saint Lucia 9 1 11.1
Saint Vincent and the Grenadines 6 0 0.0
Suriname 14,113 13 0.1
Trinidad and Tobago 259 15 5.8
SOURCE: "State of the World's Forests, 2003" (SOFO). FAO 2003.n.s.: Not significantn.a.: Not available
214
SOURCE: "State of the World Forest 2003” (SOFO), FAO 2003.
LAC: FOREST AREA 2000 (Percentage)Figure 186
CARICOM 4%
Brazil56%
Latin Caribbean 0.4%
Central America 2%
Andeanscountries
24%
Southern Cone 8%
Mexico 6%
SOURCE: “State of the World´s Forest 2003” (SOFO). FAO 2003.Out of a total area of 11,742 thousands hectares.
LAC: AREA OF FOREST PLANTATIONS 2000 (Percentage)Figure 187
Otros 3%
Brazil43%
Chile18%
Cuba 4%
Guatemala 1%
Costa Rica 2%
Venezuela 7%
Peru 5%
Ecuador 1%Colombia 1%
Uruguay 5%
Argentina 8%
Mexico 2%
Forestry production
The structure of forestry production in Latin America and the Caribbean reflects the regional
low development level. Fuel wood is by far the leading product in terms of volume , with
roundwood next in terms of importance. Even taking account of the logical differences in
volumes, since these are distinct economic goods, output of sawn wood and panels, along with
processed products (pulps and fibres, and paper and paperboard), is still very small as a regional
average. The situation has been improving slowly in recent years, however (see table 47).
Both forestry production and its rate of growth have been increasing over the last few decades;
rates of expansion are positive and rising in all the main products. Nonetheless, there are major
differences in the evolution of the different product categories
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During the 1980s, only processed forest products recorded robust growth. Over the past decade,
however, positive rates have been maintained, with paper and paperboard growing at 3.5% per
year, and pulps and fibres at 4.8%; but several categories of primary forest products are also
now growing more vigorously, mainly panels (5.9% per year) and, to a lesser extent, sawn wood
(2.4%) and roundwood (2.6%). Panel production has grown exceptionally fast in percentage
terms since 1998, reflecting an increase in Brazil in particular.
The more widespread growth of forestry production in the region is stimulating the sector as a
whole. Production levels for the different product categories in 2002 show a significant advance
on their 1990 figures. Panel production has more than doubled (211%); pulp and fibres are up by
79%, and increases among the other product categories range from 34% to 48% (see figure 188).
SOURCE: FAO/RLC based on FAOSTAT 2004.
LAC: INDEX OF FORESTRY PRODUCTION (1990=100)Figure 188
50
198
0
198
1
198
2
198
3
198
4
198
5
198
6
198
7
198
8
198
9
199
0
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
200
0
200
1
200
2
70
90
110
130
150
170
190
210
230
Pulp and fibres
Wood Base Panels
Fuel wood
Sawn wood
Paper and
Industrial round
paperboard
wood
LAC: VOLUME OF FORESTRY PRODUCTIONTable 47
Product 1980 1990 1998 2002 1980-90 1990-02
(Production in millions) (Growth %)
Primary products:
Sawn wood (m3) 25.84 28.86 34.99 38.66 1.6 2.4
Wood-based panels (m3) 4.33 4.93 6.82 10.39 1.5 5.9
Industrial roundwood (m3) 96.41 121.04 141.69 166.43 2.8 2.6
Fuel wood (m3) 206.62 235.21 257.37 272.57 1.3 1.2
Processed products:
Pulp and fibres(ton) 4.77 6.52 10.51 11.65 3.8 4.8
Paper and paperboard (ton) 7.73 10.77 13.67 15.97 4.6 3.5
SOURCE: FAOSTAT 2004.
216
Changes in processes and productive outcomes have been associated with major technical
transformations supported by conceptual and institutional development. Some countries have
progressed toward a model involving using plantations to supply productive forestry processes,
such as sawmills, and board and cellulose plants. Southern Cone countries (Chile, Argentina,
Uruguay) in particular have moved in this direction, along with a number of countries from the
Amazon basin, such as Venezuela and Peru, and several in Central America, such as Costa Rica.
This process has been substantially boosted by legislation to explicitly promote forest plantations,
which over half of the region’s countries now have in place. Other countries, such as Brazil,
which have no forestry development legislation, provide incentives linked to the financial sector
to improve their forestry base.
The sustainable forestry management paradigm has been consolidating in the region. The
system has developed from a process of forest exploitation with little or no care for its
conservation, to one of harvesting different ecosystems, such as tropical forests. An example
of this is the massive concessions programme implemented by a number of Amazon countries,
including Bolivia, Peru, Ecuador and Brazil, and by subtropical countries such as Paraguay.
Linked to the concept of sustainable forestry management, a strict certification process has
begun implementation in the harvesting of tropical forests in Bolivia, Brazil, Colombia, Peru
and elsewhere; and has also been extended to the forest plantations of Chile, Argentina, Uruguay,
Brazil and Venezuela.
Most of the countries of the region have decided to locate their forestry services and administrations
within environmental departments or ministries. This shift of strategic focus from the agricultural
sector towards the environmental authority reflects the fact that forestry services in the different
countries are increasingly concerned with environmental issues, and in many cases form part of
a complex environmental management system.
From the institutional and political standpoint, the United Nations Forest Forum (UNFF) was
recently created as an outcome of international dialogue on forests conducted under United
Nations auspices, and it will make use of national forestry programmes as a reference framework
for sustainable forestry development in the various countries.
Composition of forestry production
Despite these important relative changes, the structure of forestry production remains highly
concentrated in fuel wood and logs, the production of which displays the largest absolute
increases in volume, although not in percentage terms. Positive growth rates help to alter the
structure of production, but this is a slow process given the average levels currently prevailing.
The example provided by certain countries of the region shows that there are possibilities for
more rapid transformation of forestry production, to take better advantage of productive potential
(see table 48 and figure 189).
217
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LAC: GROSS PRODUCTION VOLUME FORESTRYTable 48
Category 1980 1990 2002 1980-90 1990-02
m3 Growth (%)
Panels 4,329,500 4,934,600 10,390,100 1.5 5.8
Pulp and fibres 4,772,100 6,519,400 11,649,000 3.8 4.8
Paper and paperboard 7,730,100 10,773,200 15,969,400 4.6 3.5
Sawn wood 25,840,400 28,856,600 38,655,700 1.6 2.4
Fuel wood 206,620,704 235,211,681 272,572,034 1.3 1.2
Industrial roundwood 96,410,999 121,037,123 166,433,800 2.8 2.6
SOURCE: FAO/RLC based on FAOSTAT.
LAC: VOLUME OF FORESTRY PRODUCTION (Millions de m3)Figure 189
SOURCE: FAOSTAT 2004.
1980 1990 2002
Pulp and fibresIndustrial round wood
Wood base panels
Paper and paperboardFuel wood
Sawn wood
300
250
200
150
100
50
"Pulp and fibres" and "Paper and paper board" measured in metric tons, otherwise m3.
"Pulp and fibres" and "Paper and paper board" measured in metric tons, otherwise m3.
218
Despite a number of positive steps, the structure of forestry production in Latin America and
the Caribbean compares very unfavourably to the pattern prevailing in developed countries.
Figures 190 and 191 show the structure of forestry production in the United States and Canada,
and in Norway and Sweden (see figure 190 and 191).
DEVELOPED COUNTRIES: VOLUME OF THE PRODUCTION 2002 (Millions)Figure 191
SOURCE: FAOSTAT 2004."Pulp and fibres" and "Paper and paper board" measured in metric tons, otherwise m3.
Norway Sweden
Industrial round wood
Wood based panels
Paper and paperboardFuel wood
Sawn Wood
65
55
45
35
25
15
5
-5
Pulp and fibres
DEVELOPED COUNTRIES: VOLUME OF THE PRODUCTION 2002 (Millions)Figure 190
SOURCE: FAOSTAT 2004."Pulp and fibres" and "Paper and paper board" measured in metric tons, otherwise m3.
Canada United States
Industrial round wood
Wood based panels
Paper and paperboardFuel wood
Sawn wood
410360310
2602101601106010
-40
Pulp and fibres
219
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BRAZIL: VOLUME OF FORESTRY PRODUCTION (Millions of m3)Figure 192
SOURCE: FAOSTAT 2004."Pulp and fibres" and "Paper and paper board" measured in metric tons, otherwise m3.
1980 1990 2002
Pulp and fibresIndustrial round wood
Wood based panels
Paper and paperboardFuel wood
Sawn wood
140
120
100
80
60
40
20
BRAZIL: GROSS PRODUCTION VOLUME FORESTRYTable 49
SOURCE: FAO/RLC based on FAOSTAT.
Category 1980 1990 2002 1980-90 1990-02
m3 Growth (%)
Panels 2,482,000 2,892,000 6,283,000 1.8 6.9
Pulp and fibres 3,089,000 4,307,000 7,436,000 3.7 4.4
Paper and paperboard 3,361,000 4,844,000 7,354,000 4.9 3.6
Sawn wood 14,881,000 17,179,000 21,200,000 1.5 1.4
Fuel wood 105,716,475 120,300,536 134,473,063 1.2 0.9
Industrial roundwood 61,722,000 74,277,024 102,994,000 2.4 2.8
In Brazil, while the productive structure is still similar to the average of the region (partly
reflecting its own weight in the regional total), the production polygon is starting to open up,
particularly in the sawn wood category. In addition, the production of panels and processed
products (pulps and fibres, and paper and paperboard) are attaining significant levels in both
volume and growth rate terms (see table 49 and figure 192).
"Pulp and fibres" and "Paper and paper board" measured in metric tons, otherwise m3.
220
MEXICO: GROSS PRODUCTION VOLUME FORESTRYTable 50
Category 1980 1990 2002 1980-90 1990-02
m3 Growth (%)
Panels 604,000 553,000 518,000 - 0.4 - 2.8
Pulp and fibres 447,000 523,000 334,000 2.5 1.0
Paper and paperboard 1,979,000 2,873,000 4,056,000 5.8 4.0
Sawn wood 1,991,000 2,366,000 3,387,000 3.4 2.8
Fuel wood 29,524,675 34,371,305 37,912,958 1.6 0.9
Industrial roundwood 6,345,200 7,580,000 7,420,000 2.3 1.2
SOURCE: FAO/RLC based on FAOSTAT.
Forestry production trends in Mexico over the last 12 years have been hampered by major
problems. In all categories except panels, production growth rates are below those of the 1980s—
and even then they were already relatively modest, except in the paper and paperboard category.
The growth slowdown of the last decade has produced very little change in the structure of
production, apart from a relative expansion achieved in the paper and paperboard segment (see
table 50 and figure 193).
"Pulp and fibres" and "Paper and paper board" measured in metric tons, otherwise m3.
MEXICO: VOLUME OF FORESTRY PRODUCTION (Millions of m3)Figure 193
1980 1990 2002
40
35
30
25
20
15
10
5
SOURCE: FAOSTAT 2004."Pulp and fibres" and "Paper and paper board" measured in metric tons, otherwise m3.
Industrial round wood
Wood based panels
Wood pulp
Paper and paperboardFuel wood
Sawn wood
221
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SOUTHERN CONE: GROSS PRODUCTION VOLUME FORESTRYTable 51
Category 1980 1990 2002 1980-90 1990-02
m3 Growth (%)
Panels 652,700 744,300 2,401,500 2.0 9.6
Pulp and fibres 1,095,300 1,435,000 3,400,000 4.0 6.3
Paper and paperboard 1,134,400 1,426,000 2,617,000 3.4 4.7
Sawn wood 3,897,000 4,734,000 9,343,000 3.6 5.9
Fuel wood 15,689,296 18,611,946 26,117,160 1.8 2.5
Industrial rounwood 14,925,000 25,552,000 36,702,000 5.8 2.3
SOUTHERN CONE: VOLUME OF FORESTRY PRODUCTION (Millions of m3)Figure 194
1980 1990 2002
40
35
30
25
20
15
10
5
Pulp and fibresIndustrial round wood
Wood based panels
Paper and paperboardFuel wood
Sawn wood
The expansion of forestry production in Southern Cone countries has accelerated sharply over
the last decade, with faster growth than in the 1980s in all categories, apart from roundwood.
Processed forestry products, panels and sawn wood all display high production figures between
1990 and 2002. The structure of production is much more diversified than the regional average.
The main product, and the fastest growing one in volume terms, consists of roundwood, but
higher percentage changes among other products are leading to increasing intensification and
diversification of forestry production (see table 51 and figure 194).
"Pulp and fibres" and "Paper and paper board" measured in metric tons, otherwise m3.SOURCE: FAO/RLC based on FAOSTAT.
SOURCE: FAOSTAT 2004."Pulp and fibres" and "Paper and paper board" measured in metric tons, otherwise m3.
222
ANDEAN COUNTRIES: GROSS PRODUCTION VOLUME FORESTRYTable 52
Category 1980 1990 2002 1980-90 1990-02
m3 Growth (%)
Panels 442,300 500,000 850,000 1.1 0.9
Pulp and fibres 136,300 250,000 469,200 8.4 7.0
Paper and paperboard 1,084,300 1,415,500 1,553,400 3.0 0.2
Sawn wood 3,046,400 3,255,600 2,543,000 1.3 0.0
Fuel wood 19,427,538 21,308,319 28,087,706 1.3 2.7
Industrial roundwood 8,140,400 9,596,700 13,289,500 2.9 1.4
SOURCE: FAO/RLC based on FAOSTAT.
ANDEAN COUNTRIES: VOLUME OF FORESTRY PRODUCTION (Millions of m3)Figure 195
1980 1990 2002
30
25
20
15
10
5
Pulp and fibresIndustrial round wood
Wood based panels
Paper and paperboardFuel wood
Sawn wood
Forestry production in the Andean countries has stalled badly over the last decade. During the 1980s
relatively rapid growth occurred only among processed products, pulps and fibres, and paper and
paperboard. Between 1990 and 2002, however, only pulp and fibre production posted high growth
rates, based on small initial volumes (see table 52 and figure 195).
The past decade has seen very fast relative growth in the production of processed forestry
products in Central America. Nonetheless, the incipient volume means that high percentage
changes do not yet signify much in absolute terms, nor therefore in the structure of production
(see table 53 and figure 196).
"Pulp and fibres" and "Paper and paper board" measured in metric tons, otherwise m3.
SOURCE: FAOSTAT 2004."Pulp and fibres" and "Paper and paper board" measured in metric tons, otherwise m3.
223
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CENTRAL AMERICA: VOLUME OF FORESTRY PRODUCTION (Millions of m3)Figure 196
SOURCE: FAOSTAT 2004."Pulp and fibres" and "Paper and paper board" measured in metric tons, otherwise m3.
1980 1990 2002
40
35
30
25
20
15
10
5
Pulp and fibresIndustrial round wood
Wood based panels
Paper and paperboardFuel wood
Sawn wood
Between 1990 and 2002, paper and paperboard was the only forestry category to post a high rate
of production growth in Latin Caribbean countries. This situation has actually persisted since the
1980s, when rapid growth of panels was based on production that was just starting up, so the high
percentage increases again did not mean large volumes (see table 54 and figure 197).
CENTRAL AMERICA: GROSS PRODUCTION VOLUME FORESTRYTable 53
Category 1980 1990 2002 1980-90 1990-02
m3 Growth (%)
Panels 116,500 89,800 135,500 - 3.3 2.1
Pulp and fibres 4,500 4,400 9,800 5.6 12.3
Paper and paperboard 79,700 78,400 202,000 - 2.9 10.3
Sawn wood 1,669,500 975,400 1,751,000 - 4.5 4.2
Fuel wood 30,274,793 33,875,101 38,974,733 1.1 1.1
Industrial roundwood 3,729,099 2,490,299 4,135,000 - 3.3 4.7
LATIN CARIBBEAN: GROSS PRODUCTION VOLUME FORESTRYTable 54
Category 1980 1990 2002 1980-90 1990-02
m3 Growth (%)
Panels 5,700 149,000 149,000 28.2 0.0
Pulp and fibres - - - - -
Paper and paperboard 81,700 132,600 187,000 6.3 7.4
Sawn wood 126,100 143,900 203,800 1.6 2.9
Fuel wood 4,318,738 4,771,399 5,343,969 0.4 - 2.0
Industrial roundwood 756,300 856,300 1,053,300 1.5 1.4
"Pulp and fibres" and "Paper and paper board" measured in metric tons, otherwise m3.SOURCE: FAO/RLC based on FAOSTAT.
"Pulp and fibres" and "Paper and paper board" measured in metric tons, otherwise m3.SOURCE: FAO/RLC based on FAOSTAT.
224
LATIN CARIBBEAN: VOLUME OF FORESTRY PRODUCTION (Millions of m3)Figure 197
SOURCE: FAOSTAT 2004."Pulp and fibres" and "Paper and paper board" measured in metric tons, otherwise m3.
1980 1990 2002
6
5
4
3
2
1
Pulp and fibresIndustrial round wood
Wood based panels
Paper and paperboardFuel wood
Sawn wood
In the CARICOM countries, forestry production is almost exclusively concentrated in roundwood
and sawn wood. In both cases, production is growing very slowly (see table 55 and figure 198).
CARICOM: GROSS PRODUCTION VOLUME FORESTRYTable 55
Category 1980 1990 2002 1980-90 1990-02
m3 Growth (%)
Panels 26,300 6,500 53,100 - 15.3 21.2
Pulp and fibres - - - - -
Paper and paperboard 10,000 3,700 - - 17.4 -
Sawn wood 229,400 202,700 227,900 - 0.4 1.5
Fuel wood 2,164,189 2,529,075 2,218,445 1.8 - 0.4
Industrial roundwood 793,000 684,800 840,000 0.5 2.4
"Pulp and fibres" and "Paper and paper board" measured in metric tons, otherwise m3.SOURCE: FAO/RLC based on FAOSTAT.
225
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CARICOM: VOLUME OF FORESTRY PRODUCTION (Millions of m3)Figure 198
SOURCE: FAOSTAT 2004.
1980 1990 2002
Sawn woodIndustrial round wood
Fuel wood
Wood based panels
3.0
2.5
2.0
1.5
1.0
0.5
LAC: VOLUME OF PRODUCTION OF PAPER AND PAPERBOARD (Millions of tons)Figure 199
SOURCE: FAOSTAT 2004.
1980
Brazil
Mexico
CARICOM
Latin Caribbean
Southern Cone
Andean countries
Central America
1990 2002
8
7
6
5
4
3
2
1
Regional distribution of forestry production
Paper and paperboard are made essentially from fibres of trees obtained from planted or natural
forests, including tropical ones. Production is increasingly concentrated in Brazil, which now
generates nearly half of the regional total (48%); Mexico produces about one quarter (27%) and
the rest is shared out in similar amounts between Andean and Southern Cone countries (see
figures 199 and 200).
226
LAC: VOLUME OF PRODUCTION OF PAPER AND PAPERBOARD (Millions of tons)Figure 200
1 2 3 4 5 6 7 8
SOURCE: FAOSTAT 2004.
20021998
Paraguay
Costa Rica
Guatemala
El Salvador
Cuba
Peru
Uruguay
Ecuador
Honduras
Dominican Republic
Venezuela
Colombia
Chile
Argentina
Mexico
Brazil
0,05 0,10 0,15
Costa Rica
Guatemala
El Salvador
Peru
Uruguay
Ecuador
Honduras
DominicanRepublic
Cuba
Paraguay
The location of pulp production is quite well defined in Latin America and the Caribbean, with
Brazil producing two thirds of the regional total, based essentially on eucalyptus. This is a short
fibre that is used in high-whiteness and quality papers. In second place, with rapidly growing
production, is Chile, which produces long-fibre pulp from pine, mainly for use in lower-quality
paper and paperboard, including newsprint. Eucalyptus production is located mainly in southern
Brazil and Uruguay, but has potential for expansion into areas of the Brazilian northeast. The
production of pine cellulose is located in the Southern Cone, especially in the south of Chile
and in the Argentine “Mesopotamia” (see figures 201 and 202).
227
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LAC: VOLUME OF PRODUCTION OF WOOD PULP AND FIBRES (Millions of tons)Figure 202
SOURCE: FAOSTAT 2004.
20021990
2 4 6 8
Costa Rica
Uruguay
Co lombia
Venezuela
Mexico
Argentina
Chile
Brazil
LAC: VOLUME OF PRODUCTION OF WOOD PULP AND FIBRES (Millions of tons)Figure 201
1980
8
7
6
5
4
3
2
1
1990 2002
SOURCE: FAOSTAT 2004.
Southern cone
Andean countries Central America
Mexico
Brazil
Panel production in Brazil and Chile is growing rapidly; Brazil currently produces 60% of the
regional total, and Chile 15%. This same regional concentration is repeated in the sawn wood
and log categories. Brazil and Mexico are the largest consumers of fuel wood (see figures 203,
204, 205, 206 and 207).
2SOURCE: FAOSTAT 2004.
200219901 2 3 4 5 6 7
LAC: VOLUME OF PRODUCTION OF WOOD BASED PANELS (Millions of m3)Figure 204
Suriname
Uruguay
Panama
Nicaragua
Honduras
Bolivia
Guatemala
Costa Rica
Peru
Cuba
Paraguay
Colombia
Ecuador
Venezuela
Mexico
Argentina
Chile
Brazil
0,02
Suriname
Uruguay
Panama
Nicaragua
Honduras
Bolivia
Guatemala
Costa Rica
0,04 0,06 0,08
228
LAC: VOLUME OF PRODUCTION OF WOOD BASED PANELS (Millions of m3)Figure 203
SOURCE: FAOSTAT 2004.
1980
Brazil
MexicoSouthern Cone
CARICOM Central America
Andean countriesLatin Caribbean
1990 2002
7
6
5
4
3
2
1
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229
LAC: VOLUME OF PRODUCTION OF SAWN WOOD (Millions of m3)Figure 205
SOURCE: FAOSTAT 2004.
1980
Brazil
Mexico
Andean countries
1990 2002
25
20
15
10
5
0
Southern Cone
CARICOM Central America
Latin Caribbean
LAC: VOLUME OF PRODUCTION OF INDUSTRIAL ROUND WOOD (Millions of m3)Figure 206
SOURCE: FAOSTAT 2004.
1980
Brazil
Mexico
Andean countries
1990 2002
120
100
80
60
40
20
Southern Cone
CARICOM Central America
Latin Caribbean
2230
SOURCE: FAOSTAT 2004.
20021990
LAC: VOLUME OF PRODUCTION OF INDUSTRIAL ROUND WOOD (Millions of m3)Figure 207
Dominican Republic
Bahamas
Trinidad and Tobago
Belize
Nicaragua
Panama
Suriname
Haiti
Guyana
Jamaica
Guatemala
El Salvador
Cuba
Ecuador
Honduras
Peru
Venezuela
Costa Rica
Uruguay
Colombia
Paraguay
Argentina
Mexico
Bolivia
Chile
Brazil
20 40 60 80 100
2 4 6
Dominican Republic
Bahamas
Trinidad and Tobago
Belize
Nicaragua
Panama
Suriname
Haiti
Guyana
Jamaica
Guatemala
El Salvador
Cuba
Ecuador
Honduras
Peru
Venezuela
Costa Rica
Uruguay
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231
IV. INTERNATIONAL TRADE IN AGRICULTURALPRODUCTS
234
A. INTERNATIONAL TRADE IN AGRICULTURE
Latin America and the Caribbean is the only region of the developing world with a significant
agricultural trade surplus. This has two direct consequences. Firstly, progress in agriculture
plays a major strategic role in the overall development process; secondly, the region is more
sensitive to changes in international markets and more vulnerable to interventions that restrict
or distort competition in international trade.
During the last decade, and particularly since 1993, the Latin American and Caribbean agricultural
exports (defined broadly to encompass crop, livestock, fishery and forestry products) gained
renewed momentum, thanks to a recovery in the international prices of several of the region’s
main export products in 1994-1996. During the second half of the decade, external sales were
further boosted by subregional integration agreements, particularly MERCOSUR. In recent
years, the region’s agricultural exports have totalled about US$ 60 billion per year (US$ 62.3
billion in 2001, the latest year for which there is information from all subsectors). In comparison,
between 1980 and 1993, the total value of agricultural exports was around US$ 35 billion.
The regional agricultural imports grew rapidly between 1987 and 1997, boosted mainly by
increased foreign purchases in Mexico. Although Mexican imports continued to grow after 1997,
the expansion was offset by a reduction in Brazil, as imports were substituted by domestic
supply, and the regional total tended to level off between US$ 30 billion and US$ 32 billion, in
other words just over half the level of exports.
The region’s agricultural imports grew faster than exports between 1988 and 1993, since when
the rate of growth of both trade flows has been similar following the more vigorous export
growth of 1993. Consequently, having shrunk from US$ 24 billion to US$ 17 billion between 1988
and 1993, the surplus was restored thereafter and has since tended to stabilize between US$ 28
billion and US$ 30 billion (see figures 208 and 209).
235
INT
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L T
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LTU
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L P
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DU
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S
SOURCE: FAO/RLC based on FAOSTAT and FISHSTAT plus.
LAC: EXTERNAL TRADE IN AGRICULTURE, FORESTRY AND FISHERY PRODUCTS(Millions of dollars)
Figure 208
0
198
019
81
198
219
83
198
419
85
198
619
87
198
819
89
199
019
91
199
219
93
199
419
95
199
619
97
199
819
99
200
020
01
10,000
20,000
30,000
40,000
50,000
60,000
70,000
Balance
Imports
Exports
SOURCE: FAO/RLC based on FAOSTAT and FISHSTAT plus.
LAC: TRADE INDEX VALUE (1993=100)Figure 209
Balance
Exports
Imports
40
198
0
198
1
198
2
198
3
198
4
198
5
198
6
198
7
198
8
198
9
199
0
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
200
0
200
1
60
80
100
120
140
160
180
236
The size of the sectoral trade surplus (between US$ 28 billion and US$ 30 billion) has been very
significant in the overall context of the regional external accounts. The regional current account
deficit fluctuated between US$ 38 billion and US$ 88 billion per year between 1993 and 2001,
so the contribution made by an agricultural sector surplus of around US$ 30 billion is significant
for the wider external balance.
The agricultural trade surplus is generated essentially in Brazil and the southern cone countries,
which account for most of the regional figure with rapidly increasing shares. In contrast, the
agricultural trade deficit in Mexico is also expanding fast and accounts for most of the region’s
deficit. Mexico and the CARICOM countries, except for Belize and Guyana, are traditionally net
importers of agricultural products. Over the last decade the Latin Caribbean countries have also
experienced deficits resulting from the deterioration in Cuban agricultural trade balance, and
vigorous import growth in the Dominican Republic (see figure 210).
LAC: BALANCE OF TRADE IN AGRICULTURE, FORESTRY AND FISHERY PRODUCTS(Thousands of dollars)
Figure 210
SOURCE: FAO/RLC based on FAOSTAT and FISHSTAT plus.
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
-5,000
-10,0001980 1990 2001
Brazil Southern Cone Central AmericaAndeans countries Latin Caribbean Mexico CARICOM
237
Most of the countries in the region have an agricultural trade surplus; only Mexico, Venezuela,
El Salvador and some of the Caribbean island states run systematic deficits. The sectoral balance
is significant in a large number of Latin American and Caribbean countries, although the regional
balance—positive or negative— is concentrated in just a few countries, reflecting the wide differences
in the size of the region’s economies. Brazil, Argentina and Chile display the largest surpluses,
while Mexico and, to a lesser extent, Venezuela have the largest deficits (see figure 211).
Roughly 80% of the agriculture-forestry-fishery trade surplus is generated by the crop-producing
subsector, and in recent years the fishery sector contribution became very important (almost 20%).
The net balance of trade in livestock and forestry products is virtually zero, although in recent
years has tended to be slightly negative (see figures 212 and 213).
INT
ER
NA
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NA
L T
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DE
IN A
GR
ICU
LTU
RA
L P
RO
DU
CT
S
SOURCE: FAO/RLC based on FAOSTAT.
20011990
LAC: BALANCE OF TRADE IN AGRICULTURE, FORESTRY AND FISHERY PRODUCTS(Millions of dollars)
Figure 211
-7,500 -5,000 0 5,000 10,000 15,000 17,500
MexicoVenezuela
Dominican RepublicEl Salvador
JamaicaSaint Lucia
HaitiCuba
BahamasBarbados
Saint Kitts and NevisAntigua and BarbudaTrinidad and Tobago
SurinameDominica
Saint Vincent and the GrenadinesGrenada
BelizePanamaGuyana
NicaraguaHonduras
BoliviaGuatemala
ColombiaParaguayUruguay
PeruCosta Rica
EcuadorChile
ArgentinaBrazil
238
SOURCE: FAO/RLC based on FAOSTAT and FISHSTAT plus.
LAC: BALANCE OF TRADE IN AGRICULTURE, FORESTRY AND FISHERY PRODUCTS(Millions of dollars)
Figure 212
Crop production
Livestock
Forestry
Fishing
SOURCE: FAO/RLC based on FAOSTAT and FISHSTAT plus.
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
-5,000
198
0
198
1
198
2
198
3
198
4
198
5
198
6
198
7
198
8
198
9
199
0
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
200
0
200
1
LAC: BALANCE OF TRADE IN AGRICULTURE, FORESTRY AND FISHERYPRODUCTS BY SUBSECTORS (Millions of dollars)
Figure 213
Crop production Fishing Livestock Forestry
198
0
198
1
198
2
198
3
198
4
198
5
198
6
198
7
198
8
198
9
199
0
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
200
0
200
1
35,000
30,000
25,000
20,000
15,000
10,000
5,0000
0
239
Exports
The rapid growth of sectoral exports during the last decade has been quite widespread
throughout the region. Export values doubled during the decade in Brazil, Mexico and the
southern cone countries, although in Mexico the increases are small in absolute terms.
Exports from the Andean countries also grew in smaller proportion. Central American exports
expanded slowly, while those from the CARICOM countries stagnated, and exports from the
Latin Caribbean plummeted as a result of a drastic slump in Cuba. This trend contrasts with
the general stagnation endured during the 1980s, when only the southern cone countries
managed to increase their agricultural exports. The cumulative change has resulted in a
greater concentration of the region’s exports in Brazil and the southern cone, each of which
account for one third of the total (see figures 214 and 215).
INT
ER
NA
TIO
NA
L T
RA
DE
IN A
GR
ICU
LTU
RA
L P
RO
DU
CT
S
LAC: GEOGRAPHIC DISTRIBUTION OF AGRICULTURE, FORESTRY AND FISHERY(Millions of dollars)
Figure 214
SOURCE: FAO/RLC based on FAOSTAT and FISHSTAT plus.
1980
Brazil
MexicoCARICOM
Latin Caribbean Southern Cone
Andean countriesCentral America
1990 2001
25,000
20,000
15,000
10,000
5,000
0
SOURCE: FAO/RLC based on FAOSTAT y FISHSTAT plus.
LAC: SHARE OF AGRICULTURE, FORESTRY AND FISHERY EXPORTS BYSUBREGION (Percentage)
Figure 215
Colombia 1%
Uruguay 5%
CARICOM 2%
Central America 8%
Andeancountries
12%
Brazil26%
Southern Cone31%
Mexico 8%
LatinCaribbean
13%
Mexico 10%
Brazil33%
CARICOM 2%
Latin Caribbean 2%
Central America 8%
Andeancountries
11%
Southern Cone34%
1990 2001
240
In the long run, the agricultural share in total merchandise exports is tending to decline, as
external trade diversifies and products from manufacturing industry gain a larger share. In
1980, agricultural exports from Latin America and the Caribbean accounted for one third (33%)
of total merchandise exports; but by 1990 the figure had fallen to 27%, and by 2001 it had
reached 17%. During this period the reduction mainly reflected rapid growth in non-agricultural
exports from Mexico.
The share of agriculture in total merchandise exports is very substantial in many countries of
the region. In 2001 the sector contributed over 30% of total merchandise sales abroad in 18
cases; and in seven of those countries it accounted for over half. The sector accounted for under
10% of total goods exported in just six countries (see figure 216).
The majority of sectoral exports are generated by the crop-growing sub-sector; nonetheless,
sales of fishery and to a lesser extent forestry products, are growing faster and thus gaining a
larger relative share. In 1990, just over three quarters (76%) of the sector’s exports came from
crop production; whereas the remaining 24% was divided roughly equally among the other three
subsectors, livestock (9%), fishing (8%) and forestry (7%). The relatively faster growth of fishery
LAC: SHARE OF AGRICULTURE, FORESTRY AND FISHERY EXPORTS IN TOTALMERCHANDISE EXPORTS BY COUNTRY IN 2001 (Percentage)
0 10 20 30 40 50 60 70 80
VenezuelaAntigua and BarbudaTrinidad and Tobago
MexicoDominican Republic
HaitiBahamasBarbados
El SalvadorJamaica
SurinameColombia
Saint Kitts and NevisPeru
Costa RicaChile
BrazilCuba
DominicaGrenadaEcuador
BoliviaUruguayGuyana
GuatemalaSaint Lucia
ArgentinaHonduras
PanamaSaint Vincent and the Grenadines
NicaraguaParaguay
Belize
Figure 216
SOURCE: FAO/RLC based on FAOSTAT y WTO.
241
INT
ER
NA
TIO
NA
L T
RA
DE
IN A
GR
ICU
LTU
RA
L P
RO
DU
CT
S
SOURCE: FAO/RLC based on FAOSTAT and FISHSTAT plus.
LAC: INDEX OF AGRICULTURE, FORESTRY AND FISHERY EXPORTS BYSUBSECTOR (1990=100)
Figure 217
Fishing
Forestry
Livestock
Crop
SOURCE: FAO/RLC based on FAOSTAT and FISHSTAT plus.
LAC: SUBSECTORAL SHARES IN TOTAL AGRICULTURE, FORESTRY AND FISHERYEXPORTS (Percentage)
Figure 218
Forestry 7%
Crop 76%
Fishing 8%
Livestock 9%
Forestry 8%
Fishing 11%
Livestock 9%
Crop 72%
1990 2001
and forestry exports during the decade resulted in a larger share for these subsectors. In 2001,
crop-production continues to be the largest contributor (72%), while livestock exports held their
level (9%) and fishery and forestry exports increased their shares (11% and 8%, respectively)
(see figures 217 and 218).
Imports
Until 1987, the regional agricultural imports were broadly stable around US$ 12 billion per year;
but rapid growth of import by Mexico since 1988 onwards, together with an import surge in
Brazil during mid-1990s, raised the regional total to US$ 33 billion in 1998. Thereafter the level
stabilized slightly below its peak, essentially reflecting a reduction in imports by Brazil thanks
to its rapid expansion of domestic supply in that country.
0
198
0
198
1
198
2
198
3
198
4
198
5
198
6
198
7
198
8
198
9
199
0
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
200
0
200
1
50
100
150
200
250
242
LAC: GEOGRAPHIC DISTRIBUTION OF AGRICULTURE, FORESTRY AND FISHERYIMPORTS (Millions of dollars)
Figure 219
SOURCE: FAO/RLC based on FAOSTAT and FISHSTAT plus.
1980
Brazil
MexicoCARICOM
Latin Caribbean Southern Cone
Andean countriesCentral America
1990 2001
12,000
10,000
8,000
6,000
4,000
2,000
0
SOURCE: FAO/RLC based on FAOSTAT and FISHSTAT plus.
LAC: SHARE OF AGRICULTURE, FORESTRY AND FISHERY IMPORTS BY SUBREGION(Percentage)
Figure 220
CARICOM 8%
Mexico34%
Latin Caribbean 11%
AmericaCentral 7%
1990 2001
Brazil17%
Southern Cone 6%
Andeancountries
17%
Southern Cone 11%
Andeancountries
18%Mexico36%
Brazil12%
CARICOM 6%Latin Caribbean 6%
AmericaCentral 11%
The most important change in the 1980s was Mexico’s increased share in the regional total
agricultural imports, which grew from 22% to 34%. During the 1990s, particularly in the later
years, Brazil’s share declined from 17% to just 12% of the regional total. The imports of Latin
Caribbean countries also shrank as result of a slump in international trade in Cuba. In
contrast, imports in the southern cone grew, partly as a result of intra-regional trade among
the MERCOSUR countries; while imports also expanded in Central America and Mexico (see
figures 219 and 220).
243
INT
ER
NA
TIO
NA
L T
RA
DE
IN A
GR
ICU
LTU
RA
L P
RO
DU
CT
S
SOURCE: FAO/RLC based on FAOSTAT and WTO.
LAC: SHARE OF AGRICULTURE, FORESTRY AND FISHERY IMPORTS IN TOTALMERCHANDISE IMPORTS (Percentage)
Figure 221
20011990
0 10 20 30 40 50 60 70
Antigua and BarbudaBrazil
MexicoChile
ArgentinaParaguay
Dominican Republic
Costa RicaEcuador
Trinidad and TobagoGuyana
Saint Kitts and Nevis
VenezuelaUruguay
BelizePanama
ColombiaBolivia
NicaraguaGuatemala
Barbados
JamaicaGrenada
BahamasSurinameHonduras
PeruEl Salvador
CubaDominica
Saint Vincent and the Grenadines
Saint LuciaHaiti
The regional capacity to generate agricultural surpluses is further confirmed by the small
share of agriculture in total merchandise imports. This is consistent with the regional
development level and the need to use foreign purchasing power for high-technology and more
capital-intensive production. During the 1980s, agricultural products accounted for about 14%
of total merchandise imports; from 1990 through 1997, the proportion fell to about 12%, and
in the ensuing years it has continued to decline, accounting for just 9% of total goods imported
by the region in 2001.
The low share of agricultural products in total goods imports is a general characteristic of
the region. In 2001, the share of agricultural products in total merchandise imports was below
18% in 29 of the region’s 33 countries; the share was larger only in four Caribbean countries—
Haiti (29%), Saint Lucia (27%), Saint Vincent and the Grenadines (24%) and Dominica (23%)
(see figure 221).
244
SOURCE: FAO/RLC based on FAOSTAT and FISHSTAT plus.
LAC: INDEX OF AGRICULTURE, FORESTRY AND FISHERY IMPORTS BYSUBSECTOR (1990=100)
Figure 223
Forestry
Fishing
Crop
Livestock
SOURCE: FAO/RLC based on FAOSTAT and FISHSTAT plus.
LAC: SUBSECTORAL SHARES IN TOTAL AGRICULTURE, FORESTRY AND FISHERYIMPORTS (Percentage)
Figure 222
Fishing 3%
1990 2001
Crop 61%Livestock
21%
Forestry15%
Crop 60%
Fishing 3%
Forestry18%
Livestock19%
The composition of sectoral imports has tended to remain stable. About 60% corresponds to
crops, 19% to livestock products; 18% to forestry and 3% to fishery products. Within this overall
stability, forestry and fishery imports are growing slightly faster, albeit from a lower absolute
base. In contrast, livestock imports are growing more slowly (see figures 222 and 223).
0
198
0
198
1
198
2
198
3
198
4
198
5
198
6
198
7
198
8
198
9
199
0
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
200
0
200
1
50
100
150
200
250
300
245
The agricultural crop surplus varies widely among the different countries of the region, and is
concentrated in Brazil and Argentina, given the size of these economies. Nonetheless, Chile,
Ecuador, Costa Rica, also display significant surpluses. Despite the surplus at the regional level,
a large number of countries run deficits in their crop trade. In 2003, the major deficits happened
in Mexico and Venezuela (see figure 225).
INT
ER
NA
TIO
NA
L T
RA
DE
IN A
GR
ICU
LTU
RA
L P
RO
DU
CT
S
SOURCE: FAOSTAT
LAC: EXTERNAL TRADE IN AGRICULTURAL CROPS (Millions of dollars)Figure 224
B. CROP-PRODUCING SUBSECTOR
Subsectoral balance
Exports of agricultural crops accounted for 72% of the regional total sectoral exports in 2002,
and 12.9% of its total exported products. Crop imports represented 61% of total agricultural
imports and about 5.1% of all imported products.
Between 1984 and 1990 the subsectoral surplus had stabilized at around US$ 20 billion. In the
early years of the 1990s, as a result of a steady decline in export prices and stagnation in exported
volumes compounded by continuous import growth, the surplus shrank to just US$ 13 billion by
1993. Since that year export values have recovered, thanks firstly to higher international prices,
and secondly to larger volumes shipped in response to the price stimulus. By 1997, the surplus
had almost doubled to reach US$ 25 billion. Prices subsequently resumed their downward trend,
and the surplus stabilized at around US$ 25 billion (see figure 224).
Value of imports
Balance value
Value of exports
198
019
81
198
219
83
198
419
85
198
619
87
198
819
89
199
019
91
199
219
93
199
419
95
199
619
97
199
819
99
200
020
01
200
220
03
0
15,000
10,000
5,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
246
Exports
Between 1980 and 1993, crop exports hardly grew at all (the rate of expansion was -0.04%)
and remained stuck at levels of around US$ 26 billion. In contrast, between this last year and
2003, foreign sales expanded at a rate of 3.4% per year. Better prices and larger volumes
exported raised total export value to US$ 45 billion by 1997. Although volumes have continued
to grow since then, weaker prices have undermined values, and total crop exports have
stabilized around US$ 45 billion.
The behaviour of international prices plays a key role in explaining the acceleration of export
growth. Firstly, there is a direct effect on the monetary value of goods exported; secondly, better
prices may also stimulate an increase in export volumes.
The international prices of the region’s agricultural exports had been falling systematically
during the 1980s, registering a cumulative decline of 37% between 1980 and 1993. In 1994,
Figure 225 LAC: BALANCE OF TRADES IN AGRICULTURAL CROPS BY COUNTRY 2003 (Millions of dollars)
SOURCE: FAO/RLC based on FAOSTAT 2004.
-500 1,500 3,500 5,500 7,500 9,500 11,500 13,500
Panama
Saint Lucia
Suriname
Antigua and Barbuda
Dominica
Saint Kitts and Nevis
Saint Vincent and the Grenadines
Grenada
Nicaragua
Belize
Guyana
Uruguay
Bolivia
Honduras
Guatemala
Colombia
Paraguay
Costa Rica
Ecuador
Chile
Argentina
Brazil
-2,000 -1,800 -1,600 -1,400 -1,200 -1,000 -800 -600 -400 -200 0
Mexico
Venezuela
Haiti
Dominican Republic
El Salvador
Peru
Trinidad and Tobago
Jamaica
Bahamas
Barbados
Cuba
247
by contrast, prices rose by 18%, and in the two following years there were additional increases
(3% and 6%), after which these levels were maintained until 1997. Since 1998 then prices have
fallen back again in spite of their recovery during 2003 they fell again 25% below their 1996
peak (see figure 226).
Export volumes had grown slowly between 1980 and 1993, posting a cumulative increase of
44% during those 13 years. Thereafter volumes began to grow rapidly thanks to better prices;
and in the following nine years to 2003 they increased by 91%.
Since 1980 to 1993, a deterioration in the agricultural terms of trade, measured as the price
ratio between the regional agricultural exports and its total imports, meant a sharp decline in
external purchasing power. During that period, despite physical export volumes growing by
37%, a steady fall in prices meant that export earnings in 1993 were actually 10% lower than in
1980. This reduction, compounded by higher prices for goods imported in the region, meant
that the external purchasing power of exports in 1993 was barely half of its 1980 level (54%),
despite larger volumes sold abroad (see figure 227).
INT
ER
NA
TIO
NA
L T
RA
DE
IN A
GR
ICU
LTU
RA
L P
RO
DU
CT
S
SOURCE: FAO/RLC based on FAOSTAT.
LAC: QUANTUM, UNIT VALUE AND VALUE INDEX OF AGRICULTURAL CROPEXPORTS (1995=100)
Figure 226
Quantum Index
Value Index
Unit Value Index
198
0
198
1
198
2
198
3
198
4
198
5
198
6
198
7
198
8
198
9
199
0
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
200
0
200
1
200
2
200
3
40
60
80
100
120
140
160
248
Between 1993 and 2001, rising prices in the early years were followed by a fall from 1997 onwards,
thereby giving a virtually neutral result for the period overall. Thus, the 73% increase in the
volume of agricultural products exported between 1997 and 2001 represented a 76% increase
in value terms. Nonetheless, the rise in import prices caused external purchasing power to
decline by 11% during the period.
Composition of exports
The composition of agricultural exports from Latin America and the Caribbean has altered
significantly in recent decades. In 1980, the key export products were coffee and sugar. The
slump in sales of these products resulting from drastic changes on international markets, in
conjunction with the growth of oilseed and fruit exports during the 1980s, meant that in 1990
the regional exports were more diversified, with the four product groups mentioned at broadly
similar levels. Over the last decade, these trends have intensified, especially the growth of oilseed
exports. External fruit sales also grew strongly, which was not the case with vegetable sales.
Cereal exports increased, thanks partly to the development of intra-regional cereal trade
especially within MERCOSUR. Sugar and coffe exports continued to drop, and coffee exports
also dropped. In 2003, the main export products were oilseeds (39%), followed by fruit (20%)
(see figures 228 and 229).
SOURCE: FAOSTAT
AL: QUANTUM, VALUE AND PURCHASING POWER OF AGRICULTURAL CROPEXPORTS (1980-2002)
Figure 227
0
198
019
81
198
219
83
198
419
85
198
619
87
198
819
89
199
019
91
199
219
93
199
419
95
199
619
97
199
819
99
200
020
01
200
2
20
40
60
80
100
120
140
160
180
200
Quantum value index
Value Index
Purchasing power
249
Geographic distribution of crop exports
In absolute terms the regional crop exports are highly concentrated in the largest economies.
Nonetheless, the past decade has witnessed additional concentration in Brazil, Argentina and
Mexico that cannot be explained by size difference alone, but reflects the share of these two
first countries in the recent expansion of soybean exports. In addition to the larger absolute
level, both countries display extremely high export growth, of 6.2% and 8.2% per year respectively.
Exports from Mexico also grew strongly (8.1% per year), reflecting the country’s coordination
with the North American market. Other countries that saw their share of exports increase
include Chile (5.7%), Costa Rica (5.8%), Guatemala (5.8%), Peru (8.8%), Bolivia (14.4%), Bahamas
(8.3%) Trinidad and Tobago (5.0%) and Belize (4.9%) (see figure 230).
INT
ER
NA
TIO
NA
L T
RA
DE
IN A
GR
ICU
LTU
RA
L P
RO
DU
CT
S
LAC: EXPORTS OF AGRICULTURAL EXPORTS (Millions of dollars)Figure 228
SOURCE: FAOSTAT.
Cereals
Sugar
Coffee, tea, cocoa and spicesGreen vegetables
Tobacco
Pulses
Fruits Oilcrops
Plant fibres and rubber
1980 1990 2003
18,500
16,000
13,500
11,000
8,500
6,000
3,500
1,000
-1,500
SOURCE: FAO/RLC based on FAOSTAT.
LAC: COMPOSITION OF AGRICULTURAL CROP EXPORTS (Percentage)Figure 229
1990
Oilcrops23%
Sugar andHoney21%
Coffee andothers18%
Fruits20%
Animal feed 0,2%Tobacco 3%
Pulses 1%
Greenvegetables 5%
Vegetal fibresand rubber 3%
Cereals 6%
2003
Sugar andHoney10%
Tobacco 3% Animal feed 0.2%
Oilcrops39% Coffee
and others10%
Pulses 1%
Vegetable fibresand rubber 1%
Greenvegetables 8%
Fruits20%
Cereals 8%
250
In 1990, exports of oilseeds from Latin America and the Caribbean were highly concentrated
in Argentina and Brazil, while other countries exported relatively marginal amounts. By 2003,
this concentration had intensified sharply, especially as result of soybean exports in these two
countries. On a smaller scale, but with major importance for the country’s agriculture, soybean
exports have also expanded in Bolivia and Paraguay (see figure 231).
LAC: VALUE OF CROP EXPORTS BY COUNTRY (Millions of dollars)Figure 230
SOURCE: FAOSTAT 2004.
20031990
Nicaragua
El Salvador
Dominican Republic
Uruguay
Bolivia
Cuba
Honduras
Peru
Paraguay
Guatemala
Costa Rica
Ecuador
Colombia
Chile
Mexico
Argentina
Brazil
Belize
Guyana
Jamaica
Panama
2,000 4,000 6,000 8,000 10,000 12,000 14,000
20 40 60 80 100 120 140 160 180 200
16,000
Antigua and Barbuda
Bahamas
Saint Kitts and Nevis
Dominica
Grenada
Saint Lucia
Haiti
Saint Vincent and the Grenadines
Suriname
Barbados
Venezuela
Trinidad and Tobago
251
The geographic location of fruit exports is widely distributed throughout the region. Until
the 1990s the leading exporter was Brazil, partly thanks to sales of citric products; but the
remarkable development of fruit growing in Chile over the last two decades has resulted in
a rapid expansion of fruit exports from this country, virtually tripling during the decade,
while exports from Brazil were hampered by difficulties in the markets for orange juice and
other citric products. In addition to Brazil and Chile, fruit exports are important in most
countries of the region (see figure 232).
INT
ER
NA
TIO
NA
L T
RA
DE
IN A
GR
ICU
LTU
RA
L P
RO
DU
CT
S
1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000
LAC: OILCROPS EXPORTS BY COUNTRY (Millions of dollars)Figure 231
SOURCE: FAOSTAT 2004.
20031990
Peru
El Salvador
Dominican Republic
Venezuela
Chile
Trinidad and Tobago
Nicaragua
Honduras
Ecuador
Costa Rica
Guatemala
Colombia
Mexico
Uruguay
Bolivia
Paraguay
Argentina
Brazil
1 2 3 4 5
Antigua and Barbuda
Grenada
Haiti
Saint Kitts and Nevis
Saint Lucia
Suriname
Belize
Saint Vincent and the Grenadines
Dominica
Bahamas
Cuba
Guyana
Jamaica
Barbados
Panama
252
200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000
Uruguay
Dominican Republic
Belize
Peru
Panama
Guatemala
Honduras
Colombia
Argentina
Costa Rica
Mexico
Ecuador
Brazi
Chile
LAC: FRUITS EXPORTS BY COUNTRY (Millions of dollars)Figure 232
SOURCE: FAOSTAT.
20031990
50 100 150 200-
Bolivia
Jamaica
Cuba
Suriname
Venezuela
Nicaragua
Saint Lucia
Saint Vincent and the Grenadines
El Salvador
Dominica
Trinidad and Tobago
Haiti
Guyana
Bahamas
Paraguay
Barbados
Grenada
Antigua and Barbuda
Saint Kitts and Nevis
253
INT
ER
NA
TIO
NA
L T
RA
DE
IN A
GR
ICU
LTU
RA
L P
RO
DU
CT
S
LAC: GREEN VEGETABLES EXPORTS BY COUNTRY (Millions of dollars)Figure 233
SOURCE: FAOSTAT.
20031990
500 1,000 1,500 2,000 2,500 3,000
Saint Vincent and the Grenadines
Suriname
Nicaragua
El Salvador
Trinidad and Tobago
Panama
Dominican Republic
Jamaica
Ecuador
Honduras
Colombia
Brazil
Guatemala
Costa Rica
Chile
Peru
Argentina
Mexico
2 4 6 8 10 12
Antigua and Barbuda
Saint Lucia
Saint Kitts and Nevis
Bahamas
Haiti
Bolivia
Grenada
Cuba
Barbados
Belize
Guyana
Uruguay
Dominica
Paraguay
Venezuela
In 1990, the regional vegetable exports were heavily concentrated in Mexico, represented by sales
to the United States taking advantage of geographic proximity and climate differences.
Implementation of the North American Free Trade Agreement (NAFTA) meant that by 2002
concentration had intensified still further. There has also been a significant growth in Peru,
thanks largely to exports of asparagus and preserves. Vegetable exports are also important in
Central America, Argentina and Chile, as well as in other countries of the region (see figure 233).
Cereal exports are highly concentrated in Argentina, partly reflecting trade within MERCOSUR
(see figure 234).
254
500 1,000 1,500 2,000 2,500
LAC: CEREAL EXPORTS BY COUNTRY (Millions of dollars)Figure 234
SOURCE: FAOSTAT.
20031990
Guatemala
Venezuela
Nicaragua
Trinidad and Tobago
Ecuador
Costa Rica
Peru
El Salvador
Colombia
Paraguay
Chile
Uruguay
Mexico
Brazil
Argentina
10 20 30
Haiti
Antigua andBarbuda
Dominica
Saint Lucia
Saint Kittsand Nevis
Belize
Guyana
Bahamas
Cuba
Panama
Grenada
DominicanRepublic
Jamaica
Bolivia
Barbados
Suriname
Saint Vincent andthe Grenadines
Honduras
255
INT
ER
NA
TIO
NA
L T
RA
DE
IN A
GR
ICU
LTU
RA
L P
RO
DU
CT
S
500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000
Figure 235 LAC: SUGAR EXPORTS BY COUNTRY (Millions of dollars)
SOURCE: FAOSTAT.
20031990
Barbados
Bolivia
Honduras
Peru
Nicaragua
Uruguay
Costa Rica
Belize
Ecuador
Chile
Jamaica
El Salvador
Dominican Republic
Guyana
Guatemala
Argentina
Colombia
Mexico
Cuba
Brazil
10 20 30 40 50
Haiti
Antigua and Barbuda
Suriname
Dominica
Grenada
Saint Vicente and
the Grenadines
Saint Lucia
Bahamas
Venezuela
Saint Kitts and Nevis
Paraguay
Panama
Trinidad and Tobago
Export growth has been restricted since this is a highly intervened market, and because of the
effect of sugar substitutes on demand, and low-productivity conditions in most countries of
the region. Cuban sugar exports present a hard slow recovery since the disappearance of the
market provided by the socialist countries. Sugar exports now mainly come from Brazil (see
figure 235).
256
SOURCE: FAOSTAT.
500 1,000 1,500 2,000
Trinidad and Tobago
Panama
Grenada
Venezuela
Jamaica
Argentina
Nicaragua
Dominican Republic
El Salvador
Honduras
Costa Rica
Ecuador
Peru
Mexico
Guatemala
Colombia
Brazil
Figure 236 LAC: COFFEE, TEA, COCOA AND SPICES EXPORTS BY COUNTRY (Millions of dollars)
1990 2003
Chile
Haití
Bolivia
Cuba10 20 30
Saint Vincent andthe Grenadines
Dominica
Guyana
Uruguay
Paraguay
The time series analysed does not record the collapse of Latin American and Caribbean coffee
exports over the last few years, resulting from changes on the international market following
increases in production in Vietnam and elsewhere. This change further accentuates the
tremendous instability displayed by this market, which has a strong effect in several regional
economies, especially those in Central America. Traditionally the leading producers have been
Brazil and Colombia, followed by Mexico and the Central American countries (see figure 236).
Antigua andBarbuda
Saint Kitts and Nevis
Barbados
Suriname
Bahamas
Belize
Saint Lucia
257
INT
ER
NA
TIO
NA
L T
RA
DE
IN A
GR
ICU
LTU
RA
L P
RO
DU
CT
S200 400 600 800 1,000 1,200
LAC: TOBACCO EXPORTS BY COUNTRY (Millions of dollars)Figure 237
SOURCE: FAOSTAT.
1990 2003
Trinidad and Tobago
Chile
Paraguay
Dominican Republic
Nicaragua
Honduras
Guatemala
Venezuela
Colombia
Cuba
Ecuador
Mexico
Argentina
Brazil
0.5
Antigua and Barbuda
Saint Kitts and Nevis
Suriname
El Salvador
Haiti
Belize
Dominica
Guyana
Jamaica
Saint Vincent and the Grenadines
Saint Lucia
Grenada
Bahamas
Bolivia
Panama
Barbados
Costa Rica
Peru
Uruguay
1.0 1.5 2.0 2.5 3.0 3.5 4.0
Tobacco exports have been highly concentrated in Brazil, and that trend intensified strongly
during the last decade (see figure 237).
Imports
Having suffered a decline during the 1980s, the regional crop imports resumed their growth
in the 1990s, thanks to relative recovery in the economies concerned, and boosted by greater
market integration and larger trade flows among the MERCOSUR countries. During the 1980s,
regional imports declined by 2.6% per year; but, in the 1990s they grew at an average annual
rate of 5.3%. The total amount imported (roughly US$ 10 billion in the 1980s) reached US$ 19
billion in 1996, and stabilized around that level until 2003. That increase was caused mainly
by higher levels of imports as the prices keept almost without variation (see figure 238).
258
LAC: IMPORTS OF AGRICULTURAL PRODUCTS BY GROUP (Millions of dollars)Figure 239
SOURCE: FAOSTAT.
Animal feed
Sugar, honey
Coffee, tea,and spices
Vegetal fibresand rubber
Cereals
Oilcrops
Fruits
Green vegetables
Pulses
Tobacco
1980 1990 2003
8
7
6
5
4
3
2
1
SOURCE: FAO/RLC based on FAOSTAT.
LAC: QUANTUM, PRICE AND VALUE INDEX OF AGRICULTURAL CROP IMPORTS(1995=100)
Figure 238
Quantum Index
Value Index
Unit value index
Composition of agricultural crop imports
In the 1980s cereals and oilseeds were already the largest categories of the regional crop imports,
and during the last decade they also grew most in absolute terms. Imports of fruit, vegetables
and animal feed have also expanded (see figures 239 and 240).
20
198
0
198
1
198
2
198
3
198
4
198
5
198
6
198
7
198
8
198
9
199
0
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
200
0
200
1
200
2
200
3
40
60
80
100
120
140
160
259
INT
ER
NA
TIO
NA
L T
RA
DE
IN A
GR
ICU
LTU
RA
L P
RO
DU
CT
S
SOURCE: FAOSTAT.
LAC: IMPORTS OF AGRICULTURAL PRODUCTS BY GROUP (Millions of dollars)Figure 240
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
1980 1990 2003
Cerea
ls
Oilcro
ps
Fruits
Green
veget
ables
Pulses
Sugar, h
oney
and b
eewax
Coffe
e, te
a, co
coa
and sp
ices
Veget
able
fibre
s
and ru
bber
Animal
feed
SOURCE: FAO/RLC based on FAOSTAT.
LAC: IMPORTS OF AGRICULTURAL CROPS BY COUNTRY (Percentage)Figure 241
1990
CARICOM 6%Latin Caribbean 11%
Brazil17%
Southern Cone 6%
Mexico35%
Andeanscountries
18%
Central America 7%
Brazil15%
Mexico36%
Andeanscountries
19%
Southern Cone 8%
Central America 10%
Latin Caribbean 8%
CARICOM 4%
2003
Geographic distribution of crop imports
Mexico is without doubt the region’s leading importer of agricultural crops, accounting for one
third of the total. This large share reflects a longstanding situation that became stronger since
1988 when Mexican imports began to accelerate. The shares of the various subregions have changed
little over the last decade, although the Central American share has risen from 7% to 10%, while
it has fallen, in the Latin Caribbean countries, from 11% to 8% (see figure 241 and 242).
260
1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000
SOURCE: FAOSTAT.
1990 2003
Figure 242 LAC: IMPORTS OF AGRICULTURAL CROPS BY COUNTRY (Millions of dollars)
Paraguay
Nicaragua
Bolivia
Uruguay
Trinidad and Tobago
Panama
Jamaica
Honduras
Haiti
Costa Rica
Ecuador
Guatemala
El Salvador
Argentina
Dominican Republic
Cuba
Chile
Peru
Venezuela
Colombia
Brazil
Mexico
20 40 60 80 100
Saint Kitts and Nevis
Antigua and Barbuda
Grenada
Dominica
Saint Vincent and the Grenadines
Belize
Saint Lucia
Guyana
Suriname
Bahamas
Barbados
261
Most of the countries of the region import cereals, with Mexico and Brazil being the largest importers
given the size of their economies. During the last decade this concentration has intensified strongly
in Mexico, following the implementation of NAFTA and reflecting the relative weakness of its
domestic supply. Mexico’s cereal imports have more than doubled during the last decade. Colombia’s
cereal imports also grew significantly (see figure 243).
INT
ER
NA
TIO
NA
L T
RA
DE
IN A
GR
ICU
LTU
RA
L P
RO
DU
CT
S
SOURCE: FAOSTAT.
1990 2003
500 1,000 1,500 2,000 2,500 3,000
LAC: CEREAL IMPORTS BY COUNTRY (Millions of dollars)Figure 243
Trinidad and Tobago
Nicaragua
Uruguay
Panama
Bolivia
Jamaica
Honduras
El Salvador
Ecuador
Costa Rica
Haiti
Guatemala
Dominican Republic
Chile
Cuba
Venezuela
Peru
Colombia
Brazil
Mexico
5 10 15 20
Grenada
Saint Kittsand Nevis
Dominica
Antigua andBarbuda
Belize
Saint Vincent andthe Grenadines
Saint Lucia
Suriname
Guyana
Argentina
Paraguay
Barbados
Bahamas
262
Oilseed imports are heavily concentrated in Mexico, and growing fast. Imports in this category
also increased rapidly over the last decade, but from a smaller base, in Brazil, Colombia, Peru, Chile,
El Salvador, Ecuador, Bolivia, Guyana, Bahamas and Belize (see figure 244).
LAC: OILCROPS IMPORTS BY COUNTRY (Millions of dollars)Figure 244
SOURCE: FAOSTAT.
1990 2003
500 1,000 1,500 2,000 2,500
Trinidad and Tobago
Jamaica
Bolivia
Panama
Nicaragua
Haiti
Honduras
Costa Rica
Argentina
El Salvador
Ecuador
Guatemala
Cuba
Dominican Republic
Chile
Peru
Colombia
Venezuela
Brazil
Mexico
10 20 30 40
Saint Kitts and Nevis
Antigua andBarbuda
Saint Vicente andthe Grenadines
Saint Lucia
Grenada
Belize
Bahamas
Dominica
Paraguay
Guyana
Suriname
Barbados
Uruguay
INT
ER
NA
TIO
NA
L T
RA
DE
IN A
GR
ICU
LTU
RA
L P
RO
DU
CT
S
LAC: FRUIT IMPORTS BY COUNTRY (Millions of dollars)Figure 245
SOURCE: FAOSTAT.
1990 2003
Nicaragua
Uruguay
Jamaica
Bahamas
Barbados
Dominican Republic
Trinidad and Tobago
Honduras
Panama
Peru
Venezuela
Guatemala
Costa Rica
Ecuador
Chile
El Salvador
Colombia
Argentina
Brazil
Mexico
100 200 300 400 500 600 700 800
2 4 6 8
Dominica
Belize
Suriname
Saint Vicent andthe Grenadines
Antigua and Barbuda
Saint Kitts and Nevis
Guyana
Haiti
Grenada
Paraguay
Bolivia
Cuba
263
In the other crop groups (fruit, green vegetables, pulses, coffee, sugar, plant fibres, tobacco and
animal feed) the geographic distribution of imports follows a similar pattern, with concentration
in Mexico and broad diffusion among most other countries of the region. In the case of tobacco
imports, the Dominican Republic has registered an exceptionally high share in the last year
(see figures 245 through 252).
Saint Lucia
SOURCE: FAOSTAT.
1990 2003
100 200 300 400 500
Dominican Republic
Paraguay
Honduras
Barbados
Ecuador
Argentina
Guatemala
Colombia
Bolivia
Cuba
Bahamas
Jamaica
Panama
Costa Rica
Chile
Trinidad and Tobago
Venezuela
El Salvador
Brazil
Mexico
LAC: VEGETABLE IMPORTS BY COUNTRY (Millions of dollars)Figure 246
5 10 15
264
Antigua and Barbuda
Grenada
Dominica
Saint Vincent andthe Grenadines
Saint Kitts and Nevis
Belize
Suriname
Saint Lucia
Guyana
Haiti
Peru
Nicaragua
Uruguay
265
INT
ER
NA
TIO
NA
L T
RA
DE
IN A
GR
ICU
LTU
RA
L P
RO
DU
CT
S
LAC: PULSES IMPORTS BY COUNTRY (Millions of dollars)Figure 247
SOURCE: FAOSTAT.
1990 2003
50 100 150 200 250 300
Uruguay
Nicaragua
Bolivia
Honduras
Guatemala
Argentina
Trinidad and Tobago
Panama
El Salvador
Ecuador
Dominican Republic
Chile
Costa Rica
Peru
Haiti
Venezuela
Brazil
Colombia
Cuba
Mexico
1 2 3
Saint Kitts and Nevis
Paraguay
Antigua and Barbuda
Belize
Grenada
Saint Vincent andthe Grenadines
Dominica
Bahamas
Suriname
Barbados
Saint Lucia
Jamaica
Guyana
266
SOURCE: FAOSTAT.
1990 2003
LAC: COFFEE IMPORTS BY COUNTRY (Millions of dollars)Figure 248
50 100 150 200
Barbados
Cuba
Panama
Jamaica
Bolivia
Nicaragua
Trinidad and Tobago
Venezuela
Costa Rica
Honduras
Guatemala
Ecuador
El Salvador
Peru
Colombia
Uruguay
Chile
Argentina
Brazil
Mexico
1 2 3 4
Antigua andBarbuda
Haiti
Saint Kittsand Nevis
Grenada
Dominica
Saint Vincent andthe Grenadines
Belize
Saint Lucia
Guyana
Suriname
Paraguay
Bahamas
DominicanRepublic
267
INT
ER
NA
TIO
NA
L T
RA
DE
IN A
GR
ICU
LTU
RA
L P
RO
DU
CT
S
100 200 300 400 500 600 700
SOURCE: FAOSTAT.
1990 2003
LAC: SUGAR IMPORTS BY COUNTRY (Millions of dollars)Figure 249
Barbados
Panama
Brazil
El Salvador
Honduras
Argentina
Dominican Republic
Costa Rica
Peru
Trinidad and Tobago
Ecuador
Guatemala
Uruguay
Jamaica
Haiti
Cuba
Colombia
Venezuela
Chile
Mexico
5 10 15
Saint Kittsand Nevis
Belize
Antigua andBarbuda
Grenada
Dominica
Saint Vincent andthe Grenadines
Guyana
Saint Lucia
Suriname
Paraguay
Bahamas
Nicaragua
Bolivia
268
LAC: PLANT FIBRE AND RUBBER IMPORTS BY COUNTRY (Millions of dollars)Figure 250
100 200 300 400 500 600 700
SOURCE: FAOSTAT 2004.
20031990
Trinidad and Tobago
Nicaragua
Uruguay
Panama
Suriname
Cuba
Costa Rica
Dominican Republic
Honduras
Bolivia
Guatemala
Ecuador
El Salvador
Venezuela
Chile
Peru
Colombia
Argentina
Brazil
Mexico
0.50 1.00 1.50
Saint Vincent andthe Grenadines
Dominica
Grenada
Saint Kitts and Nevis
Saint Lucia
Antigua and Barbuda
Guyana
Belize
Haiti
Barbados
Bahamas
Paraguay
Jamaica
269
INT
ER
NA
TIO
NA
L T
RA
DE
IN A
GR
ICU
LTU
RA
L P
RO
DU
CT
S
LAC: TOBACCO IMPORTS BY COUNTRY (Millions of dollars)Figure 251
SOURCE: FAOSTAT 2004.
20031990
20 40 60 80 100 120
Suriname
Bolivia
Ecuador
Peru
Haiti
Nicaragua
Costa Rica
Jamaica
Guatemala
Chile
Trinidad and Tobago
Uruguay
Venezuela
Colombia
Argentina
Honduras
Brazil
Paraguay
Mexico
Dominican Republic
1 2 3 4
Guyana
Saint Kitts and Nevis
Belize
Saint Lucia
Antigua and Barbuda
Saint Vicent andthe Grenadines
Grenada
Dominica
Panama
Barbados
El Salvador
Cuba
Bahamas
270
20 40 60 80 100 120 140 160
LAC: ANIMAL FEED IMPORTS BY COUNTRY (Millions of dollars)Figure 252
Haiti
Panama
Cuba
Uruguay
Argentina
Bahamas
Peru
Venezuela
El Salvador
Guatemala
Honduras
Ecuador
Costa Rica
Jamaica
Colombia
Brazil
Belize
Trinidad and Tobago
Chile
Mexico
SOURCE: FAOSTAT 2004.
20031990
0.50 1.00 1.50
RepublicaDominicana
Antigua andBarbuda
Dominica
Saint Kittsand Nevis
Saint Lucia
Paraguay
Saint Vincent andthe Grenadines
Bolivia
Nicaragua
Barbados
Grenada
Guyana
Suriname
C. LIVESTOCK SECTOR
International trade in livestock products is virtually in balance in Latin America and the
Caribbean; exports and imports both amount to about US$ 6 billion per year, accounting for
roughly 1.6% of imports and exports in the regional overall external merchandise trade. Within
overall agriculture sector trade, livestock products account for 9% of exports and 19% of imports.
During the 1980s, the small trade balance was generally positive but displayed a slightly
declining trend. Although the balances have always been small, the result has been negative
over the last decade, except in 2002, largely reflecting the slowdown in exports between 1996
and 1998 (see figures 253 and 254).
271
INT
ER
NA
TIO
NA
L T
RA
DE
IN A
GR
ICU
LTU
RA
L P
RO
DU
CT
S
SOURCE: FAO/RLC based on FAOSTAT.
LAC: INTERNATIONAL TRADE IN LIVESTOCK PRODUCTS (Millions of dollars)Figure 253
-2,000
-1,000
0
1,000
2.000
3,000
Imports
Exports
Balance
198
0
198
1
198
2
198
3
198
4
198
5
198
6
198
7
198
8
198
9
199
0
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
200
0
200
1
200
2
4,000
5,000
6,000
7,00019
80
198
119
82
198
319
84
198
519
86
198
719
88
198
919
90
199
119
92
199
319
94
199
519
96
199
719
98
199
920
00
200
120
02
SOURCE: FAO/RLC based on FAOSTAT.
LAC: EXTERNAL TRADE IN LIVESTOCK PRODUCTS (Millions of dollars)Figure 254
-2.000
-1.000
0
1.000
2.000
3.000
4.000
5.000
6.000
7.000
Trade balance
Value of exports
Value of imports
The sub- sectoral trade balance is very small because the surplus in bovine and poultry meat
is offset by a deficit in dairy products. Trade in pig meat and live animals is virtually in balance,
with the sign changing back and forth (see table 56).
Trade in livestock products is also in balance in most countries considered individually.
Among surplus countries only Brazil, Argentina, Chile, Uruguay and Nicaragua displayed
relatively large balances; in the latter two, the livestock sector accounts for a particularly
272
LAC: BALANCE OF TRADE IN LIVESTOCK PRODUCTS 2002 (Millions of dollars)Figure 255
SOURCE: FAO/RLC based on FAOSTAT 2004.
Mexico
Cuba
El Salvador
Venezuela
Guatemala
Jamaica
Dominican Republic
Honduras
Trinidad and Tobago
Haiti
Bahamas
Peru
Saint Lucia
Barbados
Guyana
Colombia
Grenada
Saint Vincent and the Grenadines
Suriname
Ecuador
Belize
Dominica
Antigua and Barbuda
Saint Kitts and Nevis
Bolivia
Panama
Paraguay
Costa Rica
Nicaragua
Chile
Uruguay
Argentina
Brazil
-3,000 -2,000 -1,000 0 1,000 2,000 3,000
large share of their overall trade balance. Among deficit countries, most of the negative
balance is concentrated in Mexico, because of its size; but, in relative terms, there are also
significant deficits in several Central American countries (El Salvador, Guatemala and
Honduras), and a number of Caribbean countries (Cuba, Haiti, Saint Lucia, Dominica, Grenada,
Guyana, Bahamas and Barbados) (see figure 255).
LAC: EXTERNAL TRADE IN LIVESTOCK PRODUCTS (2002)Table 56
Product Imports Trade balance Growth rate (%)
TOTAL 6,099,490 4,926,877 100.0 100.0 5.4 5.1
Bovine meat 2,048,809 1,454,350 33.6 29.5 1.6 9.2
Poultry meat 1,576,205 509,093 25.8 10.3 10.0 6.8
Pig meat 902,566 551,420 14.8 11.2 23.7 11.1
Sheep meat 34,437 -55,443 0.6 1.8 0.0 9.3
Goat meat 174 2,146 -1,972 -1.2 -5.2
Other meats 50,587 56,188 1.4 -2.3
Dairy products and eggs 730,857 1,864,326 12.0 37.8 14.2 3.5
Live animals 444,734 92,595 -0.1 1.7
254,933 52,936 201,997 4.2 1.1 -5.5 0.1
Exports Imports
Share (%)
SOURCE: FAO/RLC based on FAOSTAT 2004.
(Thousands of dollars) (Thousands of dollars)(1990-2002)
Exports Imports
106,775
Animal fibre
352,139
89,880
-1,133,469
1,172,613
594,459
1,067,112
351,146
0.0
1.0
7.1
0.0
1.8
7.3
Exports
273
INT
ER
NA
TIO
NA
L T
RA
DE
IN A
GR
ICU
LTU
RA
L P
RO
DU
CT
S
SOURCE: FAO/RLC based on FAOSTAT.
LAC: SUBREGIONAL SHARES IN EXPORTS AND IMPORTS OF LIVESTOCKPRODUCTS (Percentage)
Figure 256
Brazil 49%
LatinCaribbean 0%
CARICOM 0.3 %
Andean countries 3%
Central America 5%
Mexico 11%
Southern Cone 32%
Exports2002
Mexico 58%
Brazil 7%
LatinCaribbean
6%
CARICOM 7%
SouthernCone 6%
Andeancountries 7%Central America 9%
Imports2002
Despite the relatively small scale of trade balances in this subsector, there is clear differentiation
in the balances recorded among countries. As much as 81% of exports come from Brazil and the
southern cone countries; whereas Mexico is the destination for 58% of livestock-product imports
(see figure 256).
Exports
During the 1980s, exports of livestock products from Latin America and the Caribbean did not
show changes, posting a slightly negative average growth rate of -0.2% per year. The slight
reduction that occurred in the first half of the decade was offset by an increase, also moderate,
during the second half. As from 1992, chicken meat exports from Brazil grew strongly, supported
by sharp percentage rise in bovine meat exports in that country after 1997, and a year later also
in Mexico and Nicaragua, albeit involving smaller absolute amounts. A number of other countries
also saw rapid growth, but with less effect on the regional totals. The result was an average
growth rate of 5.3% per year during the decade.
The main explanation for this acceleration can be found on the supply side, especially in the
development of poultry production, while international prices have had relatively neutral effects
on the overall sub-sector. The export quantum index rose by 44% between 1992 and 1995; and,
following an interruption of the rising trend in 1996-1998, it then grew by a further 53% between
then and 2002. These represent,specilly in Brazil, a significant increases in export volumes,
based on profitable technology models (see figure 257).
274
SOURCE: FAO/RLC based on FAOSTAT.
LAC: UNIT VALUE, QUANTUM AND VALUE INDEX OF LIVESTOCK PRODUCTEXPORTS (1995=100)
Figure 257
20
198
0
198
1
198
2
198
3
198
4
198
5
198
6
198
7
198
8
198
9
199
0
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
200
0
200
1
40
60
80
100
120
Quantum Index
Value Index
Unit value index
140
SOURCE: FAO/RLC based on FAOSTAT.
AL: INDEX OF QUANTUM, VALUE AND PURCHASING POWER OFLIVESTOCK-PRODUCT EXPORTS
Figure 258
198
019
81
198
219
83
198
419
85
198
619
87
198
819
89
199
019
91
199
219
93
199
419
95
199
619
97
199
819
99
200
020
01
200
2
0
20
40
60
80
100
120
140
160
Exports quantum index
Exports value index
External purchasingpower of exports
Although international prices have had a neutral effect on exports in this subsector, their
purchasing power was reduced sharply during the early 1980s by a relative rise in import prices.
Since 1984, the erosion of purchasing power has been lower, but constant, as import prices have
not risen while exports have expanded continuously (see figure 258).
275
INT
ER
NA
TIO
NA
L T
RA
DE
IN A
GR
ICU
LTU
RA
L P
RO
DU
CT
S
LAC: EXPORTS OF LIVESTOCK PRODUCTS (Millions of dollars)Figure 259
1980 1990 2002
SOURCE: FAOSTAT.
Animal fibres
Live animals
Pig meatDairy products and eggs
Livestock subproducts
Goat meat
Poultry meat Bovine meat
Sheep meat2,100
1,850
1,600
1,350
1,100
850
600
350
100
-150
Composition of livestock product exports
The structure of the regional exports in the livestock sub-sector has changed significantly
during the last decade. Until the early 1990s, bovine meat exports accounted for the absolute
majority. Wool exports were less important and also declined rapidly from the 1980s onwards,
along with exports of animals on the hoof—basically yearling cattle exported by Mexico for
fattening in the United States, taking advantage of lower fodder costs.
The last decade witnessed several changes, the most significant was the exceptional growth of
poultry meat exports, which expanded from US$ 400 million in 1990 to over US$ 1.6 billion in
2002. Practically all of this increase occurred in Brazil (see figure 259).
Exports of pig meat also grew vigorously during the decade: having been practically non-existent
at the beginning of the 1990s, the US$ 900 million mark was attained by 2002. Half of this increase
occurred in Brazil and nearly all the rest in Chile and Mexico. Exports of dairy products and eggs
also grew strongly, albeit on a more modest scale, mostly in Argentina.
The composition of livestock exports was thus very different from the situation in 1990. The
share of bovine meat fell from over half (51%) to just one third (33%); the share of wool exports
also dropped from 11% to just 4%. In contrast, poultry meat exports expanded from 12% to 26%
of the sub-sectoral total. There were also increased shares for pig meat (from 1% to 15%), and
dairy products and eggs (from 7% to 12%) (see figure 260).
276
Geographic distribution of livestock exports
The origin of the livestock exports has varied significantly during the last decade. Until 1990,
Argentina was the leading exporter, followed relatively closely by Brazil, Uruguay, Mexico, and
in smaller amounts, by Paraguay, Chile, Bolivia and a number of Central American countries.
Since then, the exceptionally strong growth of exports from Brazil, which have increased fivefold
between 1990 and 2002, has resulted in a heavy concentration of the region’s livestock exports
in this country. Brazil’s share of the regional total grew from 20% in 1990 to almost half (49%)
in 2002. As counterpart, the share of southern cone countries dropped from 58% to 32% (see
figures 261 and 262).
SOURCE: FAO/RLC based on FAOSTAT.
LAC: COMPOSITION OF LIVESTOCK-PRODUCT EXPORTS (Percentage)Figure 260
1990 2002
Other meats 2%Dairy products
and eggs 7%
Bovine meat51%
Animalfibre11%
Sheep meat 2%
Poultrymeat 12%
Liveanimals
14%
Goat meat 0%
Pig meat 1%
Other meats 2%
Bovine meat33%
Dairyproductsand milk
12%
Sheep meat 1%
Poultry meat26%
Goat meat 0%
Pig meat15%
Animal fibre 4%
Live animals 7%
277
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500 1,000 1,500 2,000 2,500 3,000 3,500
LAC: VALUE OF LIVESTOCK EXPORTS (Millions of dollars)Figure 261
SOURCE: FAOSTAT 2004.
20021990
Ecuador
Bolivia
Guatemala
El Salvador
Paraguay
Panama
Peru
Colombia
Costa Rica
Nicaragua
Chile
Mexico
Uruguay
Argentina
Brazil
10 20 30 40 50 60
Suriname
Dominica
Grenada
Saint Vincent andthe Grenadines
Antigua and Barbuda
Saint Kitts and Nevis
Saint Lucia
Bahamas
Haiti
Belize
DominicanRepublic
Cuba
Guyana
Barbados
Trinidad and Tobago
Venezuela
Honduras
Jamaica
SOURCE: FAOSTAT.
LAC: SUBREGIONAL SHARES OF LIVESTOCK-PRODUCT EXPORTS (Percentage)Figure 262
1990 2002
Latin Caribbean 0.8%Andean countries 4.1%
Brazil19.6%
Mexico12.0%
SouthernCone
57.6%
Central America 5.4% CARICOM 0.5%
Brazil48.7%
Mexico11.3%
SouthernCone
32.4%
Latin Caribbean 0.0%
CARICOM 0.3%Central America 4.7%
Andean countries 2.5%
278
LAC: VALUE OF BOVINE MEAT EXPORTS (Millions of dollars)Figure 263
SOURCE: FAOSTAT 2004.
20021990
200 400 600 800 1,000 1,200
Honduras
Bolivia
Venezuela
Chile
Trinidad and Tobago
Colombia
Guatemala
Panama
Paraguay
Mexico
Costa Rica
Nicaragua
Uruguay
Argentina
Brazil
10 20 30
Ecuador
Dominican Republic
Antigua and Barbuda
Barbados
Dominica
Grenada
Guyana
Saint Vicent andthe Grenadines
Saint Lucia
Suriname
Saint Kitts and Nevis
Peru
Haiti
El Salvador
Cuba
Bahamas
Jamaica
Belize
Honduras
The changes in the geographic distribution of bovine meat exports largely follow the pattern
displayed by the subsector as a whole, the most significant change being the concentration of
exports in Brazil (see figure 263).
279
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50 100 150 200 250 300 350
LAC: EXPORTS OF DAIRY PRODUCTS AND EGGS (Millions of dollars)Figure 264
SOURCE: FAOSTAT 2004.
20021990
Ecuador
Honduras
Bolivia
Jamaica
Peru
Panama
Costa Rica
Nicaragua
Chile
Brazil
Mexico
Colombia
Uruguay
Argentina
Antigua and Barbuda
Grenada
Saint Lucia
Suriname
Dominica
Haiti
Saint Vincent andthe Grenadines
Saint Kitts and Nevis
Belize
Dominican Republic
Bahamas
Paraguay
Guyana
Cuba
Barbados
Venezuela
Guatemala
Trinidad and Tobago
El Salvador
1 2 3 4 5 6
Over the last decade, the Argentinian exports of dairy products and eggs grew strongly, thereby
increasing their level of concentration. At the same time, exports also grew substantially in
other countries which had previously exported only minimal amounts of these products, such
as Colombia, Brazil, Mexico and Chile. There were also significant increases in exports from
Central American countries (see figure 264).
280
LAC: EXPORTS OF POULTRY MEAT (Millions of dollars)Figure 265
SOURCE: FAOSTAT 2004.
20021990
200 400 600 800 1,000 1,200 1,400 1,600
Nicaragua
Trinidad and Tobago
Dominican Republic
El Salvador
Jamaica
Barbados
Venezuela
Uruguay
Peru
Panama
Costa Rica
Ecuador
Mexico
Argentina
Chile
Brazil
0.5 1.0 1.5 2.0
Paraguay
Bahamas
Dominica
Grenada
Guyana
Saint Kitts and Nevis
Suriname
Haiti
Cuba
Saint Vincent and the Grenadines
Belize
Bolivia
Colombia
Honduras
Antigua and Barbuda
Guatemala
Saint Lucia
The change in the geographic distribution of exports of poultry meat merely reflects the huge
increase in exports from Brazil; no other country in the region had previously sold significant
amounts of this product, and Brazil currently claims 95% of the regional total (see figure 265).
281
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100 200 300 400 500 600
LAC: VALUE OF PIG MEAT EXPORTS (Millions of dollars)Figure 266
SOURCE: FAOSTAT 2004.
20021990
Peru
Nicaragua
Jamaica
Venezuela
Argentina
Ecuador
Trinidad and Tobago
Barbados
El Salvador
Guatemala
Costa Rica
Mexico
Chile
Brazil
0.02 0.04 0.06 0.08 0.10
Paraguay
Uruguay
Bolivia
Honduras
Panama
Haiti
Antigua and Barbuda
Dominica
Grenada
Saint Kitts and Nevis
Saint Vincent and the Grenadines
Saint Lucia
Suriname
Bahamas
Guyana
Colombia
Dominican Republic
Cuba
Belize
Exports of pig meat only began to be significant during the last decade, and were concentrated
essentially in Brazil. Nonetheless both Chile and Mexico now have significant external sales
of this product (see figure 266).
Exports of animal fibres, mostly wool, are concentrated in Argentina and Uruguay, but have
been decreasing fast over the last few decades (see figure 267).
LAC: EXPORTS OF ANIMAL FIBRES (Millions of dollars)Figure 267
SOURCE: FAOSTAT 2004.
20021990
Honduras
Costa Rica
Guatemala
Colombia
Ecuador
El Salvador
Paraguay
Bolivia
Mexico
Chile
Brazil
Peru
Argentina
Uruguay
20 40 60 80 100 120 140 160 180
0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08Venezuela
Nicaragua
Panama
Cuba
Haiti
Dominican
Antigua and Barbuda
Barbados
Belize
Dominica
Grenada
Guyana
Jamaica
Saint Kitts and Nevis
Saint Vincent and the Grenadines
Saint Lucia
Suriname
Trinidad and Tobago
Bahamas
282
Most live-animal exports originate in Mexico and consist of cattle that are born taking advantage
of the rainy season in that country, and after weaning are sold to the United States for fattening,
since it would not be profitable to feed them in Mexico during the dry season; moreover, ratios
between meat prices and the cost of feed and concentrates are more favourable in the United
States (see figure 268).
LAC: VALUE OF LIVE ANIMALS EXPORTS (Millions of dollars)Figure 268
SOURCE: FAOSTAT 2004.
20021990
Guyana
Barbados
Venezuela
Peru
Paraguay
El Salvador
Brazil
Costa Rica
Colombia
Argentina
Chile
Panama
Nicaragua
Mexico
50 100 150 200 250 300 350 400
10 20 30 40 50 60
Haiti
Bahamas
Dominica
Grenada
Saint Vincent and the Grenadines
Suriname
Ecuador
Antigua and Barbuda
Saint Lucia
Bolivia
Jamaica
Saint Kitts and Nevis
Trinidad and Tobago
Honduras
Belize
Cuba
Dominican
Uruguay
Guatemala
283
INT
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NA
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NA
L T
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GR
ICU
LTU
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L P
RO
DU
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284
SOURCE: FAO/RLC based on FAOSTAT.
LAC: QUANTUM, UNIT VALUE AND VALUE INDEX OF LIVESTOCK- PRODUCTSIMPORTS (1995=100)
Figure 269
Quantum index
Value index
Unit value index
Imports
Imports of livestock products have grown steadily since 1983, in particular reflecting the rapid
increase in Mexican imports of bovine meat and dairy products. During the 1990s, the pace of
growth accelerated somewhat, reaching an annual average rate of 5.2% over the last decade.
Growth was almost exclusively due to larger import volumes, since 1987 international prices
have shown small fluctuations that cancel each other out in the medium term (see figure 269).
Until the 1980s, milk accounted for about half of the regional total livestock-product imports.
During that decade, as a result of the economic crisis and a contraction in both income and
consumption, livestock product imports declined or stagnated in most countries, with only
Mexico and Brazil displaying significant growth. On the contrary during the 1990s, in contrast,
an expansion in milk imports was supported by growth in bovine meat trade, partly explained
by sub-regional trade within MERCOSUR. Imports of pig meat also grew, albeit to a lesser extent
(see figure 270).
As a consequence, livestock imports diversified. The share of dairy products and eggs fell from
55% to 39%; the share of bovine meat imports grew from 20% to 30%, and that of pig meat from
5% to 11% (see figure 271).
During the past decade, while Mexican imports recorded larger absolute amounts, livestock-
product imports grew rapidly in most countries in relative terms, except for Brazil where
domestic supply expanded vigorously. Although Mexican imports continued to grow fastest,
in relative terms there was also rapid growth in Chile, Uruguay and Central American countries.
There were also significant increases in the Caribbean, particularly in Guyana, Suriname and
Haiti (see figure 272).
20
198
0
198
1
198
2
198
3
198
4
198
5
198
6
198
7
198
8
198
9
199
0
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
200
0
200
1
40
60
80
100
120
140
LAC: IMPORTS OF LIVESTOCK PRODUCTS (Millions of dollars)Figure 270
SOURCE: FAOSTAT.
Goat meat
Animal fibres
Sheep meat
Live animals
Pig meat
Bovine meat
Dairy products and eggs
Livestock subproducts
Poultry meat
Other meats
2.2502.0001.7501.5001.2501.000
750500250
1980 1990 2001 2002
285
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LTU
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SSOURCE: FAO/RLC based on FAOSTAT.
LAC: COMPOSITION OF LIVESTOCK IMPORTS (Percentage)Figure 271
1990
Dairyproductsand eggs
55%
Bovinemeat20%
Live animals 9%Poultry meat 8%
Animal fibre 2%
Sheep meat 1%
Pig meat 5%Goat meat 0%
2002
Live animals 7%
Bovinemeat30%
Dairyproductsand eggs
39%
Pigmeat11%
Animal fibre 1%
Sheep meat 2%
Goat meat 0%
Poultry meat 10%
286
Geographic distribution of livestock importDuring the decade, the relative importance of countries as destinations for livestock-product
imports changed significantly. The share going to Mexico grew substantially, from 46% to 58%,
thereby accentuating the heavy concentration of livestock-product imports in this country. The
share received by Central American countries more than doubled (except in Nicaragua), from
4% to 9%. The share of imports received by southern cone countries also grew, largely as a result
of trade between MERCOSUR members. In contrast, the largest relative decline occurred in
Brazil, where the share of livestock-product imports plummeted from 19% to 7% (see figure 273).
In 2002, nearly three quarters of the regional bovine meat imports went to Mexico (72%), while
the remainder was widely distributed among the other countries. In relative terms, there were
particularly large import shares in Chile (10%), El Salvador (3%), Bahamas (1%), Barbados (0.4%)
and Jamaica (1%) (see figure 274).
VALUE OF LIVESTOCK IMPORTS (Millions of dollars)Figure 272
SOURCE: FAOSTAT 2004.
20021990500 1,000 1,500 2,000 2,500 3,000 3,500
Uruguay
Honduras
Colombia
Jamaica
Peru
Guatemala
Venezuela
El Salvador
Chile
Cuba
Brazil
Mexico
10 20 30 40 50 60 70 80
Saint Kitts and Nevis
Antigua and Barbuda
Dominica
Paraguay
Belize
Suriname
Bolivia
Saint Vincent and the Grenadines
Grenada
Ecuador
Guyana
Nicaragua
Barbados
Saint Lucia
Costa Rica
Panama
Argentina
Bahamas
Haiti
Trinidad and Tobago
Dominican Republic
287
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ICU
LTU
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SOURCE: FAO/RLC based on FAOSTAT.
LAC: SUBREGIONAL SHARES OF LIVESTOCKS IMPORTS (Percentage)Figure 273
1990
CARICOM 11%
Brazil19%
Southern Cone 2%
Mexico46%
CentralAmerica 4%
Mexico58%
Latin Caribbean6%
CARICOM 7%
Brazil 7%
2002
LatinCaribbean
12%
Andeancountries 6%
Central America9%
Andeancountries 7%
Southern Cone 6%
LAC: VALUE OF BOVINE MEAT IMPORTS (Millions of dollars)Figure 274
SOURCE: FAOSTAT 2004.
20021990
200 400 600 800 1,000 1,200
Honduras
Colombia
Saint Lucia
Barbados
Argentina
Cuba
Venezuela
Trinidad and Tobago
Guatemala
Peru
Bahamas
Jamaica
Costa Rica
El Salvador
Brazil
Chile
Mexico
Saint Kitts and Nevis
Paraguay
Haiti
Guyana
Antigua and Barbuda
Belize
Dominica
Bolivia
Nicaragua
Suriname
Ecuador
Panama
Grenada
Dominican Republic
Saint Vincent and the Grenadines
Uruguay
1 2 3 4
288
LAC: VALUE OF IMPORTS OF DAIRY PRODUCTS AND EGGS (Millions of dollars)Figure 275
SOURCE: FAOSTAT 2004.
20021990
100 200 300 400 500 600 700 800
Costa Rica
Panama
Guyana
Chile
Haiti
Dominican Republic
Colombia
Honduras
Trinidad and Tobago
Jamaica
Peru
Guatemala
El Salvador
Cuba
Venezuela
Brazil
Mexico
5 10 15 20
Saint Kitts and Nevis
Uruguay
Suriname
Dominica
Saint Vincent andthe Grenadines
Antigua and Barbuda
Grenada
Bolivia
Paraguay
Belize
Ecuador
Argentina
Bahamas
Barbados
Nicaragua
Saint Lucia
Imports of dairy products were widely distributed throughout the region, with Mexico the
leading importer (40%) partly because of the size of its economy. Large shares were also absorbed
by Cuba (5%), El Salvador and Guatemala (4% each), Barbados and Bahamas (0.8% each), Guyana
(1%) and Saint Lucia (0.9%) (see figure 275).
Over half of all poultry-meat imports in the region went to Mexico (55%). In relative terms, there
were large-scale imports of chicken in Cuba (16%), Guatemala (4%), Bahamas (2%), Saint Lucia
(1.6%), Grenada (1%) and Antigua and Barbuda (0.7%) (see figure 276).
In the region Mexico was the leading importer of pig meat (72%), while imports to Cuba were
also large in relative terms (5%).
289
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LAC: VALUE OF POULTRY MEAT IMPORTS (Millions of dollars)Figure 276
SOURCE: FAOSTAT 2004.
20021990
50 100 150 200 250 300
Trinidad and Tobago
Dominica
Antigua and Barbuda
Honduras
Peru
Grenada
Saint Vincent and the Grenadines
Panama
Suriname
Saint Lucia
Bahamas
Jamaica
Haiti
Colombia
Guatemala
Cuba
Mexico
1 2 3 4 5 6 7 8
Venezuela
Chile
Paraguay
Belize
Uruguay
Bolivia
Nicaragua
Brazil
Dominican Republic
Argentina
Ecuador
El Salvador
Costa Rica
Guyana
Saint Kitts and Nevis
Barbados
D. INTERNATIONAL TRADE FISHERY PRODUCTS
The regional international trade in fishery products is growing strongly. In 2001, external sales
of these products amounted to almost US$ 7 billion, accounting for 11% of the sector’s total
exports and 2% of the total value of goods exported by the all the countries of the region. In
several cases the share of fishery products in total merchandise exports was even larger: Panama
(31%), Peru (16%), Ecuador (15%), Guyana (13%), Bahamas (11%) and Chile (11%).
Considering fishery imports are negligible in all countries, accounting, as a regional average,
for just 0.3% of total goods imported in 2001, and 3% of sectoral imports. Fishery products
represented 1% of total merchandise imports in four countries only (Barbados, Grenada, Saint
Kitts and Nevis and Saint Lucia). Outside of the island states, the largest share of total external
purchases was in Colombia (0.6%).
As a result, the fishery trade balance is large and growing, based almost entirely on the value
of exports (see figure 277).
290
LAC: BALANCE OF TRADE OF THE FISHERY SECTOR (Millions of dollars)Figure 278
1980 1990 2001
SOURCE: FISHSTAT plus.a/ Salmons.
Aquatic animals and mammals
Cephalopods
Crustaceans
Molluscs
Other marine products
Demersal fish
Diadromousa and freshwater fish
Pelagic fish
2.100
1.600
1.100
600
100
-400
SOURCE: FISHSTAT plus.
LAC: EXTERNAL TRADE IN FISHERY PRODUCTS (Millions of dollars)Figure 277
198
0
198
1
198
2
198
3
198
4
198
5
198
6
198
7
198
8
198
9
199
0
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
200
0
200
1
0
1.000
2.000
3.000
4.000
5.000
6.000
7.000
8.000
Trade balance
Exports value
Imports value
The most significant change in the composition of the regional surplus resulted from the
development of salmon production in Chile starting in 1988. In the 1980s the structure of
the regional trade surplus had been based on broadly the same components, mainly crustaceans
(shrimp) and pelagic fish (canned and in the form of fish meal). During the 1990s the
contribution to the trade surplus made by diadromous and freshwater fish (salmonidae) grew
exceptionally strongly, as Chile’s salmon trade surplus grew from US$ 7 million to US$ 940
million between 1987 and 2001. At the same time, the regional trade surplus in crustaceans,
pelagic fish and other marine products also expanded. Consequently, the regional trade
surplus in fishery products as a whole widened from US$ 2.8 billion in 1990 to US$ 5.9 billion
in 2001 (see figure 278).
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Partly due to the low level of consumption per capita, the region has a surplus in all product
categories. In 2001, the main components of the subsectoral trade surplus continued to be
crustaceans and pelagic fish (34% and 25%, respectively), with diadromous fish accounting for
another 14% (see table 57).
Chile produces the leading share of the fishery trade surplus, mainly as result of its remarkable
development of salmon farming, but also with trade surpluses in pelagic fish, molluscs,
marine animals and seaweed. Peru also has a large share, based essentially on its trade
surplus in pelagic fish (60% of the regional surplus in this category). The surplus in Argentina
is based on crustaceans, demersal fish and cephalopods (octopus and squid); whereas that
in Ecuador is largely the outcome of sales of canned crustaceans and pelagic species.
Many of the island states have trade deficits in fishery products, thereby revealing a demand
not satisfied by domestic supply in a productive sector of particular importance given the
situation of these countries (see figure 279).
Table 57
Product Exports Imports Trade balance Growth rate (%)
(Thousands of dollars) (Thousands of dollars)
TOTAL 6,949 100.0 6.4 8.5
1,785 329 1,455 31.9 3.9 8.0
309 152 156 14.8 1.1 6.2
969 126 842 12.2 17.6 31.9
2,119 75 2,043 4.8 13.7
220 27 192 13.9 16.7
219 29 189 7.3 13.5
44 1 43 -1.7 8.9
69 10 58 1.0 1.0 13.8 15.5
1,212 280 932 27.1 8.6 5.2
Share (%)
SOURCE: FAO/RLC based on FISHSTAT plus.a/ Salmons.
(1990-2001)
Exports Imports Exports Imports
LAC: EXTERNAL TRADE IN FISHERY PRODUCTS 2001
Pelagic fish
Demersal f ish
Diadromousa and freshwater fish
Crustaceans
Cephalopods
Molluscs
Aquatic animals and mammals
Aquatic plants
Other marine products
5,9151,033
17.4
25.7
100.0
4.5
13.9
3.2 2.7
0.6 0.1
30.5 7.3
3.2 2.9
292
Exports
Fishery exports have maintained their pace of growth over the last two decades; expanding by
6.0% per year in the 1980s and by 6.4% in the 1990s. Nonetheless, there have been significant
changes in the composition of exports. Until 1990, 69% of external sales corresponded to the
two traditionally important groups in the region’s fishery exports, namely crustaceans and
pelagic fish (basically in the form of fish meal). By 2001, in contrast, those two groups accounted
for just 57%, while diadromous fish had expanded to 14% of the total (see figure 280).
LAC: BALANCE OF TRADE IN FISHERY PRODUCTS 2001, BY COUNTRY(Millions of dollars)
Figure 279
SOURCE: FISHSTAT plus.
20011990
Dominican RepublicJamaica
BarbadosBolivia
Saint LuciaHaiti
Saint Kitts and NevisParaguayDominica
Antigua and BarbudaSaint Vincent and the Grenadines
BelizeGrenada
Trinidad and TobagoSuriname
Guatemala
BrazilEl Salvador
CubaNicaragua
GuyanaBahamas
VenezuelaUruguay
HondurasCosta RicaColombia
PanamaMexico
EcuadorArgentina
PeruChile
-100 400 900 1400 1900
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LAC: EXPORTS OF PELAGIC FISH (Millions of dollars)Figure 281
SOURCE: FISHSTAT plus.
1980 1990 2001
EcuadorOthers
Peru
Chile900800700600500400300200100
The growth of salmon exports has been the most significant change in the region during the
period. In 1997, US$ 15 billion worth of diadromous and freshwater fish were exported; by 2001,
the figure had risen to US$ 970 billion. Practically all of this increase corresponded to salmon
exports from Chile (US$ 937 million).
Exports of the pelagic fish were concentrated mainly in Peru and Chile (essentially fish meal).
During the 1980s, these exports grew rapidly in both countries, especially in Chile; over the
past decade, Chilean exports of pelagic fish stabilized, while the category grew exponentially
in Peru (see figure 281).
SOURCE: FAO/RLC based on FISHSTAT plus.
LAC: COMPOSITION OF FISHERY EXPORTS (Percentage)Figure 280
1990
Cephalopods 1%
Crustaceans38%
Demersal fish 9%Other marineproducts 13%
2001
Pelagicfish31%
Molluscs 3%
Aquatic animalsand mammals 0.1%
Aquatic plants 1%
Diadromousa andfreshwater fish 4%
Crustaceans31%
Pelagicfish26%
Cephalopods 3%
Aquatic animalsand mammals 1%
Aquatic plants 1%
Diadromous andfreshwater fish 14%
Demersal fish 4%Other marineproducts 17%
Molluscs 3%
a/ Salmons.
294
Crustacean exports had grown rapidly in Ecuador during the 1980s; but export growth was halted
by serious diseases that attacked shrimp farming in that country, and external sales had declined
by 2001. On the contrary, there were exceptionally large increases in Argentina and Mexico, which
regained their 1980 levels, but on a different base (see figure 282).
The geographic distribution of mollusc exports also changed dramatically during the last decade,
growing strongly in Chile and, to a lesser extent, in Argentina and Peru. Mollusc exports in
Mexico declined, however (see figure 283).
LAC: EXPORTS OF CRUSTACEANS (Millions of dollars)Figure 282
1980 1990 2001
SOURCE: FISHSTAT plus.
Mexico
Argentina
ColombiaHonduras
Panama
Others
Venezuela Ecuador
Brazil600
500
400
300
200
100
LAC: EXPORTS OF MOLLUSCS (Millions of dollars)Figure 283
1980
140
120
100
80
60
40
20
Others
1990 2001
SOURCE: FISHSTAT plus.
Peru Chile
Argentina
Mexico
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Cephalopod exports also grew significantly. In 1990, the external sales in this category amounted
to US$ 43 million, and by 2001 the figure had reached US$ 220 million, most of which (US$ 149
million) represented exports from Argentina.
Country shares in fishery exports
Despite significant changes in the composition of exports, the different countries have seen only
minor changes in their regional shares. The change in the structure of fishery exports from Chile
did not cause a major change in this country’s share of total regional exports (see figure 284).
LAC: IMPORTS OF FISHERY PRODUCTS (Millions of dollars)Figure 285
1980 1990 2001
SOURCE: FISHSTAT plus.a/ Salmons.
400
300
200
100
Diadromousa and freshwater fish
Demersal fish
Other marine productsMolluscs
Cephalopods
Aquatic animals and mammals
Crustaceans Pelagic fish
Aquatic plants
SOURCE: FAO/RLC based on FISHSTAT plus.
LAC: COUNTRY SHARES OF FISHERY EXPORTS (Percentage)Figure 284
1990
Chile28%
Ecuador14%
Peru12%
Mexico11%
Others17%
Argentina10%
Brazil 4%
Colombia 4%
2002
Chile28%
Others14%
Argentina14%
Mexico10%
Peru16%
Ecuador10%
Brazil 4%
Panama 4%
Imports
In Latin America and the Caribbean, fishery imports essentially correspond to intra-regional trade
flows and generally involve small amounts. Until 1992, annual import values were below US$ 500
million, but by 2001 they had risen to US$ 1 billion. The increase occurred in the three categories that
were already relatively important, namely pelagic fish (mostly canned and fish meal), demersal fish
(hake or similar), and “other products” (mainly frozen or canned fish); and also among the diadromous
fish category, especially reflecting intra-regional trade in Chilean salmon (see figure 285).
296
Balanza Comercial
Valor de las Exportaciones
Valor de las Importaciones
SOURCE: FAO/RLC based on FAOSTAT.
LAC: EXTERNAL TRADE OF THE FORESTRY SECTOR (Millions of dollars)Figure 286
198
019
81
198
219
83
198
419
85
198
619
87
198
819
89
199
019
91
199
219
93
199
419
95
199
619
97
199
819
99
200
020
01
200
2
-2.000
-1.000
0
1.000
2.000
3.000
4.000
5.000
6.000
7.000
Trade balance
Value of Exports
Value of Imports
E. FORESTRY PRODUCTS
Balance of trade in forestry products
In 2002, forestry exports from Latin America and the Caribbean accounted for 8% of exports
in the broadly defined agricultural sector and 1.5% of total goods exported. Imports represented
17% of the sectoral total, and 1.6% of total merchandise imports. From 1998 to 2002, exports
have held steady at just over US$ 5 billion, and imports at around US$ 6 billion, thereby generating
a deficit of roughly US$ 1 billion per year41.
The figures for international trade in forestry products have a small weight in the regional
average; but their relative importance is greater in certain countries. In Chile, for example,
forestry products account for about 8% of external sales, in Uruguay and Guyana about 6%, and
in Brazil 5%.
During the 1980s, forestry exports grew by an average of 7.3% per year, especially driven by
Brazilian exports of manufactured products (pulps and fibres, paper and paperboard), while
Chilean exports also grew in smaller amounts. During that decade, characterized by economic
recession and shrinking domestic demand across most of the region, imports did not grow at
all, and actually declined (-1.2% annually), such that the initial deficit of US$ 1 billion was steadily
absorbed and by the end of the decade there was a surplus of US$ 300 million. During the 1990s,
the import side expanded rapidily at the rate of 7.6% per year, driven mainly by an increase in
Mexican paper imports. In addition, the pace of export growth eased to 5.1% per year, following
a slowdown in sales from Brazil and Chile especially after 1995. Consequently, the balance
declined again and, as mentioned above, the region has recorded an annual deficit of around
US$ 1 billion since 1998 (see figure 286).
41 Exports of forestry products are estimated at over US$ 7 billion in 2003.
297
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SOURCE: FAO/RLC based on FAOSTAT.
LAC: COUNTRY SHARE OF FORESTRY IMPORTS AND EXPORTS 2002 (Percentage)Figure 287
Chile30.7%
Mexico 3.6%
Uruguay 2.1%
Brazil48.6%
Others 5.9%
Colombia 1.9%
Peru 2.0%
Argentina 5.2%
Exports Imports
Mexico37.5%
Brazil12.9%
Others13.5%
Colombia 5.5%
Argentina 4.6%
Costa Rica 4.4%
Chile 4.2%
Peru 4.0%
Venezuela 3.8%
DominicanRepublic 3.5%
Guatemala 3.3%
El Salvador 2.6%
As much as 80% of the region’s forestry exports originate in Brazil and Chile (49% and 31%,
respectively), but imports are more widely distributed. Mexico is the leading importer, accounting
for 38% of the total (see figure 287).
The trade balance is concentrated in a few of the countries of the region, with most of the surplus
generated by Brazil and Chile, although Uruguay and Guyana also show significant national
surpluses. The deficit is concentrated in Mexico in absolute terms; but is also relatively large
in Saint Kitts and Nevis, and Saint Vincent and the Grenadines, as well as in Central American
countries except Nicaragua.
The overwhelming majority of the countries run trade deficits in forestry products; but for the
region as a whole these are compensated by the surpluses generated by Chile and Brazil. Chile
runs a surplus in all categories, while Brazil compensates for its deficit in newsprint with a
surplus in the other forestry product categories. This country is also the world’s largest producer
and exporter of short-fibre paper, which is manufactured from eucalyptus. There are also four
countries that are almost in balance or have small surpluses in their forestry-product trade,
albeit involving much lower figures than those of Brazil or Chile: Uruguay, Guyana, Argentina
and Suriname (see figure 288).
As exports are very small in Central America and the Caribbean, import trends control the level
of the deficit, which represents a significant proportion of overall merchandise imports in both
of these subregions. External purchases of forestry products in Central America accounted for
2.8% of total merchandise imports in 2002, 1.9% in the Latin Caribbean and in 2.2% CARICOM
(see figures 289, 290 and 291).
298
LAC: BALANCE OF TRADE IN FORESTRY PRODUCTS BY COUNTRY (Millions of dollars)Figure 288
SOURCE: FAO/RLC based on FAOSTAT.
20021990-2,000 -1,500 -1,000 -500 0 500 1,000 1,500 2,000
Mexico
Costa Rica
Colombia
Dominican Republic
Venezuela
Guatemala
El Salvador
Peru
Trinidad and Tobago
Jamaica
Panama
Cuba
Ecuador
Honduras
Barbados
Saint Vincent and the Grenadines
Bahamas
Haiti
Saint Lucia
Bolivia
Paraguay
Antigua and Barbuda
Nicaragua
Dominica
Saint Kitts and Nevis
Belize
Suriname
Argentina
Guyana
Uruguay
Chile
Brazil
SOURCE: FAOSTAT.
CENTRAL AMERICA: EXTERNAL TRADE OF THE FORESTRY SECTOR (Millions of dollars)Figure 289
198
019
81
198
219
83
198
419
85
198
619
87
198
819
89
199
019
91
199
219
93
199
419
95
199
619
97
199
819
99
200
020
01
200
2
-400
-200
0
-600
-800
200
400
600
800
Value of imports
Trade balance
Value of exports
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The regional relatively small trade balance stems from a deficit in paper and paperboard which
more than cancels out the surplus in all the other categories, in both primary and processed
products (see table 58).
SOURCE: FAOSTAT.
CARICOM: EXTERNAL TRADE OF THE FORESTRY SECTOR (Millions of dollars)Figure 291
198
019
81
198
219
83
198
419
85
198
619
87
198
819
89
199
019
91
199
219
93
199
419
95
199
619
97
199
819
99
200
020
01
200
2
-200
-100
0
-300
100
200
300
400
Value of imports
Trade balance
Value of exports
SOURCE: FAOSTAT.
LATIN CARIBBEAN: EXTERNAL TRADE OF THE FORESTRY SECTOR (Millions of dollars)Figure 290
-400
198
019
81
198
219
83
198
419
85
198
619
87
198
819
89
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019
91
199
219
93
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419
95
199
619
97
199
819
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200
020
01
200
2
-200
-100
0
-300
100
200
300
400
Value of imports
Trade balance
Value of exports
300
Exports
During the 1980s, the main categories exported were pulp and fibres, paper and paperboard,
and sawn wood; since the last decade the exports of wood panels also became important (see
figure 292).
Only manufactured products (pulps and fibres, and paper and paperboard) increased in the
1980s, mainly reflecting the buoyancy of paper exports from Brazil; foreign sales of pulp and
fibre expanded in this country and in Chile.
During the 1990s, pulps and fibres were the most dynamic category, mainly in Chile (where
exports in this category now almost match those of Brazil); these two countries account for
practically all of the regional total.
The 1990s also saw the start of a prosperous export process in non-timber forestry products,
valued at over US$ 250 million for 2002, mainly in Brazil, Peru, Bolivia and Argentina.
Exports of paper and paperboard were weaker, mainly because Brazilian sales slumped by nearly
half. This decrease was partly offset by a stronger export performance in other countries—Chile
particularly, but also Mexico and Colombia.
LAC: EXTERNAL TRADE OF THE FORESTRY PRODUCTS (2002)Table 58
Exports Imports Trade balance Share (%) Growth rate (%) (1990-02)
Product Millions of US$ Exports Imports Exports Imports
Total 5,222 5,506 -283 100.0 100.0 5.1 7.6
Paper and paperboard 933 3,728 -2,795 17.9 67.7 0.9 8.5
Pulp and fibres 2,096 739 1,357 40.1 13.4 7.1 4.3
Sawn wood 1,233 529 704 23.6 9.6 6.2 4.6
Wood based panels 837 487 349 16.0 8.9 -2.5 5.0
Industrial roundwood 121 20 101 2.3 0.4 8.4 11.7
SOURCE: FAO/RLC based on FAOSTAT 2004.
LAC: VALUE OF FORESTRY EXPORTS (Millions of dollars)Figure 292
1980
2.500
2.000
1.500
1.000
500
Industrial roundwood
1990 2002
SOURCE: FAOSTAT.
Wood based panels Sawn wood
Pulp and fibres
Paper and paperboard
301
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Most of the increase in exports of panels was generated by Brazil; Chilean exports of this
category grew rapidly, but from a lower initial base.
Sawn wood export were strong in Brazil and Chile, but those from Honduras, Mexico, Argentina
and other countries were also significant.
Geographic distribution of forestry exports
Forestry exports in Latin America and the Caribbean are heavily concentrated in Brazil and
Chile. In recent years other countries have recorded export growth in different products, albeit
on a smaller scale. External sales of paper and paperboard increased in Mexico, Colombia,
Argentina and Uruguay; foreign sales of wood panels were also significant in Argentina and
Peru; as were sawn wood exports in Peru, Argentina, Honduras and Mexico. Nonetheless, export
growth in Brazil and Chile has been much more dynamic, and regional exports in this subsector
are continuing to concentrate in these two countries (see figures 293, 294, 295, 296 and 297).
LAC: VALUE OF FORESTRY EXPORTS (Millions of dollars)Figure 293
SOURCE: FAOSTAT 2004.
20021990
500 1,000 1,500 2,000 2,500 3,000
Cuba
Bahamas
Trinidad and Tobago
Belice
Suriname
El Salvador
Panama
Nicaragua
Costa Rica
Guatemala
Bolivia
Guyana
Paraguay
Honduras
Venezuela
Ecuador
Colombia
Peru
Uruguay
Mexico
Argentina
Chile
Brazil
200 400 600 800 1,000
Dominica
Barbados
Antigua and Barbuda
Saint Kitts and Nevis
Saint Vincent andthe Granadinas
Saint Lucia
Jamaica
Grenada
Dominican Republic
Haiti
302
LAC:VALUE OF EXPORTS OF PAPER AND PAPERBOARD (Millions of dollars)Figure 294
SOURCE: FAOSTAT 2004.
20021990
Guatemala
Costa Rica
Panama
El Salvador
Peru
Venezuela
Uruguay
Argentina
Colombia
Mexico
Chile
Brazil
100 200 300 400 500 600
LAC: VALUE OF EXPORTS OF PULP AND FIBRES (Millions of dollars)Figure 295
SOURCE: FAOSTAT 2004.
20021990
Dominica
Uruguay
Belize
Mexico
Argentina
Chile
Brazil
200 400 600 800 1,000 1,200
303
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LAC: VALUE OF EXPORTS OF WOOD-BASED PANELS (Millions of dollars)Figure 296
SOURCE: FAOSTAT 2004.
20021990
100 200 300 400 500
Cuba
Bolivia
Guatemala
Peru
Colombia
Ecuador
Chile
Brazil
Argentina
Paraguay
Costa Rica
Mexico
Nicaragua
Suriname
LAC: VALUE EXPORTS OF SAWN WOOD (Millions of dollars)Figure 297
SOURCE: FAOSTAT 2004.
20021990
100 200 300 400 500 600
Trinidad and Tobago
El Salvador
Belize
Panama
Costa Rica
Suriname
Colombia
Venezuela
Guatemala
Nicaragua
Uruguay
Guyana
Paraguay
Ecuador
Bolivia
Mexico
Honduras
Argentina
Peru
Chile
Brazil
304
Forestry Imports
In the 1980s forestry imports stabilized at around US$ 2 billion, in the midst of a contraction
in domestic demand throughout Latin America and the Caribbean caused by the external
debt crisis and ensuing adjustment programmes. During the 1990s, on the other hand,
forestry imports grew vigorously (7.6%), thanks especially to increases in paper imports in
Mexico, Brazil, Argentina, Chile, Peru, Dominican Republic and the Central American
countries (see figure 298).
Having hardly grown at all during the 1980s (0.9% per year), imports of paper and paperboard
expanded by 14% in 1991 and by a further 32% in 1992; after which they maintained strong
growth until 1997 before stabilizing, thereby demonstrating a high income-elasticity of demand.
Although the growth in paper imports was quite widespread in the region, it was mostly
concentrated in Mexico and in Central America (see figure 299).
LAC: VALUE OF FORESTRY IMPORTS (Millions of dollars)Figure 298
1980
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
Industrial roundwood
1990 2002
SOURCE: FAOSTAT 2004.
Wood based panels Sawn wood
Pulp and fibres
Paper and paperboards
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LAC: VALUE OF IMPORTS OF PAPER AND PAPERBOARD (Millions of dollars)Figure 299
1980
1,400
1,200
1,000
800
600
400
200
Brazil
MexicoCARICOM
Latin Caribbean Southern Cone
Andean countriesCentral America
1990 2002
SOURCE: FAOSTAT.
LAC: VALUE OF IMPORTS OF PULP AND FIBRES (Millions of dollars)Figure 300
1980
350
300
250
200
150
100
50
Brazil
MexicoCARICOM
Latin Caribbean Southern Cone
Andean countriesCentral America
1990 2002
SOURCE: FAOSTAT 2004.
Imports of the other processed product, pulp and fibres, were smaller in amount and concentrated
exclusively in Mexico. During the 1990s, the latter imports in this category increased, as did
those of Brazil, Colombia and Venezuela (see figure 300).
306
LAC: VALUE OF IMPORTS OF WOOD-BASED PANELS (Millions of dollars)Figure 301
1980
Brazil
MexicoCARICOM
Latin Caribbean Southern Cone
Andean countriesCentral America
1990 2002
2,500
2,000
1,500
1,000
500
SOURCE: FAOSTAT 2004.
250
200
150
100
50
LAC: VALUE OF IMPORTS OF SAWN WOOD (Millions of dollars)Figure 302
Brazil
MexicoCARICOM
Latin Caribbean Southern Cone
Andean countriesCentral America
SOURCE: FAOSTAT 2004.
1980 1990 2002
Imports of primary forest products are relatively insignificant. Purchases of wood panels
grew rapidly in Mexico from 1999 onwards, since when have accounted for half of the region’s
total imports in this category, which expanded at annual rate of 5% during the last decade
(see figure 301).
The other category in which regional imports achieved significant levels is sawn wood, having
expanded by 4.6% per year over the last decade, boosted particularly by higher imports in
Mexico, Jamaica and the Bahamas (see figure 302).
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The heavy concentration of forestry imports in Mexico is also reflected in each of the specific
product categories (see figures 304, 305, 306 and 307).
Geographic distribution of forestry-product imports
External purchases by the leading importer of forestry products, Mexico, have continued to
grow rapidly during the last decade, as has also occurred in most countries of the region. Only
in Cuba, Ecuador, Panama, Bahamas, Belize and Antigua and Barbuda have forestry imports
stagnated or declined (see figure 303).
LAC: VALUE OF FORESTRY IMPORTS (Millions of dollars)Figure 303
SOURCE: FAOSTAT 2004.
20021990
500 1,000 1,500 2,000 2,500
Saint Kitts and NevisSaint Lucia
GuyanaSaint Vincent and the Grenadines
Suriname
BoliviaDominica
Belice
NicaraguaAntigua and Barbuda
Haiti
BarbadosParaguay
El Salvador
BahamasUruguay
HondurasTrinidad and Tobago
JamaicaGuatemala
Dominican Republic
Costa RicaArgentina
Chile
PanamaPeru
Ecuador
ColombiaCuba
Venezuela
BrazilMexico
10 20 30 40
Saint Kitts andNevis
Saint Lucia
Guyana
Saint Vincent andthe Grenadines
Suriname
Bolivia
Dominica
Belice
Nicaragua
Antigua andBarbuda
Haiti
Barbados
308
LAC: VALUE OF IMPORTS OF PULP AND FIBRES (Millions of dollars)Figure 305
SOURCE: FAOSTAT 2004.
2002199050i 100 150 200 250 300 350
Guatemala
Panama
Cuba
Costa Rica
Uruguay
Ecuador
Peru
Argentina
Venezuela
Colombia
Brazil
Mexico
LAC: VALUE OF IMPORTS OF PAPER AND PAPERBOARD (Millions of dollars)Figure 304
SOURCE: FAOSTAT 2004.
20021990
200 400 600 800 1,000 1,200 1,400
Mexico
Colombia
Ecuador
Brazil
Venezuela
Chile
Panama
Cuba
Costa Rica
Guatemala
Peru
Argentina
Dominican Republic
Jamaica
Trinidad and Tobago
Honduras
Uruguay
Paraguay
El Salvador
Nicaragua
Haiti
Bahamas
Barbados
Bolivia
Suriname
Belice
Guyana
Dominica
Saint Vincent and the Grenadines
309
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LAC: VALUE OF IMPORTS OF WOOD BASED PANELS (Millions of dollars)Figure 306
SOURCE: FAOSTAT 2004.
20021990
500 1,000 1,500 2,000 2,500
Bahamas
Belize
Dominica
Argentina
Honduras
Saint Vincent and the Grenadines
Uruguay
Barbados
Costa Rica
El Salvador
Panama
Trinidad and Tobago
Cuba
Dominican Republic
Peru
Jamaica
Venezuela
Colombia
Brazil
Mexico
310
LAC: VALUE OF IMPORTS OF SAWN WOOD (Millions of dollars)Figure 307
SOURCE: FAOSTAT 2004.
20021990
50 100 150 200 250
Dominica
Panama
Haiti
Antigua and Barbuda
Peru
Uruguay
Argentina
Colombia
Barbados
Venezuela
Cuba
Bahamas
Saint Vincent and the Grenadines
El Salvador
Trinidad and Tobago
Jamaica
Brazil
Dominican Republic
Mexico
The development of Latin American and Caribbean forestry trade has been strongly linked to
the pace of economic growth, and demonstrates high import elasticity with respect to income.
Progress has been driven by changes in legal and institutional frameworks, supported by
economic integration and technical training. The forces with potential to fuel this trade in the
future include the development of new financial mechanisms and productive chains.
The countries of Latin America and the Caribbean face common problems in forestry trade
development—mainly high levels of deforestation, illegal felling, forest fires and pests,
compounded by high production costs stemming from institutional and infrastructural
shortcomings.
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V. CONCLUSIONS AND POLICY ORIENTATIONS
314
A. INTRODUCTION
This final chapter discusses the trends and challenges analysed above, in order to draw lessons
and policy orientations. The intention is not to conclude with specific recommendations or “recipes”
that can be applied across the board to solve the problems identified; for each society will take the
decisions as best sulted to their country. Instead the aim is to draw on the analysis of the foregoing
chapters to contribute to a collective reflection about the key challenges that agriculture faces in
Latin American and Caribbean countries, and about the orientations of agricultural policy, its
chief characteristics, possible new instruments and how to make them viable; changes in agents
and relations, and other elements that are potentially useful in defining plans of action and
programmes for agricultural and rural development.
B. THE GLOBAL CHALLENGE: GROWTH WITH EQUITY
Over the past 25 years, the countries of Latin America and the Caribbean have endured severe
crises and made profound structural reforms in their economies; they have also undergone far-
important political change. This process has been anything but linear, continuous and
homogeneous; in several cases there have been major setbacks and repeated recessions. The
process has also not been homogeneous; the diversity of experience during this period embraces
much of the spectrum ranging between economic orthodoxy and heterodox alternatives laced
with pragmatism. The forms of the various cases have been varied, and even today there are
huge differences between individual countries. Nonetheless, in the final analysis, there is clearly
a high degree of convergence and even an element of synchronization in the changes that are
unfolding. Adjustment for economic stabilization and the main structural reform processes
have both been widespread across the region (see chapters I and II).
Although this is partly explained by the relatively common initial level of development among the
Latin American and Caribbean economies, constraints arising from the international setting have
also played an increasingly important role. Based on extraordinary technical progress, particularly
in telecommunications and information technology, economic globalization has emerged as the
defining feature of the direction of change in the socioeconomic development process and in future
prospects. This reflects not only the rapidly growing importance of international trade, which now
accounts for a quarter of world output, but also the transnationalization of economic and productive
processes themselves, involving production-processing-consumption chains that transcend national
borders, and capital flows that offer unparalleled opportunities for development financing and
broad scope for productive investment. But this also entails high levels of uncertainty, vulnerability
and instability.
Government policies are becoming increasingly homogeneous, both for structural reasons and
because of international commitments and competitive demands. Moreover, private enterprises,
which carry out activities are heavily influenced by the globalization of financial and trade
circuits, tend to pursue broadly similar strategies.
315
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Economic openness, trade and financial liberalization, privatization, deregulation, the priority
given to macroeconomic fundamentals, and emphasis on the role of the market in allocating
productive resources, are all features of the development model that are not only shared by most
countries of the region, but largely reflect a rationale that transcends policy choices.
Notwithstanding the constraints arising from this exogenous backdrop, however, policy
orientations still have considerable scope for action and undeniable relevance, not only in
making the most of the opportunities that arise and minimizing adverse economic impacts,
but also to improve equity, maintain local control over ways of life and preserve cultural identity.
At a time of relatively more favourable prospects in the medium-to-long term, the huge scale
of the challenge facing Latin American and Caribbean countries needs to be recognized. They
need to regain a sustained growth path in a setting that includes highly influential factors that
are beyond their control (requiring strict discipline in resource management); and, at the same
time, urgent needs arising from the huge social deficits that have accumulated through time
can longer be ignored.
As discussed in the preceding chapters, one of the most worrying features of the current
economic paradigm, with negative effects on economic growth and equity alike, is the fact that
a large part of the population tends to be excluded from development processes. While
globalization dissolves borders and fosters multiple linkages in economic growth, the regional
structural heterogeneity breaks these processes up, blocking and distorting resource use and
preventing numerous agents from participating in economic circuits. Ultimately, this excludes
a large part of the population from current streams of progress.
Latin America is the most unequal region in the world; and in recent decades, far from improving,
the regional income distribution has actually become even more concentrated. Worsening
inequality might be understandable if it reflected an initial deepening of market relations in
the move towards a more global economy, since groups with greater capacities can integrate
more efficiently. But trends towards greater concentration have persisted even in countries
where gross domestic product has been growing on a sustained basis for several years. The
current growth model is not leading Latin American countries towards the more equitably
income distributions prevailing in developed countries; on the contrary, high levels of
concentration in the distribution of family income are being perpetuated and are spreading in
the vast majority of the region’s countries.
Children in poor families have less access to opportunities in terms of education, training and
healthcare; and they grow up in depressed economic environments lacking in infrastructure
and services. Economic heterogeneity and transmission of poverty from one generation to the
next are thus the main difficulties in overcoming the structural problems of underdevelopment
and ensuring widespread access to acceptable minimum levels of well-being for the population
at large. It is essential to achieve a development model that eliminates exclusion and generates
employment and income opportunities for the large mass of the population that lives in poverty,
and thus reverse the trend towards exclusion. This does not mean aspiring to a homogeneous
society, which is totally unrealistic, but certainly much greater equality of opportunity than
prevails today.
316
In the last few years, several studies have shown that, far from being mutually exclusive,
economic growth and equity reinforce each other. Resource allocation alternatives that are
exclusive in the short run carry less weight than complementarity in the long term42.
Bottlenecks in human resources, and in physical and service infrastructure, generate
heterogeneity in production, economic polarization, environmental deterioration and social
exclusion, with the result that much of the population is excluded from the progress that
economic growth brings in its wake. Such constraints also hinder efficient exploitation of
national resources, prevent domestic saving from playing a larger role in the financing of
development, and heighten social tensions—thereby also generating a climate of political
instability, social violence and problems of governance, which undermine the potential for
sustained economic growth.
From a medium- and long-term perspective, achieving greater equity is not negatively related
to the pace of economic growth; in fact the two processes are mutually stimulating. Yet, when
differences in access to assets, education, health, services, consumption and citizenship are
perpetuated from one generation to another, the economic growth process produces a polarizing
dynamic that diverges from equal opportunities and continuously widens economic and social
differences, thereby undermining the growth base.
Sustained economic progress requires sustainable use of resources and efficient participation
by the population through democratic institutional arrangements. Moreover, political democracy
needs to be sustained by social democracy; and this, in turn, is only possible in a solidarity-
based society, where equal opportunities contribute to social mobility and coexistence amidst
inevitable inequalities.
The challenge is to address the urgent needs of the majority of the population that lacks
minimum acceptable levels of well-being, while, at the same time, continuing to increase growth
rates in a sustainable manner. These two goals—poverty alleviation and growth—can be targeted
through various concrete policies; but incorporating the population at large into the benefits
of progress, and solving investment needs (with both domestic and external saving) to finance
rapid and sustainable growth, will be at the centre of the region’s development agenda.
42 Bibliography: among other articles“What is the evidence on income inequality and development”, Irman Adelman, California Agricultural ExperimentStation, Giannini Foundation of Agricultural Economics, University of California, April 1989.“Inequality does cause underdevelopment: New evidence”, William Easterly, Center for Global Development, January2002.“New ways of looking at old issues: inequality and growth”, K. Deininger and L. Squire, Journal of Development Economics,vol 57, 1998.“The vicious cycle of inequality in Latin America”, T. L. Karl, October 2002.“Economic Growth and Income Inequality: Reexamining the Links”, K. Deininger and L. Squire, 1998.“Has income distribution really worsened in the South? And has income distribution really worsened between the Northand the South?”, P. Rodas-Martini and L. Cifuentes, Human Development Report, 2001.“Sorpresas distributivas después de una década de reformas: Latinoamérica en los Noventas”, M. Székely and J. L.Londoño, Inter-American Development Bank, 1998.“Income distribution, poverty and social expenditure in Latin America”, J. A. Ocampo, ECLAC Review 65, August 1998.“Possibilities and limitations for the reduction of poverty in Latin America”, Social Panorama of Latin America, 2001-2002, ECLAC, 2002.
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C. COMPONENTS OF DEVELOPMENT POLICY
Simultaneous pursuit of the recovery of sustained economic growth and improvements in equity
require a complex strategy involving: an economic policy designed to promote inclusive development;
a full range of social policies and universal coverage of basic services; human capital support
programmes; institutional development and strengthening of social capital; citizenship rescue
actions that reduce exclusion; and targeted support.
The first condition for reducing poverty and marginality involves the restoration of rapid and
sustained economic growth. Recession or stalled output growth fuels unemployment, diminishes
the capacity and reach of social policies, and undermines opportunities to obtain higher incomes
through self-employment. In such conditions, poverty spreads in the absence of viable strategies
to counteract these negative effects.
Rapid and sustained economic growth is necessary for reducing poverty and exclusion, it is not
sufficient in itself. The current development model is highly polarizing and causes income to
become increasingly concentrated in the most economically privileged segment of the population.
In such conditions, it is hard for corrective mechanisms, such as targeted public spending, to
alter the polarizing effects of income concentration from outside the economic process.
Government measures to promote equity are futile if the production and distribution process
constantly intensifies concentration, and societies reproduce and strengthen polarization.
Economic policy design is a basic tool in the fight against poverty; and in the coming years it
will be necessary to take explicit account of its influence on variables affecting investment and
employment, and to incorporate policy orientations that promote the creation of quality jobs
along with measures to reduce poverty and inequality.
A large proportion of poor and indigent people are excluded from economic processes and the
incentives that stem from national output growth. In addition to an economic policy that
promotes inclusion, complementary social policies are needed to reduce exclusion. Investments
to improve education, health, training and the conditions of social participation among population
groups living in poverty (considering the family unit as a whole in its community surroundings),
along with the development of programmes to expand coverage of social services, are
unquestionable priorities in such policies. People living in conditions of poverty also need
assistance to broaden their access to productive resources.
Achieving efficiency in policy design implementation entails reorganizing productive and
distributive processes, to adapt them to the new development conditions. New types of agents
need to be developed—both public and private—along with new forms of relationship and a better
regulatory framework. This institutional development means more efficient modalities for
gaining access to and using natural resources, markets, financing, and both formal and informal
standards.
Direct, targeted, temporary and transparent support can be provided to respond to current
urgencies, resolve the most serious deficiencies, and avoid cumulative deterioration among
poor families.
Targeted programmes to develop productive capacities among excluded population groups, as a
potential exit from other forms of support that are necessarily temporary.
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The marginality suffered by low-income population groups is often more than economic; as
well as exclusion from goods and labour markets, such groups also tend to be excluded from
social programmes and are affected by a variety of other problems that prevent them from a
normal participation in social life. Accordingly, citizenship rescue programmes are needed
that help this population group participate more fully in social policy decision making.
D. THE AGRICULTURAL AND RURAL DEVELOPMENT POLICY APPROACH
Within this broad strategy, it is essential to recognize that rural-urban polarization still persists
as a fundamental expression of income concentration, inequality of opportunities and the
intergenerational transmission of poverty in Latin American and Caribbean countries. Although
most poor people and nearly half of those who are indigent live in the cities, the impact of
poverty is far greater in rural areas. Two thirds of the rural population live in poverty, and almost
two fifths in conditions of indigence.
In all of the countries of the region, rural exclusion has generated extensive areas of poverty, where
lack of infrastructure, communications and services seriously discourages investment, Severely
fragments development and tends to propagate polarization. The combination of large masses of
rural poor, without training, education or minimum conditions of subsistence, compounded by
the absence of a policy committed to the environmental sustainability of development, has generated
a negative dynamic where poverty and loss of productive potential are becoming increasingly
serious problems across broad areasof different countries of the region, provoking environmental
degradation and disintegration of the national development base.
Broadly speaking, rural areas function as a mechanism for absorbing unemployment and
underemployment, by providing modes of subsistence to population groups that are excluded from
the main currents of the prevailing development model. The rural sector thus serves as a stabilization
factor offering special conditions that combine productive activities with the family unit and
community life, to offer adequate survival strategies based on very low monetary incomes.
The pitiful conditions endured by most of the rural population stand in strong contrast to the
modernity being achieved in many spheres of Latin American and Caribbean development. This
massive expression of underdevelopment has its pallid reflection in welfare indicators, which are
clearly unfavourable to the rural sector in terms of education, health, sanitation services and
conditions of life generally. Moreover, in rural areas there is less social mobility, and opportunities
for progress are scarce. Nuclei of “core” poverty tend to consolidate in rural zones because the
children of poor rural families have fewer opportunities in education, training and health; and
they grow up in depressed economic environments, lacking in infrastructure and services. Not
only are they poorer to start with, they also make less progress.
The fragmentation of urban-rural development has been accompanied by gender fragmentation.
Rural women suffer segregation in labour markets, where their pay is systematically lower, and
they also face discrimination in access to credit and landownership.
Poverty is particularly severe among indigenous peoples; and the fact that such population
groups are also subject to exclusion to an even greater degree has rendered several traditional
communities economically unviable. As the ways of life and modes of organization of indigenous
communities are closely linked to the rural domain, poverty relief which continues to rely mainly
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on migration to the cities is likely to entail the loss of cultural and social heritage among such
communities, and the vast diversity of ways of life in the Latin American and Caribbean
countryside will be diminished.
Although the task of rural development reaches far beyond the domain of agricultural production,
agricultural policy nonetheless plays a fundamental role in any strategy. While rural development
implies a diversification of employment sources and greater vertical integration among economic
activities in rural areas, there is a direct relation—a positive dynamic—between agricultural and
non-farm rural incomes. Although the need persists to reallocate human resources of very low
productivity currently in the rural area, the simplistic belief that industry will generate job
opportunities and incomes has been superseded by an approach which, rather than viewing the
two sectors as antagonistic, stresses their links. The competitiveness that matters encompasses
the whole production-processing-trade-consumption chain. Such global systemic competitiveness
largely depends on the macroeconomic context and degree of inter-sectoral coordination; it is
not a question of seeking relative advantages for individual products in isolation. What is
essential is to construct and develop the competitiveness of the system as a whole, including
various forms of inter-sectoral integration and territorial coordination.
The competitive capacity of agriculture, and the profitability of sectoral activities, do not depend
on indicators of rural productivity alone. Agronomic progress is always desirable, and it is essential
to exploit the wide-ranging potential for returns if available technologies were to become more
widespread. But to achieve rapid and sustainable agricultural growth, it is essential to address
elements that fall outside the remit of agricultural technology and farmers’ capacities, such as
those caused by changes in the international setting and in the macroeconomic framework, or
shortcomings in infrastructure and services, among others.
Agricultural policy needs to be consistent with a broader vision that embraces vertical integration
with other sectors, and linkages with other policies in the rural domain. Nonetheless, sectoral
policy alone is clearly unable to cope with the scale of the problems and challenges facing the
rural sector. It is essential to define a rural development strategy—as a recognized national
priority—and to build social consensus on the modalities and costs of the main policies, evaluated
in terms of solutions to the key national problems. Policy design needs to embrace intersectoral
relations and the land-based approach to development.
An extension of the development approach must also encompass the rural development strategy
itself. The territorial basis of development should not be confined merely to the rural sector,
but should make the most of linkages with small urban centres and the intermediate city system.
More than a rural development strategy, what is needed is an urban-rural development strategy
that exploits the multiple possibilities available to the rural population for economic activity
originating in relatively neighbouring population clusters—both in terms of demand for goods
and services and access to markets, and in terms of possibilities for the provision of inputs and
financing. The last few years, in particular, have highlighted the potential of migrant workers’
remittances in this regard.
The strategy to transform and revalue the rural areas calls for a sustained drive to develop basic
infrastructure, such as electricity, transport or communications, in addition to support for
productive investment in various sectors.It is also essential a broad participation in social policy—
especially in education, health, food security and the provision of basic utilities—as part of a
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strategy for human capital investment and rebuilding of rural institutions, within a dynamic of
social capital development (broadly defined to encompass the different modes and mechanisms
of relationship between agents, the norms governing such relations, and development among
agents themselves through forms of representation and empowerment).
E. THE ROLE OF AGRICULTURAL AND RURAL DEVELOPMENT
Recently, rural development has once again been attracting the attention of national authorities
and international organizations, but for reasons other than the traditional arguments in defence
of agriculture that adduce the importance of certain specific products, or paternalistic arguments
related to small-scale producers. The latter are now seen as obsolete and lacking in bargaining
power vis-à-vis macroeconomic or financial priorities. The current emphasis on productivity
and competitiveness, reduction of the State and the new international setting, have shifted the
axes of potential agricultural policy towards the creation of conditions to absorb technical and
productive capital, and the promotion of an urban-rural development process that aims to reduce
poverty by creating jobs and generating local incomes.
As the foregoing chapters have shown, agricultural and rural development has major potential to
foster economic growth, equity and conservation of the environment. In recent years, consensus
on this potential has been growing. Agricultural and rural development has formed a central part
of national strategies in the region’s countries. It has also gained a high priority on the agendas
of various international organizations, not only FAO and other specialized agencies, but also
multilateral banks, such as the Inter-American Development Bank (IDB) and the World Bank43.
The new argument in favour of agricultural and rural development differs from earlier demands
on behalf of the rural sector and the peasant economy—which at times were little more than
rhetoric—in two key respects: the scope of the new approach, and the role assigned to it within
economic and social development.
The new approach has several key dimensions:
i) It supersedes the narrow sectoral view that focused on primary agricultural production alone, and
instead highlights the importance of intersectoral coordination and the concept of the agribusiness
sector, emphasizing productive chains and product systems.
ii) Rural development is no longer seen as depending on agricultural progress alone; non-farm
economic activities have a key role to play.
iii) Various forms of linkage between the rural and urban economies are highlighted.
iv) As a corollary of the three preceding elements, policy agents and instruments will also be
different.
There are also substantial differences in terms of its role within overall economic and social
development. Aside from the debate on the multifunctional nature of agriculture, which could
be biased by the backdrop of trade negotiations, the vision of agricultural development in Latin
America and the Caribbean is being expanded beyond the narrow sectoral framework, to
43 See, for example, documents arising from FAO, “World Food Summit”, “World Food Summit Five Years Later”, IFPRI“2020 Vision”, “The Path Out of Poverty” and “Strategy for Agrifood Development in Latin America, 2000” of the IDBand World Bank.
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encompass the fundamental inter-relationships that exist between agriculture and possibilities
for transformation and revaluation of the rural domain to solve key national problems.
The performance of agriculture has effects that go beyond sensitive product markets; in the
reality of the production chains prevailing in most of the region’s countries, agriculture is an
essential element in building systemic competitiveness and enhancing trade and agribusiness
integration. It also affects natural resources as the environmental basis of development, beyond
their direct productive potential, and plays a significant role in overcoming regional imbalances,
and in the territorial organization of development. Agriculture is also fundamental in providing
opportunities for large segments of the population that live in rural areas, and in exploiting
programmes to alleviate rural poverty.
The agriculture and rural development policy affects fundamental areas including the following:
i) Food supply and food security: in addition to the essential nature of food availability, lower
prices benefit poor population groups in particular, most of whose spending goes on such goods.
ii) Real incomes, through food prices; and overall systemic competitiveness, through greater
exploitation of the natural resource base, and its effect on wage and raw materials costs.
iii) Job creation and income generation among population groups that tend to be excluded from
modern commercial circuits.
iv) Poverty reduction, achievement of greater equity and progress towards more equal
opportunities.
v) Incorporation of extensive zones that are currently excluded from the economic growth
process; overcoming regional imbalances, and the territorial management of development.
vi) Improvements in environmental sustainability, and sustainable exploitation of natural
resources. Erosion, desertification, deforestation and loss of genetic wealth are all closely linked
to poverty and exclusion in rural areas, and to the technological orientations of the corresponding
productive processes.
vii) Recovery of cultural wealth, and its relation to the preservation of natural environments.
F. INSTITUTIONAL DEVELOPMENT AND STRENGTHENING OF SOCIAL
CAPITAL
An initial requirement of sectoral policy is that it should be consistent with macroeconomic policy.
Not only is this a prerequisite for policy to be effective, rather than merely a statement of intentions,
it is also the way to take explicit account of factors that are beyond farmers’ control, such as the
exchange rate, interest rates, or requirements for public expenditure and investment. It is also
necessary to remain alert to growing macroeconomic volatility and the effect of such changes,
which are sometimes abrupt, on conditions for agricultural and rural development.
Allocation of productive resources through market mechanisms, combined with the State’s new
role in development and progress in administrative decentralization, require agricultural policy
to be highly participatory. Policy design, implementation and evaluation are tasks that should
be approached jointly by public-sector bodies and civil-society stakeholders, taking special
account of fiscal constraints, the weakness of public structures and the need for the private
sector to expand its action in rural areas.
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It is also essential to seek specific means to give rural inhabitants greater decision-making
capacity and enable them to become genuine protagonists in the development process. These
requirements also underscore the priority need to rebuild rural institutions in keeping with the
new conditions of Latin American and Caribbean development.
The abrupt withdrawal of government and the numerous institutions that performed multiple
activities in support of agriculture, in conjunction with the drastic change that has occurred
in forms of competition in agricultural production, on national and international markets alike,
has radically altered relations between agents and provoked sudden obsolescence among rural
institutions.
Nonetheless, the process of correcting that policy has certainly not been an organized search
for rationality in economic policies, in particular because the external debt crisis and subsequent
adjustment to achieve macroeconomic stabilization caused a sudden drain on the State’s
financial capacities. The economic crisis also resulted in the collapse of the State. The overblown
institutional framework that supported agricultural development was dismantled more because
it could not be maintained, than in response to criteria of economic rationality in the civil
service. The various institutions in charge of agricultural programmes were eliminated or
drastically downsized, before suitable private-sector replacements could be found.
The initial assumption in those early years of adjustment was that if macroeconomic balances
were kept stable, the private sector could satisfy demands for sectoral development. Soon
afterwards, the thesis of State subsidiarity made it clear that there were significant areas where
State action was irreplaceable, and that it should intervene exclusively in cases where the market
failed: public goods, externalities, natural monopolies, asymmetric information, economies of
scale, and so forth. In the last few years, this negative definition of the areas of State intervention—
by exclusion from situations that the market can resolve on its own—has been enhanced by a
positive definition of State activities that can help the market become more efficient. This has
led to the realization that areas of action exist where a proactive policy, compatible and consistent
with market mechanisms rather than contrary to them, can achieve positive results.
In situations where the participation of economic agents is highly unequal, as is the case in
rural zones, markets lose competitiveness and their efficiency and capacity to resolve productive
problems. As a result, they become mechanisms that accentuate polarization, requiring
complementary interventions to keep their outcomes within acceptable levels of equity.
Recognition of the huge inequality of opportunities endured by the rural population justifies
a set of differential policies to correct this situation. To support restructuring among the farming
population, the rural institutional framework needs strengthening to support and enhance the
process of investment in social and productive infrastructure and human capital, with a view
to generating productive jobs of a very different type (both in farming and non-farming activities).
State intervention is fully justified in the provision of public goods; or in situations where there
are significant externalities attached to private action; and in measures aimed at reducing
transaction costs, especially for small-scale producers. Similarly, a deliberate policy is needed
to enhance systemic efficiency, create conditions for competitiveness in the medium term and
achieve more effective exploitation of the natural resource base. In Latin American and Caribbean
countries the State has played a key role in the development of productive infrastructure such
as irrigation, and also in transport, communications and marketing infrastructure. Such
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development does not necessarily have to be financed exclusively with public funds; but State
action is crucial in providing stimulus, organization and financial support for these activities.
It is essential to develop a new institutional framework for agricultural policy that allows for
participation and exploitation of initiatives from different stakeholders: small- and large-scale
producers, family farmers, indigenous groups, traders, entrepreneurs, investors, government
and non-governmental institutions. In particular, it should have the capacity to mobilize
producers to overcome the legal, political, economic and cultural obstacles that restrict their
development possibilities. The key task of institutional development is to increase efficiency
and reduce uncertainty. The challenge consists of building institutional forms that can strengthen
and channel social and private initiatives, ensuring that these have access to information, a
long-term perspective, and bargaining capacity.
This is a question of promoting development among the various agents and enhancing the forms
and mechanisms by which they interrelate, through better rules and forms of organization. It
includes reforms that are pending within the State modernization process, such as a deepening
of decentralization to include effective transfer of economic resources and technical capacities
to decentralized government mechanisms, strengthening of intermediate support and coordination
mechanisms, increasing the capacity of civil society to supervise State action, and development
of mechanisms for building consensus with private agents.
The strengthening of social capital and governance capacity among local authorities, as part
of a wide-ranging decentralization process, is emerging as the alternative with greatest potential
to raise the efficiency of local development policy, coordinating representative organizations
of society, and strengthening social capital to boost the efficiency of skilled human resources
in the public domain. Technical support for decentralized mechanisms, and strengthening their
orientation towards operations closely coordinated with producers and other civil society
stakeholders, will thus be clear priorities in rebuilding the rural institutional framework.
In short, to respond to the new development orientations, agricultural policy needs to be neutral
with respect to relative prices and highly participatory. It should not be confined merely to the
promotion of primary production, but must respond to markets demands and the linkages and
ties with agribusiness and agri-commerce processes. It should also stress investment in human
capital, reduction of transaction costs for small-scale producers, their participation in the rural
(or urban-rural) development strategy, and pertinent differential needs. Consideration should
also be given to the complementary aspects of development from the standpoint of the national-
global dynamic. A key aspect is the construction of new rural institutions (in the broad sense
of the term), within a process of social capital strengthening that gives viability to a new
agricultural and rural dynamics.
G. NEW POLICY INSTRUMENTS
Although many of the old sectoral policy instruments were done away with during the adjustment
phase, they have not been adequately replaced; yet needs persist, in the financing system and
in marketing, for example. Other areas, such as animal health and plant protection systems
require major redesign and strengthening. The development of institutional capacity to fulfil
commitments arising from the Agreement on Sanitary and Phytosanitary Measures also needs
special attention; and the institutional framework for agricultural research and rural extension
needs adaptation to become more efficient and spread technical progress more widely.
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Furthermore, new priorities have arisen, such as the need for information systems and support
for more effective international involvement.
The new market-based policy strategy excludes many of the tools of traditional agricultural
policy that are inconsistent with the macroeconomic framework or with the commitments and
exigencies of international integration. It also rejects measures which have a distorting effect
on relative prices, along with non-transparent global subsidies. Constraints relating to the
availability of fiscal funds are also tending to direct policy choices towards cofinanced actions
that are inexpensive to administer.
New policy instruments constitute significant institutional development in themselves. This
is not limited to organizational changes in the public sector, or to a mere shifting of
responsibilities towards the private sector; it also encompasses the rules and mechanisms of
interaction that determine the ways in which social stakeholders interact. The establishment
of policies—and the laws and mechanisms that give them validity and make them operational—
is thus a clear example of institution development.
Nonetheless, these new policy instruments also require specific institutional modalities and
developments that differ radically from those of traditional agricultural policy, yet are crucial
for achieving policy objectives. Just as important as obtaining funding for the new instruments
is the need to design mechanisms that attract widespread support and participation from the
various stakeholders, and which can reach the target population while complying with established
regulations and operating with low administrative costs.
The new instruments involve highly participatory programmes executed in decentralized fashion;
they are consistent with the constraints of the macroeconomic framework and the exigencies
of international participation, as well as with other efforts to achieve greater intersectoral
integration. They also provide a complementary basis of support for rural poverty reduction
programmes.
The broad scope of rural development policy includes several key areas:
The regulatory framework governing international trade
There is a burgeoning agenda in priority agriculture and food issues that transcend national
boundaries, such as trade negotiations, agreements on investment, animal health, plant
protection, food safety and quality, and environmental sustainability. Systems of rules and
regulations need alterations in a wide variety of areas, to bring them into line with international
standards and create coordination mechanisms at the appropriate levels. In complementary
fashion, subregional and bilateral integration agreements are proliferating. Economic
globalization is rapidly erasing the separation—in space and time—of phenomena that affected
development in various countries, giving way to increasing inter-relationship. A major area of
the agricultural and rural development policy in the countries of Latin America and the Caribbean,
is to obtain international consensus and trade negotiations to achieve more favourable trading
the political and technical strengthening in the negotiations to eliminate or meningfully reduce
subsidy and commercial protection mechanism in developing countries is fundamental.
Special efforts are also needed to develop analytical instruments for ex-ante and ex-post estimations
of the effects of economic and trade integration agreements. Such instruments would make it
possible to design programmes to exploit new opportunities, by lifting the various barriers that
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restrict export potential. This would also make it possible to design policies and programmes to
minimize the economic and social costs of productive restructuring. Specific disputes that
sometimes tend to dominate integration processes in the short term need to be resolved within
a broad development vision and with a long-term perspective.
Property rights and market development
At the national level, an initial sphere of action involves the development of markets for the
main factors of production: land, natural resources, labour, capital and technology—including
steps to establish a clear framework of property rights over land, water, biodiversity, forests,
technological patents, and so forth. Conditions also need to be established to foster the
development of rural financial markets, and to regulate the rural labour market, since both
display special characteristics. The efficiency of these markets largely depends on institutional
development.
The viability of having policy instruments in place for those factors of production—which have
a key influence on both competitiveness and agricultural profitability—depends firstly on the
real existence of the respective markets and their efficiency in coordinating the corresponding
supply and demand, within a legal framework that clearly establishes the scope and limitations
of rights, procedures to negotiate them (contracts), and forms of regulation for their beneficial
exploitation.
Only within such a framework is it likely to be possible to implement instruments that are
compatible with market mechanisms, and which encourage the social use of such productive
factors while achieving better results in terms of productivity, competitiveness, equity,
environmental sustainability, and the other goals of agricultural development.
Security in land tenure, access to titling, reduction of the transaction costs generated by
bureaucratic procedures, explicitness and trust in commercial mechanisms for the sale and
rental of land, together with clear rules making it possible to regulate its beneficial exploitation
on a sustainable basis, and thus optimize economic results, requires specific institutional
growth that is essential for agricultural development. This involves creating legal and
administrative rules, while also generating information systems and providing training to the
people involved.
In countries where land ownership is still heavily concentrated and there are many unproductive
large estates (latifundios), it is important to promote agrarian reform processes that draw on
the positive and negative experiences that exist in the region. For examplemeasures such as
loosening of fiscal constraints or direct targeted support for the poorest families could also be
included.
Property rights over water extend far beyond the agricultural and rural development framework.
As an essential resource par excellence, demands for more and better quality water for urban
consumption, agriculture, mining, industry and electric power generation are expanding rapidly.
It is becoming essential to optimize water use—sequentially or on an alternative basis—for
widely differing purposes. The way water resources are exploited has a major effect on regional
development. Watershed conservation and management, typification in terms of the degree
and scope of water rights, transparency in processes of awarding such rights, water resource
management, user organization and training, and education of the public at large, also pose
major challenges for institutional development.
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In fishery activity, some of the regional economies are attempting to introduce the transferable-
fishery-quota system which assigns “property rights”, allowing purchase, sale or rental of the
right to participate in a regulated fishing area. This system is based on the assumption that
those who hold the right to exploit a fishery will also want to ensure that it is managed efficiently
and sustainably, since the economic value of the right depends directly on the fishery performance.
Nonetheless, efforts made to introduce this quota system have been opposed by small-scale
fishermen, labour organizations, boat owners and fish processors.
Concessions are a pillar of development in the forestry sub-sector; yet various studies have
suggested that governments in many cases receive less than 50% of forest rents and often much
less than this. Possibly there are better ways to promote development of the forestry industry,
increase exports and facilitate access to forestry land for poor rural populations. Key aspects
of concessions policy need to be reviewed, such as the type of charges applied (rates based on
surface area or volume, taxes, etc), the duration of concession contracts, procedures to prevent
or minimize corruption, and the degree of competition promoted in forestry markets.
Agricultural development programmes
The new conditions of regional economies have invalidated agricultural policy measures aimed
at controlling relative prices. The technical assumptions that underpinned this policy have been
long superseded in the new approaches to development, and by evidence arising from more
recent experiences. The widely assumed price inelasticity of agricultural supply has been shown
to be false, especially considering effects on the reallocation of productive, human, technical
and natural resources in anything other than the short term. The economic liberalization process
resulted in the elimination of multiple exchange rates, differentiated tariffs, quantitative trade
barriers and export taxes. In the absence of control over foreign trade that made it possible to
regulate local prices, domestic trade was also set free; official prices and subsidies were
suppressed; and most interventions that distorted relative prices were eliminated. This has
resulted in the suppression of taxes and retentions, thereby affording the market greater freedom
to set prices. Nonetheless, while the behaviour of demand and prices normally responds to
conditions that are beyond the control of the region’s countries, there is still plenty of room for
countries to take measures aimed at enhancing competitiveness to be able to face market
challenges on a better footing. Measures for infrastructure development, provision of services,
access to financing and markets, and reduction of transaction costs, could play an important
role in this regard.
The design of such instruments, along with their forms of execution, relationships with agents
participating in the various economic and administrative domains, and adaptation to each
practical reality, are among the institutional development efforts that will make it possible to
implement an agricultural policy that is consistent with the region’s new development model.
Recognition of the role of microeconomic policies assumes that the domain of productive activities
is the market economy—not defined by the theoretical paradigm of pure and perfect competition,
but imposed as an objective reality. It also recognizes that the State’s role is not only to fulfil non-
economic functions and take responsibility for the macroeconomic framework. The false State vs.
market dichotomy has been rejected, and the usefulness of the State in developing markets and
making them more efficient is now recognized.
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The spontaneous effects of changes in relative prices on agricultural production can be severely
hampered by market failures and by the unfavourable “climate” that still persists in many of
the region’s economies. The opportunity provided by higher prices in several productive sectors
is occurring at a time of serious economic difficulties for producers, severe financing constraints
and significant distortions in market operations. To maximize the positive effects of trade
liberalization and economic integration, it is essential to develop an agricultural policy which
assures that better prices are actually perceived by farmers, and that these have capacity for
productive response.
Agricultural policy—with the collaboration of all agents involved—therefore needs to overcome
the bottlenecks that exist in credit, marketing, infrastructure, services, phytosanitary and
zoosanitary requirements, quality standards, management systems, market information,
technical assistance and input supply. Only within such a policy can producers benefit from
better relative prices and harness the stimulus thus provided to raise productivity and increase
production.
The reduction of public investment channelled into agriculture following crises and adjustment
processes, seriously impaired sectoral development. The impact was felt particularly in the
rural domain because public investment—in communications, electrification, basic services,
etc—also acted as a major stimulus to private investment. The simultaneous reduction in the
availability of public services compounded by financing difficulties discouraged investments
still further. In some areas, such as irrigation, the systems for operating and managing existing
infrastructure were also drastically altered.
To promote the capitalization of agriculture, programmes could be designed for investments
that are cofinanced between the State and farmers, in order to raise investment levels in targeted
areas. Generally speaking, this is a matter of establishing the possibility of subsidies or bonuses
within guidelines that are consistent with sector development priorities. A wide range of
potential new policy instruments exists in this area, consistent with the macroeconomic
framework and with the exigencies of international participation44.
Subsidies to develop irrigation
Irrigation projects give rise to major externalities and require substantial regulation; and
financing them normally requires loan conditions that are tied to the potential to be developed.
Generally speaking, investments of this type generate high economic and social returns; and
several countries have implemented irrigation development programmes that subsidize part
of the cost of the respective infrastructure.
For example, Chile has a programme that subsidizes up to 75% of the total cost of irrigation,
drainage or mechanization projects. Both property-based and other civil works projects are
covered, and individual owners, organizations, agricultural enterprises, cooperatives, irrigation
associations, and so forth, can all submit bids. The subsidy is only paid when the works are
finished and have been approved; and the projects to be supported are selected on the basis of
competitive bidding. There are two categories of bidding process: one for projects promoted by
44 The examples given refer to Chile and Mexico, where a study has been carried out on this subject. There are a numberof similar programmes in other countries. Roughly US$ 3,000 in the programme in Mexico. To receive the subsidy, the newly forested area must be accredited by a qualified professional, and have a managementplan approved by the corresponding official body (in Chile, this is the National Forestry Corporation).
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agricultural entrepreneurs and another for those involving small-scale producers (in the latter
case, bids are submitted through the Agricultural Development Institute, INDAP).
Projects are awarded points based on expansion of the irrigated area, or the productive potential
to be achieved, and in terms of lowest cost per hectare. In projects submitted by agricultural
entrepreneurs, the size of the private contribution in relation to the total project cost also has
considerable weight in the points score. This means that the subsidy paid in entrepreneurial
projects is well below 75%.
In the last few years, over 10,000 projects have been submitted and roughly 5,000 have received
subsidies. Approximately 250,000 hectares of irrigated land have been incorporated into business
agriculture, along with nearly 200,000 hectares to the benefit of 65,000 small-scale producers.
In Mexico, the Rural Alliance (Alianza para el Campo) programme, contains a wide variety of
agricultural and rural development support mechanisms, including programmes to encourage
capitalization. In general, the State’s role is limited to setting the rules and establishing procedures
for granting subsidies, while the various operations are carried out directly among the agents
involved. Within the promotion of investment in irrigation works, there are a number of programmes
for promoting private investment (the Fertilizer and Irrigation program “Ferti-irrigación”,
agricultural technification using pumped irrigation, and a programme to recover salinated soils).
Subsidies for mechanization.
Alianza para el Campo also provides support for the purchase and repair of agricultural machinery.
In this case the respective commercial arrangements are made directly between farmers and
enterprises that sell or repair machinery (tractors, seed sowing machines, levellers, specialized
tools, etc); the Federal Government provides 20% of the cost of new machinery, up to an established
maximum45; and the government of the respective federative state provides an additional 10%.
For major machinery repairs, the Federal Government contributes 30% of the cost (up to a
maximum of roughly US$ 600), with the state government contributing a further 15%.
Subsidies to priority product groups
Alianza para el Campo also runs programmes that assist with seed purchase, technology transfer,
or plant protection with respect to various priority crops (ornamental horticulture, citric crops,
palm oil, coconut palm, cotton and soybeans), and also livestock production.
The Federal Government subsidizes up to 40% of the costs of establishment or rehabilitation
of grazing land sown with grasses or pulse vegetables, and investment in infrastructure (fencing,
drinking troughs, pumping equipment and transport piping, weighing scales, anti-tick dips,
etc). The state government contributes a further 10%. Other programmes provide subsidies to
purchase and import animals of high genetic quality. On average, subsidies account for between
35% and 40% of the total cost.
Subsidies for reforestation projects
Chile has one of the largest areas of planted forest in the region, and forestry exports are one of
the leading product lines in its foreign trade. State incentives for private investment have played
a leading role in the development of this sector. Over the last 20 years, about 2 million hectares
45 Roughly US$ 3,000 in the programme in Mexico.
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of land have been forested, with slightly over half of this area benefiting from fiscal support
through subsidy mechanisms totalling just over US$ 200 million.
The subsidy is provided on a once-only basis in respect of the corresponding land area,
reimbursing 75% of the net costs of forestation (preparation of the land, purchase of plants,
workers’ wages, net costs of pruning and thinning, etc). The proportion rises to 90% in projects
making use of depleted soils on steep slopes46. Support of this type has provided a solution to
the problems of obtaining finance for such long-term projects, thereby making it possible to
complement forestry development based on investments by transnational enterprises, particularly
targeting the pulp and paper industry.
A number of negative externalities have been identified in this sector, relating to biodiversity
loss or increased soil acidity, in addition to the displacement of certain population groups. But
such problems are not inevitable in forestry projects. There are also significant positive
externalities: environmental ones, stemming from the recovery of soils and protection against
erosion; and economic ones, stemming from jobs created in activities among suppliers and in
product processing.
Marketing support
The transition from a closed economy with prices that were regulated at all stages of production
systems—managed prices for the producer, agribusinesses and final consumers—to a more open
market economy, has posed a major challenge for the agricultureof the region. In most countries,
the public body responsible for setting such prices and for regulating the domestic and
international market has either disappeared altogether or else has been stripped of most of its
powers. Tariff protection has also been rapidly lowered as a result of sub-regional integration
processes— in some cases negotiated with compensation measures47.
In the case of Mexico, support modalities were established in the context of its admission to
NAFTA, which made it possible to compensate buyers for paying an agreed domestic price that
was above the price of the corresponding imported product. The amount of the support covers
the difference between the international and domestic prices, in both cases including the
respective marketing costs. The body responsible for these support mechanisms, ASERCA,
neither buys nor sells, but operates exclusively to provide the support needed to keep prices in
line with those on the international market.
In addition, ASERCA maintains an information system, in both printed and electronic form,
which publishes products of varying frequency: a website, daily price bulletins, weekly specialist
bulletins, a monthly magazine, and so forth.
It also supports farmers’ operations in markets.
Rural financing
One of the most complex problems still to be solved in agricultural development policy is its
financing. In the 1990s, stabilization and adjustment policies caused the demise of traditional
forms of agricultural credit, which was usually granted by State-owned banks and characterized
by negative interest rates, unpaid debts and debt cancellation. These systems entailed high
fiscal costs and involved major conflicts of efficiency, equality and transparency.
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46 To receive the subsidy, the newly forested area must be accredited by a qualified professional, and have a managementplan approved by the corresponding official body (in Chile, this is the National Forestry Corporation).47 For example, PROCAMPO in Mexico, or the commitment to increase public expenditure on agriculture in Chile.
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A large percentage of rural producers depended on informal financing sources, and continue
to do so nowadays. Among such sources, supplier credit has grown significantly, in addition
to agro-industrial and commercial financing for farming products, and remittances sent
by emigrated workers. Several countries have developed microfinancing systems supported
by NGO’s.
Developing efficient credit mechanisms are targeting the search on flexible solutions that
combine formalization of existing financing sources with a new regulatory framework that
supports efficiency and transparency, and incentives for microcredit and complementary actions
by development banks. More than an agricultural credit mechanism, the aim is to develop rural
financial systems that encompass credit, insurance and saving. The inclusion of mechanisms
to capture savings could open up better alternatives for channelling remittances into productive
investment, and would also allow for broader financial coverage and better knowledge of
customers. This, in turn, could reduce transaction costs and information asymmetries, thereby
increasing synergy in the different activities of the system. Progress in the construction of such
systems basically depends on institutional development that promotes participatory mechanisms
subject to clear regulations, and government support to foster the necessary trust.
Progress in terms of the recognition and stability of property rights over land, subject to
principles of efficiency and equity in land tenure, are also important mechanisms for expanding
access to credit and developing rural financial markets.
Research and technology transfer systems
The basic design criteria for crop and livestock technology transfer and research systems also
require significant institutional development. The objectives here are as follows: open systems,
where universities participate along with other public- or private-sector bodies, either national
or international, involved in agricultural research and technology transfer; competitive systems,
funded by the State and other financing agencies (multilateral banks, regional research funds,
international cooperation) on the basis of results and achievement; dynamic systems, with
capacity to respond to the challenges of domestic and external competition; environmentally
sustainable systems, i.e. with technological proposals that help arrest the deterioration of natural
resources; and decentralized systems that ensure participation from producers and other private
stakeholders and provide opportunities for them to contribute to the financing and orientation
of activities.
In addition, lack of funds and the expanding scope of demands for technology, to incorporate
commercial, agribusiness and management aspects are giving rise to a new national agricultural
technology systems (NATS) paradigm which include the following lay characteristics:
(i) Separation of research financing policies from the actual execution of the research activities.
The first of these concerns the major priorities of technology policy, whereas the second is a
matter of efficiency and management.
(ii) Institutional plurality of NATSs, encompassing universities, NGOs, producer organizations,
etc. This reflects a diversification of financing sources for research and development activities.
33148 Examples are the “kilo for kilo” or “pound for pound” programmes.
(iii) Increasing use of competitive funds by the different types of NATS agents, especially
competitive grants.
(iv) Concentration of public funds for research into technology of public use, basic and strategic
research, (long-term research with uncertain results), research into technologies for small-scale
producers, research on natural resources, etc.
(v) Institutional autonomy combined with periodic accountability (research contracts). Process-
based financing is giving way to results-based financing.
(vi) Organized participation by producers and agribusinesses in research plans, assignment of
priorities, financing and evaluation. Institutional modalities in this respect may vary widely:
partial financing activities, participation in the governance of research institutions, contractual
relations, etc.
(vii) Change in the linear relationship between research and transfer. The traditional vertical
link between the technical expert and the farmer, in a specific product line, is rendered obsolete
by the realization that technical assistance is a complex educational process that needs to be
set in the farmers’ own logic of survival and progress. This requires direct participation by
producers and their organizations, along with NGOs and other private institutions in both
formal and informal types of partnership, promoting information dissemination and feedback
mechanisms. It also involves moving from a mere “production culture” towards a “business
culture”. Certain combinations with development programmes may yield highly favourable
results. For example, there are programmes that subsidize the difference between a kilogram
of certified or enhanced seed and a kilogram of grain produced by the farmer, in order to promote
technological change48.
There are also a number of alternatives for expanding the bases of financial support for NATSs.
In many cases, agreements are reached with the private sector, through foundations, to
complement existing resources and capacities. The marketing of research products and services
is thus far an underexploited alternative. The sale of research products by public-sector or
mixed-ownership institutions , charging a royalty of some kind for products subject to intellectual
property protection, is being successfully promoted by a number of institutes in the region. A
plant variety is created, with protection under the legislation on seeds, and this is placed on
public tender for exploitation by private enterprise for a given period of time, in accordance
with current legislation.
Incomes can also be generated by selling services that are not research activities strictly speaking,
such as soil analysis, agrochemical testing, and other diagnostic activities. Nonetheless, such
cases would only be justified where surplus capacity exists and the income can be used to help
finance research activities. Specific circumstances aside, however, it would be better to sell surplus
capacity in order to prevent research institutions being diverted from their specific purpose.
To enable the rural poor population to access such services on a more widespread basis, specific
modalities of rural technical assistance will need to be established that differ significantly
from traditional agricultural extension activities. The traditional agriculture extension scheme
attempts to make farmers aware of efficient technology that is already validated and available
within the technology generation system. This knowledge transfer is then complemented by
specific support to help producers adopt such technology . The results achieved by this approach
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are very limited, however, in the case of low-income rural population groups, which generally
lack a profitable and competitive agricultural project and do not have the means to adopt pre-
existing technology packages.
Peasant farming economies have very diverse forms of interaction with the market, combining
commercial production with self-consumption activities, together with income generated outside
the family farm. Although agricultural activities are a major pillar of the system, their coexistence
with numerous non-farm activities means that it is the overall set of activities that gives the
rationale to the survival strategy.
Recognizing this reality, rural extension modalities are moving away from the traditional view of
agricultural extension. Instead, the aim is to provide technical assistance to enhance productivity
in the various income-generating activities carried out by farmers, families. This requires support
from the demand side of technical assistance; i.e. help for communities to translate their
knowledge of problems and assistance needs into specific technical assistance demands.
On the supply side, it is essential to strengthen capacities, in order to overcome the inertia that
tends to direct support towards agricultural technologies and neglect other possibilities.
Technical assistance capacity needs to match the diversity that exists in demand. Moreover,
technical support for agricultural production should not be restricted to primary production
activities, but should also emphasize marketing, value-added and management, among other
aspects. Consideration should also be given to demands for technical support in non-farm
activities (including linkages with activities outside the community that play a part in the
population’s survival strategy through remittances or services).
Efficient tools are needed to operate the technical assistance support system, including subsidy
modalities (partial, temporary and transparent), community control over the service, the most
efficient mechanisms (farmer to farmer, etc); and monitoring and evaluation systems, including
impact evaluation, which involves measuring the change in productivity or profitability resulting
from technical support, compared to progress achieved by farmers that do not receive such support.
Direct producer support
The underlying justification for direct support to agricultural producers is its capacity to promote
income growth, sometimes on a cumulative basis, while recognizing that the country-city
polarization remains an expression of unequal opportunities and a fundamental mechanism
for intergenerational transmission of poverty. Perhaps the best example in the region is
PROCAMPO, in Mexico, which has channelled direct support amounting to some US$ 1 billion
benefiting around 3 million producers per year49.
Such direct support has the advantage of raising living standards according to the exclusive
criteria of the beneficiaries themselves. Results achieved in terms of improving the family’s
human capital, capitalizing the family farm, or making some immediate productive use of the
funds received, stem from autonomous decisions.
These transfers do not distort trade; the amount of the support is not tied to production or to changes
in market prices, and they are fully funded from fiscal resources, without any transfer from consumers.
They therefore comply fully with international commitments.
49 In the case of PROCAMPO in Mexico, a justification exists in the sense of seeking to ensure that producers of basiccrops continue to receive, through this new direct channel, the equivalent of the subsidies that were paid through priceguarantee systems, which have had to disappear under the rules of membership of the North Atlantic Free TradeAgreement (NAFTA).
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The subsidies are targeted and transparent, and the fact that they are established with a known
time-limit allows decision making to take this into account.
The targeting of support requires a beneficiary register to be created, which raises the problem
of discrimination between different population groups and runs the risk of political cronyism.
H. INSTITUTIONAL CHANGES FOR THE NEW POLICY INSTRUMENTS
The establishment of decentralized and participatory policy instruments, operating in support
of the market, clearly represents a major step forward from previous policies that tended to be
vertical, narrow, paternalistic, bureaucratic and inefficient. Although these new instruments
no longer spawn bureaucratic growth, they naturally require agent relationships that allow for
effective deconcentration of decision-making and genuine participation. Elimination of the
bureaucratic entity that embodied traditional policy thus forces the new policies to address the
social dimension and rebuild rural institutions.
In traditional agricultural policy a key role in policy implementation was usually played by a
government agency. These were specialized by field of action, type of support, or even branch
of production; and they were often exclusively oriented towards productive development. Their
mode of operation was essentially vertical—from the government body down to the beneficiaries.
In such circumstances, the internal regulations of the entity in question, and its administrative
procedures, resulted in policy decisions being made through a specialized technical team.
Efficiency in implementation, and consistency with other policies, was also the responsibility
of the government agency—a task that was made easier by its relatively narrow sectoral focus.
Among the new agricultural policy orientations, with instruments that are intended to enhance
the functioning of the market, policy goals are firmly anchored in economic relations themselves.
This requires policy to be designed on analytically very sound foundations, and shared with the
various stakeholders involved in policy implementation: central government, decentralized
government bodies, producer organizations, NGOs, etc. This setting, and the rationale of the policy
itself, require a broader view of objectives that takes account of intersectoral linkages and
consistency within the economic rationale of the various stakeholders. The need for governance
capacity on the part of the State is therefore much greater.
What was previously resolved through relatively simple bureaucratic procedures now requires
much more complex institutional development and is more demanding in terms of service
quality. The functioning of decentralized and participatory instruments requires an explicit
logical framework, developed information systems and a strengthening of the technical capacities
of the various agents involved.
A detailed legal framework needs to be formulated to enable all stakeholders to participate
under recognized rules of the game, with clear and transparent participation mechanisms.
Normally, the regulatory framework will need to be adjusted periodically, and this requires a
flexible civil service. A communication system which can function efficiently in the precarious
conditions of services in rural area will be essential.
Most of the countries of the region maintain rural development support programmes. Although
there is tremendous diversity in the type of support provided, progress in many cases has tended
to follow the footsteps of agricultural policies. Rather than proliferating central government
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institutions, highly decentralized participatory programmes have been established with highly
decentralized execution—often at the municipal level. These programmes form the most important
institutional base for channelling resources into rural development, and depend on many actions
which, although decided upon locally, must nonetheless respond to and be consistent with a
logic of national aim.
Unlike the agricultural policy traditional mechanisms, the new instruments tend to be
differentiated, targeting specific population groups. When subsidies are established, they are
intended to be targeted, temporary and transparent. This requires the timeframe of programmes
to be defined on solid technical foundations, with an explicitly defined the target population,
and clear criteria for beneficiary eligibility, accreditation mechanisms and forms of oversight.
The fact that participatory programmes naturally tend to be highly decentralized requires
communication and dissemination systems, support for beneficiary organizations, administrative
rules and procedures governing interaction between the various categories of stakeholder, and modes
of coordination that ensure policy consistency in the national domain.
The previous bureaucratic and paternalistic type of growth, which was very onerous and highly
inefficient, tended to centralize decision making; and society maintained a very indirect and
potential participation capacity through State supervision of each administrative body. In
practice, each organization had a clear information advantage and a more specific interest,
which meant that its survival and potential growth aspirations normally took precedence over
external intentions of global rationality.
The challenge in the new policy orientations is to deconcentrate decision-making capacities,
while at the same time increasing consistency and efficiency. Administrative decentralization
represents a major step in this direction. In order to expand participation, decisions need to
address local demands more precisely, establish regional synergies and promote political
accountability. Moreover greater legal, administrative, financial and technical capacity is needed
among decentralized bodies. It is also necessary to strengthen integration ties and put
mechanisms in place to ensure consistency at the national level.
Policy financing problems were traditionally resolved mostly through budgetary requisition by
the corresponding body. In contrast, the new policy instruments, which rely on cofinancing,
require systems to manage funds from various sources, reconciling public investment criteria
with those of private funding mechanisms and diversified administrative supervision.
Furthermore, the operational organization which was under the responsibility of the public
agency, along with its monitoring and evaluation functions, now need to be shared. Instead of
evaluations of administrative processes and resource spending, impact evaluations are now
required to measure the effect of the program and its capacity to achieve its goals efficiently.
This is not just a question of different stakeholders participating in the evaluation; the evaluation
itself is no longer unambiguous, but is approached with different criteria and viewpoints, with
targets which might be prioritized differently by the Government and private agents. It is also
no longer a process evaluation based on administrative operation and execution of expenditure,
but an impact evaluation that measures the effect of the programme in terms of achieving
objectives, and its efficacy and efficiency. Lastly, it is no longer a matter of assessing the
performance of the government agency, but of evaluating the results achieved with the programme,
and improving its design and organization.
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Deconcentration of decision-making capacities requires information systems that report the
results of monitoring and evaluation to the different agents involved. Efficient organizational
and operational forms are crucial for policy efficiency under the new policy instruments,.
By replacing policies that were based on paternalism and a large bureaucracy, the new policy
orientations allow for the democratization of decision making and far more efficient resource
use. Nonetheless, elimination of the simple vertical relation between central government
institutions and passive beneficiaries, and its replacement by decentralized participatory
policies, no longer allows for solutions that are merely administrative, but places heavy demands
on institutional development in the rural domain.
The concept of institutional development is not limited to organizational changes in the public
sector, or to a mere shifting of responsibilities towards the private sector. The current approach,
which has superseded the false State vs. market dichotomy, recognizes the usefulness of the
State in developing markets and making them more efficient. This is a question of promoting
development among the different agents and enhancing the modes and mechanisms in which
they interrelate, through better rules and organizational forms.
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