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Region: Helping Latin America Become the Global Granary

Agricultural Productivity Increases Help Latin America Become a Food Export Powerhouse

Agricultural Productivity Increases Help Latin America Become a Food Export Powerhouse


Overview

With agricultural productivity growing at a relatively higher pace than in other regions, Latin America has been gaining an increasing share of the global food markets. Cereal yields across Latin America grew at average annual rate of about 3.3 percent between 1990 and 2006 (compared to 1.7 percent for the rest of the world) and its share of global food exports grew from about 11 percent in 1995-1999 to 14 percent a decade later. The World Bank has been an active investor and partner for governments in the region, backing the drive for increased agricultural productivity while also providing additional financial assistance to mitigate the impact of the 2008/09 food crisis.

Full Brief—4 Pages
Agricultural Productivity Increases Help Latin America Become a Food Export Powerhouse
—PDF, May 2011

Challenge

While some counties are still reeling from the 2008 crisis that saw unprecedented price hikes followed by social disturbances and that pushed as many as 44 million people worldwide into extreme poverty, another crisis seems to be looming. By February 2011, food prices had increased by almost 30 percent over 2010, to stand only 3 percent below their June 2008 peak. Structural changes in the demand of the agricultural products (including the increasing popularity of bio-fuels) and rigid supply systems in most regions, exacerbated by inclement and frequent natural disasters, have combined to make the challenge of meeting prospective food shortages even more daunting.


Approach

Unleashing the growth potential of net food exporters, first and foremost means increasing food production capacity and driving higher agricultural productivity. Increasing agricultural productivity, particularly through the development and adoption of new technologies, has been a key element of the World Bank Group Action Plan for improving the contribution of agricultural to food security and poverty reduction. For urbanized economies (as are most countries in Latin America and the Caribbean), increasing agricultural productivity entails targeted actions to improve equality in land access, generate investment in agricultural research, with a focus on grains and oilseeds, and the delivery of wider access to higher value markets.


Results

The Brazil - Santa Catarina Natural Resources Management and Rural Poverty Reduction Project sought to decrease rural poverty through better income-generating and more sustainable production systems. Some 39,000 farmers benefited from the project and a survey of beneficiary families showed that 86 percent were able to improve their incomes. It also showed that project-supported investments had strengthened their agro-livestock activities significantly (59 percent of respondents) to very significantly (27 percent).

Our property has 10 acres with 10 cows on average. Before, we would produce 600 litres of milk per month and made R$180. With the new investment and capacity building projects, and the same number of cows, we now produce between 1,700-2,000 litres of milk per month with one person rather than three carrying out the same job.

— Jocelino and Ana Selinger, Santa Catarina, Brazil

The Argentina Provincial Agricultural Development Project focused support on public services and infrastructure investments, in combination with on-farm adoption of improved production technologies, in order to promote increased production, land under cultivation, crop diversification and exports in project areas. In all, some 108,000 small and medium farm families were supported by the project, which sought to deliver better public infrastructure and services to intensify land use, to increase productivity per hectare, and to introduce new crops and varieties along with new technological packages. The support for increased and diversified agricultural production and exports resulted in: a 106 percent increase in the area under production to 55,000 hectares in Chubut, Entre Rios, Mendoza, and Tucuman Provinces; a 109 percent increase (equal to 210,00 tons ) in aggregate existing production; and a 25 percent rise in export volumes for six agro-livestock products, ranging from 25 percent for apples to 1,173 percent for strawberries.

The Nicaragua Agricultural Technology and Rural Technical Education Project helped increase yields of major staples by 23 percent and farm income by 25-84 percent. For example, maize and bean yields increased by 37 percent and 63 percent respectively from 1999 to 2003. As many as one-third of small- and medium-sized farms were in direct contact with extension services, about eight out ten of which adopted, and are satisfied with, recommended improved technologies. Overall, there were 68,000 producers who benefited from project-financed services, with a survey showing that at least 60 percent saw a productivity increase; 55 percent reported at least a 25 percent cost reduction, and 45 percent claimed a 20 percent in sales price due to higher quality of production.


Bank Contribution

The Bank followed a three prong approach to boosting its own support for agriculture in the region. First, following other donors to the sector, the World Bank increased financial assistance to agriculture through both the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA) to a high of US$4.14 billion in fiscal year 2009 and US$3.02 billion in FY10. Additionally, and also in line with other partners, the World Bank responded rapidly to the 2008/09 food price crisis with US$1.2 billion in fast tracked funding through the World Bank's Global Food Crisis Response Program by the end of 2010. The Bank has supported technology generation projects in client countries with US$2.6 billion of financial assistance over the last 15 years, with around US$360 million directed to countries in Latin America and the Caribbean. The Bank has also provided assistance through projects that aim to improve land administration, amounting to US$2.5 billion over the period FY06-2010, of which US$883 million went to Latin American countries.


Partners

The Bank worked in partnerships with client country and international institutions, such as the Brazilian Agricultural Research Corporation and the Consultative Group on International Agricultural Research. Other partners include the Inter-American Development Bank and UN technical agencies such as the Food and Agriculture Organization and the UN Development Programme.


Toward the Future

Most regions and development institutions are renewing efforts to give more prominence to agriculture in countries where it is not already a policy priority. The World Bank's strategic direction in the sector is based upon the five focal areas highlighted in the World Development Report of 2008, which was dedicated to agriculture. These are: agricultural productivity; linking farmers to markets; risk and vulnerability; rural non-farm income; environmental services and sustainability. To increase agricultural productivity in the urbanized countries of the Latin America and Caribbean region, greater attention and support will be devoted to technology development and dissemination, and to addressing land access inequities.


For more information, please visit the Projects website.



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