Argentina “has a vital role to play” as food producerin a context marked by the consequences in the provision of commodities initially generated by increases in logistics and transportation costs, which were later exacerbated by the war between Russia and Ukraine.
So pointed it out to Télam John DentonSecretary General of the ICC (Chamber of international tradefor its acronym in English), who emphasized that the country has food production to supply “ten times its population” and “the capacity to feed the net importing nations”, in order to “alleviate the impact of the current crisis in global food security”.
Denton has an extensive diplomatic career in Australia and is active in both international economic relations and the United Nations High Commissioner for Refugees (UNHCR).
Recently, he was in Buenos Aires participating in the seminar “Agrifood: New world scenario, opportunities and challenges for producing countries”organized by the ICC and the Argentine Chamber of Commerce and Services (CAC).
Tel: How does the current world scenario affect food supply?
John Denton: We are living through a very difficult food crisis, a combination of rising food prices, supply chain disruptions and now the war in Ukraine has put millions of people around the world at risk of hunger, food insecurity and even starve.
T: And in this context, what is the role of food producing countries, as in the case of Argentina?
JD: Food producing nations like Argentina have a vital role to play. First, they must rapidly increase production as much as they can. While this may be very difficult at the moment, due to high prices and, in some cases, fertilizer shortages, farmers and large agricultural producers must find more efficient ways to produce food at scale, ideally without involving a significant logging and deforestation.
Governments must create policies that allow small farmers to continue working even at lower margins, especially in poorer countries where farmers who cannot make a living may decide to leave in search of opportunities in urban centers.
Second, food-producing countries must keep international markets open. Governments must avoid the temptation to stockpile food or not release any reserves they may have on international markets. They must, above all, avoid imposing export restrictions, which we have seen more of in recent months, not only because this could lead directly to starving people being unable to access food, but also because it could create a cascade of deaths. And while subsidies may have a role to play, they need to be balanced in ways that ensure they do not unduly distort market prices.
Finally, food exporting countries should increase their donations to the World Food Program, which is struggling to meet the needs of the most vulnerable. Major food-producing countries must recognize that this global food crisis carries a significant risk of social and political upheaval, which could ultimately pose economic, political, and security challenges for the food-producing nations themselves.
T: What potential does Argentina have as a supplier of food and food technology, beyond exports of cereals, oilseeds and derivatives?
JD: Agriculture plays a vital role in the Argentine economy, employing more than a third of the labor force (including indirect employment) and contributing around 8.3% of GDP and up to 20% if the entire value chain is included. .
Argentina is also the world’s tenth largest exporter of agri-food products, and currently produces food for more than 450 million people. That’s 10 times its population!
As a giant of world agriculture, with great potential, competitive prices and diversified production, it has the capacity to feed net importing nations and alleviate the impact of the current crisis on world food security. This is part of the reason why ICC recently launched the ICC Agri-Food Hub in Buenos Aires, with the aim of maximizing the inclusion of agri-food companies in global supply chains.
The SME ecosystem in Argentina is also essential for the development of more inclusive and sustainable food systems. To that end, the ICC Entrepreneurship Center in Buenos Aires, launched in partnership with the Argentine Chamber of Commerce and Services and Usina de Emprendedores, works closely with businesses and government agencies to enable local entrepreneurs in the southern cone from Latin America expand their operations to global markets.
The challenge of adding value to the food industry in a world that is entering stagflation
The world is heading for a period of inflation combined with economic stagnationa situation known as “stagflation”and that represents an important challenge for the food industrywhile the prices of raw materials tend to rise but, at the same time, their industrialization faces higher costs and lower marketing margins.
John Denton identified three factors that need to be encouraged to drive a more value-added food industry: Education, support for industrial development, and effective economic environments.
Tel: Many food-producing countries add very little value to their exports, and in some cases even import products made in other countries with their own raw materials. What actions can be taken to reverse this situation?
John Denton: Moving up the value chain may be for some countries a very sound economic strategy with greater economic benefits. At the same time, there is significant global efficiency in different countries specializing in different parts of the supply chain. In some cases, a country may be better off specializing in grains or rice or other raw materials and then, for example, moving on to processed foods.
Moving into higher value-added industries requires investments in education, targeted support for industrial development, and generally effective economic environments. We know from history that protectionist measures tend to discourage innovation and that open trade relations allow countries to specialize in products in which they have a comparative advantage. And we know that relocation production today is often much more difficult, less efficient, and less effective than policymakers tend to imagine.
T: This process is not without complications.
JD: As the world potentially enters a period of stagflation, countries with strong resource or raw input industries may fare better than industries closer to the consumer. This is because commodity prices will likely rise and the production of value-added goods will face higher costs and potentially lower margins, as consumers will have less purchasing power due to inflation. Policymakers need to take these factors into account when considering trying to push more value-added parts of the agricultural supply chain.
T: You represent the private sector in the United Nations Group on Food, Energy and Finance. What experiences were you able to gather from public-private work, both in Australia and in other countries? How can that relationship be improved?
JD: ICC’s leadership in response to recent global crises was recognized by United Nations Secretary-General Antonio Guterres, who appointed me to represent the global private sector on a new Global Crisis Response Group Steering Committee to address the immense challenges interconnected that the world faces. This is the first time that the private sector has been structurally and intimately involved in a response to a global crisis, a testament to much of the work we did during the pandemic and an acknowledgment of the fact that no global challenge can be solved without the participation active in the private sector. If the pandemic has taught us anything, it is that public-private partnerships are essential to survive in difficult times. The ingenuity of the private sector, the power of public-private partnerships and the strength of ICC’s global business community can make the world a better place, not just for business but ultimately for people. But there is always room for improvement. At ICC we are dedicated to the development of new models and strategies to increase the participation of the private sector in development results, and to foster collaborations with the main UN agencies and relevant sectoral institutions.
