Latin America and the Caribbean (LAC) economies had been in a sustainable growth pattern during the last decade. They are also home to a third of the world’s fresh water, the most of any developing region when measured on a per capita basis, and to more than a quarter of the world’s medium- to high-potential farmland.
Little wonder that the LAC region as a whole is the largest net food-exporting region in the world. The region’s total share of exports has increased more than 7.5 times since 1991, while imports measured in calories has increased by 3.5 times in the same period. In 2013 and 2014, these trends were reflected in the roles that Brazil, Argentina, Paraguay, and Uruguay played in increasing the world’s supply of wheat, corn, and soybeans.
Despite the aforementioned successes, agricultural productivity is still behind in the region and there are significant differences amongst countries. For example, three major shocks in 2013 and 2014 served to illustrate just how vulnerable Central America still is.
The first came from coffee rust; the second was a significant drought; and last but not least was the child migration crises. The latter shock, in part a product of the first two crises, was also a consequence of significant deficiencies faced by El Salvador, Guatemala, and Honduras; these include a lack of access to infrastructure, health services, and security as well as severe malnutrition and stunting. We must remind ourselves that economic growth is only sustainable if all countries have food and nutrition security. Without a country-owned and country-driven food and nutrition security strategy, there will be obstacles and additional costs to global, regional and country level economic growth.
Countries with very high levels of poverty and chronic malnutrition face limitations in human capital development, which is required to achieve sustainable growth. High levels of poverty, inequality, and chronic malnutrition will also cause governments to invest in short-term fixes through social safety net programs and conditional cash transfers. High rates of malnutrition can lead to noticeable effects such as loss of 4-5% of gross domestic product (GDP), according to the Food and Agriculture Organization of the UN (FAO).
Food security not only carries significant benefits for human health, but also serves as the basis to achieve sustained economic growth. For this reason, it is essential that we understand that a food security strategy needs to be seen as more than a single sector issue; it requires a combination of coordinated actions in various sectors. We are talking about actions in finance, agriculture, health and nutrition, infrastructure and other sectors. But also is essential to understand that cooperation between governments and the private sector should be central.
Likewise, economic growth alone will not solve the problem of chronic malnutrition and stunting. In one recent edition of The Lancet, a leading scientific journal in the field of global health and nutrition, we learn that a 10% increase in economic growth will lead to 6% reduction in chronic malnutrition.
What does this mean? First, the one-to-one relationship between economic growth and chronic malnutrition shows that growth by itself won’t resolve the problem of chronic malnutrition, which is a key variable in any food security strategy. Second, we know that economic growth can have a negative effect, too. For example, a 10% increase in economic growth is correlated with a 7% increase in obesity among women. This also shows the critical nature of targeting tax and fiscal instruments to optimize the consumption of nutritious foods and minimize the use of foods that cause obesity, another common form of malnutrition.
Without stable and long-lasting food security, there will be a continued negative effect on human capital and this will raise government fiscal costs, with negative consequences on government public spending. This will also lead to stagnated economic growth in the long term. Thus, food security is central to both short- and long-term economic growth and it needs to be a central part in a larger cross-sectoral strategy at the national, regional and global levels. A recent report from IFPRI shows which countries are facing the highest rates of hunger and malnutrition, providing a roadmap for governments and policymakers seeking to address the issue.
Finally, it is important to understand that investments geared toward achieving food and nutrition security must be integrated into the larger public policy debate, particularly in countries facing budgetary restrictions and obstacles to development on multiple fronts. Having clear targets and proper monitoring and evaluation strategies for measuring progress in the fight against hunger and malnutrition is a necessary start. Beyond this, linking these targets with other cross-sectoral programs where the efficiency and effectiveness of public expenditures are held accountable will play a key role in achieving long-term, sustainable economic growth even under tight budget constraints.
The World Economic Forum on Latin America 2015 takes place in Riviera Maya, Mexico, from 6-8 May.
Author: Dr Máximo Torero, Division Director, Markets, Trade and Institutions, International Food Policy Research Institute (IFPRI), USA
Image: A farmer sells Andean tubers during the Mistura gastronomic fair in Lima, Peru, September 12, 2013. REUTERS/Enrique Castro-Mendivil