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Global farming will solve local hunger

No individual country can hope to feed its entire population unless it enters into cooperative farming with fellow nations, each focusing on their core competencies, says Edgar J Flores Tiravanti, Minister, Head of the Economic and Trade Section, Embassy of Argentina, India in an interview with Smart AgriPost

What are Argentina’s achievements in agriculture?

The country’s agricultural sector currently represents 13% of the economy. Its productivity levels, especially those of soybean and wheat per hectare are well above those of other important world producers. The country is also a world leader in other products: it is the largest producer of concentrate lemon juice and the largest soybean oil exporter. It is the second largest exporter of pears, sunflower oil, honey, peanuts and corn. Furthermore, Argentina stands at the forefront of the development and use of no-till farming, as well as biotechnology applications for crops and animal husbandry.

The country can be divided into three large agricultural regions:  the central prairies or “Pampas”; the Northern Region, and the Irrigated Valleys, located in the provinces of Mendoza and San Juan (West of the country) and Río Negro and Neuquén (South West). In general, most grain crops are produced in the Pampas region, while the north is the main producer of industrial crops (citrus fruits, sugar cane, tobacco and cotton, among others). The irrigated valley region is important for the production of higher value crops, such as pome fruits and horticultural crops. Mendoza is the main wine-producing province in the country.

At its current levels of production, Argentina could feed around 400 million people, but the country has the potential for much more than that.

How can Argentina & India improve their cooperation in agriculture?

In the areas of agriculture, livestock and food processing there is a big potential for cooperation. Argentina is already a big supplier of soybean oil and other edible oils to India and has begun this year to export apples and pears to this market. Argentina is also following up on India’s sanitary clearance for citrus fruits, grapes, honey and poultry, and India is doing the same so that mango fruits and guar seeds can enter the Argentine market.

So far some obstacles, such as high trade costs, in part due to tariff and non-tariff barriers and transport freights, have inhibited our bilateral trade and investments from unleashing their full potential. But, in order to go beyond the commodity level and to add value to our trade, we need to work more closely together.

There are already some Indian investments related to agriculture and agro-industry in Argentina: United Phosphorus and Punjab Chemicals and Crop Protection in agrochemicals, while Sonalika International Tractors, in a joint-venture with the Argentine company Apache, recently presented a tractor prototype built jointly by both companies. In addition, a few Argentine experts have been working in India as consultants on agriculture and post-harvest technologies.

What are the opportunities in the agricultural sector that you see in India?

In principle, I see two niche areas in which Argentine entrepreneurs could find opportunities in India: Agricultural Technologies and Horticulture. In order for Argentina and India to move a step further in their bilateral trade and investments in the agricultural and agro-industrial sector, we need to think in terms of integration and productive complementarities between both countries.

The world is witnessing a significant increase in the demand for food. Population growth, improvements in the quality of life in developing countries and climate change, raise questions about the world’s ability to produce food for all its inhabitants, at reasonable prices without depleting natural resources.

To do this, a large increase in productivity is required, and this is only possible with a paradigm shift: the knowledge applied to production or a new way to manage the agribusiness.

South America will lead the growth of food production in the coming years (50% of this growth over the next 5 years). As part of this region, Argentine agribusiness offers opportunities to Indian investors; and our entrepreneurs will find many opportunities in India’s agriculture and food-processing sector. Through investments, integration between companies and contract farming, both parties could take advantage of the productive complementarities, exchange products (such as seeds and vegetables), and work together in biotechnology.

In this sense, this step towards the integration of Argentina and India to the international value chains in agriculture and agro-industry exceeds the national level and will require, sooner or later, a renegotiation of the Preferences Trade Agreement signed between India and Mercosur in March 2005.
It will be time then for Argentina to expand the list of preferences according to its interests. These interests could also be those of India, should Argentines and Indians decide to work together toward a mutually beneficial relationship.

Horticulture has been recognized as an important alternative for diversification in agriculture. India is endowed with natural soil and topography that is favourable for growing a variety of fruits and vegetables along different agro-climatic conditions.

For example, pulses (such as beans, chickpeas, lentils & peas) can be grown in a variety of soils and climatic conditions, and play an important role in crop rotation, either simultaneously or interspersed with other crops, thereby maintaining soil fertility. India is the world’s largest producer, but also the first consumer of pulses. India produces between 14 and 18 million tonnes of pulses per year. But in recent years the production has stagnated. It consumes about 22 million tons of pulses per year. For a country with a large population of vegetarians, these products represent the main source of protein.
India produces, with important variations, between 75 and 85% of consumption of these products per year. The rest has to be imported. Its external suppliers are Myanmar, Vietnam, Australia and Canada, among others. Argentina could be a supplier as well, and a very competitive one.
It is estimated that the total population of India will reach 1,680 million in 2030. For that year, the domestic demand for pulses will be around 32 million tons. To meet that demand, local production should grow at a rate of 4.2% per year. In addition, India must remain competitive to support the local producer. From the above, it can be inferred that India should develop and adopt more efficient technologies and policies that encourage the Indian farmer to devote more extensions to these crops.

In Argentina, the Northern and the Valleys regions present a wide range of ecological conditions, crop variety and combination of irrigated and rain fed agriculture, that are very suitable to grow pulses and other horticultural crops such as fruits and vegetables.

In this sense, Argentine agriculture could become not only a supplier of India’s rising demand, but also a partner for Indian farmers and agribusinesses. Together, both partners could increase their produce at home, develop new products, as well as diversify  their export basket. Later on, based on the strength of their new competencies and improved competitiveness, they could consider entering new markets.

How do you ensure a good price for the farmers?

In contrast to India, where farmers are subsidised, in Argentina they have to pay taxes. Traditionally, in Argentina’s economic history, agricultural policies have been a significant part of the import substitution strategy prioritised by the government. This strategy assumes that domestic demand, supplied by local production, should be the main source of the country’s social and economic growth. On the basis of this strategy, the agricultural sector is seen as a provider of low-priced food, an instrument for limiting inflation in food prices and a significant source of tax revenues.

In the past 10 years, fiscal revenues have been increased through taxes imposed on agricultural products’ exports: soy 35%, sunflower seed 32%, wheat 23%, corn and sorghum 20%. In each chain, the export of primary products has been taxed at a higher rate than processed products in order to promote local value added. On the other hand, small farmers have been supported through programmes aimed at facilitating their access to technology, markets and credit.

With regard to the logistics, Argentine farmers’ advantages and disadvantages regarding the prices of storage and transportation in comparison with their peers from other countries will depend on the crop and the distance between the producing regions and the ports.

What are the investment opportunities in dairy farming and fisheries in India?

Rising incomes in India will continue to foster the demand for products that are part of a more diversified diet, such as dairies and seafood. In the understanding that India is already the largest producer of milk in the world and the third fish exporter, it would be wise for Argentine potential investors to evaluate which are the major challenges for these sectors in India and in which way they could contribute to address them.

With regard to dairy, perhaps Argentina could contribute with its know-how in milk processing and dairy products diversification. Argentine dairy production is characterised by new investments in technology, improvements in pasteurisation systems, process automation, growth of biotechnology applications and constant innovation, among other factors. With US$ 1.7 billion in exports, the sector boasts of great growth potential, particularly in specific segments such as cheese, which follow international best practices in terms of production and quality.

With a natural competitive advantage provided by its 4,725 kilometre coastline, Argentine local fish industry is recognized worldwide for the high quality of its catch and processed products. Although in 2014 Argentina exported U$S 1.6 billion dollars, in the same year India exported US$ 5.4 billion dollars’ worth. India is not an important buyer of Argentine fish products (only US$ 265,000 dollars in 2014). This scenario could change in the near future, should fish industries in both countries find a common interest to increase trade and cooperation.

 What is the status of agro exports and imports in Argentina?

 In 2014, Argentine exports reached $72 billion, of which around 60% ($43.2 billion) were from the primary sector (including the agro-industry). Imports reached $65 billion that year, but in this case less than 8% ($5.2 billion) were agro imports.

 How are you promoting technology in agriculture?

 Agriculture and food-processing industry in Argentina receive significant support from the public sector through several institutions like the National Institute for Agricultural Technology (INTA) and the National Institute for Industrial Technology (INTI); the National Council for Scientific and Technical Research (CONICET) and the National Agency for Scientific and Technological Promotion (ANPCyT). Likewise, the Argentine Ministry of Agriculture, Livestock and Fisheries is implementing a national value-added programme with the objective of maximising and generating opportunities for speciality and differentiated Argentine products.

As an example, it is worth mentioning that INTA has been conducting research on storage of grain and oilseeds in hermetic plastic bags or “silobags” since the year 2000. A novel grain quality monitoring system was also developed for the “silobags” and implemented by farmers, grain elevators and the industry. The system measures the CO2 concentration inside the bag and relates it to the biological activity, allowing for the sorting of the bags according to a storage risk factor. The system has proven to work efficiently and today, Argentina is exporting this technology.