Organic production in Argentina: an export opportunity?
04 Apr 2023
In recent years there has been a growing worldwide increase in both the consumption of certified organic products and the amount of land devoted to this type of production.
This growth is associated with a change in consumption patterns worldwide, towards an increasingly healthier one with a greater awareness of the consequences of land use and the impacts of environmental pollution.
Retail sales of organic products in the world have experienced an average annual growth rate of more than 10% since the beginning of the century. This positive trajectory has been particularly dizzying over the last ten years, a period in which sales tripled.
According to data from the Organic Agriculture Research Institute (FIBL), in 2020, three markets accounted for a fundamental part of this process: the United States, with 41% of the market share; the European Union, with 37%, and China with 8.5%, the country with the highest growth in the last decade.
It is important to note that organic agriculture contributes to mitigating global warming by improving the soil’s capacity to capture carbon and by eliminating the use of inorganic nitrogen fertilizers (the synthesis and application of which involves the emission of greenhouse gases such as nitrous oxide and ammonia).
In turn, the reduction in the use of plant protection products (pesticides, herbicides, insecticides and fungicides) substantially reduces the direct and indirect effects that these products have on human health and the environment.
Along with the increase in global consumption, there is currently a proliferation of restrictions on imports of agricultural products by developed countries, such as sanitary and phytosanitary (SPS) measures, tolerance limits for plant protection, carbon adjustment at borders (in the case of the European Union) and the increasing incorporation of environmental provisions in trade integration agreements.
Therefore, entering into the production and export of organic products, as well as the development of state capacities for this purpose, not only implies adapting to the future but also avoiding a potential loss of food exports. In fact, 65% of the value of our exports in the last five years was generated by products and by-products of animal and vegetable origin.
Exports of organic products show a considerable differential in unit prices compared to their conventional or non-organic counterparts. This differential is not due to a higher level of processing in the production chain, but is largely a consequence of the certifications obtained as a result of the modification of production processes towards organic processing. Thus, the potential increase in Argentine exports can be achieved in two complementary ways: on the one hand, through the increase in unit prices of the export of pre-existing production that makes the transition to organic; on the other hand, through the opening of new and more sophisticated export markets.
According to the latest report of the National Agrifood Health and Quality Service (Senasa), 93% of the 3.9 million hectares allocated to organic production in Argentina is composed of permanent pasture for grazing, almost entirely sheep and wool production, which is exported almost entirely as raw material. This situation, together with the global scenario described above, opens up a range of challenges and opportunities for our country linked to the deepening of the necessary transformation of its agriculture towards organic production, with a triple expected effect: greater economic growth due to the increase in production and exports, an improvement in the quality of food for the local population and the mitigation of the effects of climate change.
Source: Bae Negocios