AGRIAGRI-- BUSINESS IN ARGENTINA BUSINESS IN ARGENTINA A SEMINAR ON INVESTMENT OPPORTUNITIESA SEMINAR ON INVESTMENT OPPORTUNITIES

Maximiliano MorenoDirector of Multilateral Negotiations

Ministry of Agriculture, Livestock and FisheriesArgentina

NEW INTERNATIONAL ENVIRONMENT

Challenges and Opportunities

• Change in the international economic power

• Change in the consumers habits due to: (i) income increase (ii) urban areas (60% in 2030)

• Biofuels (14% cereals and 16% oilseeds)• Increasing trade protectionism• Climate change (agriculture 13.5% of

GHG)

INTERNATIONAL GLOBAL TRENDS

• Water and land scarcity• Price volatility

INTERNATIONAL GLOBAL TRENDS

FOOD OFFER VS. FOOD DEMAND

Food supply not growing at the same pace than demand

Pressure on prices

• Food production shall increase by 70% in 2050 to attend demand

• 1 billion Tns. of grains and 200 millions Tns. of meat.

• Developing countries shall double its agricultural production

• 80% percent of the necessary production increases would come from productivity increases and only 20% from expansion of arable land.

FAO PROJECTIONS

Investments required in developing countries to support this expansion in agricultural output amount to an average annual net investment

of USD 209 billion. Gap: 50%

INVESTMENTS ARE THE KEY

RESEARCH & DEVELOPMENT

THE ARGENTINE EXPERIENCE

NATIONAL POLICIES ADOPTED TO TAKE ADVANTAGE OF INTERNATIONAL

OPPORTUNITIES

Source: MAGyP en base a datos de INDEC

Total Area 2,8 million km2

Agricultural Area 360.000 km2

Population 40,5 million

GDP U$S 370.000 million

Investment / GDP 22%

GDP Annual Growth

2003/2009 over 8%

Exports U$S 68.500 million

Imports U$S 56.443 million

ARGENTINA AT A GLANCE

The importance ofAgriculture and Agro-

Industry

Fuente: MAGyP en base a datos de INDEC

WHAT WE HAVE DONEWHAT WE HAVE DONE

• Strengthened institutional framework: creation of the Ministry, INTA, SENASA• No-Till Farming• Biotechnology• New Agricultural attaches• Competitive exchange rate• Preferential loans to agri-food sector• Cooperation initiatives• Consolidate risk management tools

• Argentine agri-GDP increased 321% • Agri-food sector accounts for 15% of

Argentine GDP• Productivity grains sector increased 25%• Food for 400 million people• Tripled exports of agri-food products,

reaching USD 38 billion

ARGENTINE FIGURESTHE RESULTS IN FIGURES 2002THE RESULTS IN FIGURES 2002--1010

14

22,1%

22,6%

EXPORTS EVOLUTION

Source: MAGyP en base a datos de INDEC

ARGENTINE FIGURESTHE RESULTS IN FIGURES THE RESULTS IN FIGURES –– EXPORTS EXPORTS (2002(2002--10)10)

1° Honey, Concentrated Lemon Juice, Peanut Oil, Soybean Oil andSoybean Meals.

2° Corn, Sunflower Oil, Lemons and Limes, Pears, Peanuts, ProcessedBovine Meat, Grape Juice, Sorghum, Sunflower Meals, Yerba Mate and Peanut Meals.

3° Soybean, Garlic and Concentrated Apple Juice.4° Wheat Flour and Olives.5° Greasy Wool.6° Wheat, Boneless Bovine Meat, Whole Dry Milk, Tangerines, Dried

Eggs. 7° Barley, Frozen Potatoes, Olive Oil and White Rice.8° Tobacco, Malt, Raisins and Clean Wool.

• Grains from 70.8 M Tn to 100 M Tn (+41%)• Bovine meat from 2.5 M Tn to 2.6 M Tn (+4%)• Poultry meat from 0.6 M Tn to 1.6 M Tn

(+139%)• Pork meat from 170,000 Tn to 280,000 Tn

(64%)• Ovine meat from 46,000 Tn to 76,000 Tn

(+63%)• Dairy products from 8.5 B Lts to 10.4 B Lits

(+22%)

ARGENTINE FIGURESTHE RESULTS IN FIGURES THE RESULTS IN FIGURES –– PRODUCTION PRODUCTION (2002(2002--10)10)

ARGENTINE ARGENTINE ““PEA 2020PEA 2020””

Our policy: MORE FOOD FOR MORE PEOPLE

Our objectives:• Consolidate as a world food supplier leader• Strengthen quality and value added on our food production• Supply increasing domestic and international food demand• Guarantee sustainable production

Our Plan: Federal and Participative Agri-food and Agribusiness Strategic Plan, 2010/2016. (PEA²)

15%3 M Tns2.6 M TnsWINE SECTOR

36%4.5 M Tns3.3 M TnsCITRICS

26%680,000 Tns540,000 TnsFISHERIES

115%118,000 Tns55,000 TnsHONEY

89%10.2 M Tns5.4 M TnsHORTICULTURES

234%1.3 M Tns388,000 TnsCOTTON

58%157.7 M Tn100 M TnsGRAINS

% INCREASEOBJECTIVE (2020)

BASE LINE (2010)

PEA PRODUCTION OBJETIVESPEA PRODUCTION OBJETIVES

76%18.3 B Liters10.4 B LitersDAIRY PRODUCTS

40%106,000 Tns76,000 TnsOVINE MEAT

193%822,000 Tns281,000 TnsPORK MEAT

88%3 M Tns1.6 M TnsPOULTRY MEAT

46%3.8 M Tns2.6 M TnsBOVINE MEAT

% INCREASEOBJECTIVE (2020)

BASE LINE (2010)

PEA PRODUCTION OBJETIVESPEA PRODUCTION OBJETIVES

PEA OBJECTIVESPEA OBJECTIVES

• Increase value added on agricultural exports from 22% to 41%

• Favor innovation and transfer / adoption of new technologies

• Stimulate new organization units: clusters, cooperatives

• Improve infrastructure (transport, telecommunications, energetic resources)

PEA OBJECTIVESPEA OBJECTIVES

• Contribute to the achievement of the UN Millennium Development Goals (eradicate poverty and hunger –sustainable development)

• Increase exports of agri-food products from USD 40 billion to 100 billion (+ 153%)

- Commodities: +80% (USD27.3 billion)- Manufactures: +193% (USD 67 billion)

• Favor the adoption of tax and incentive regime to stimulate private investment

To achieve these goals, we must

increase investment that allows the

enhancement of systemic

competitiveness.

MORE INVESTMENTS ARE THE KEY

The Provincial Agricultural Development Project

(PROSAP) is the most important instrument of public

investment of the Ministry of Agriculture.

www.prosap.gov.ar

Source Million USD

World Bank 442

IDB 925

National Public Sources 273

Total 1,640

CONCLUSIONS

• International organizations reports indicate that during the next decades the world will demand more quantity and quality of food products.

• Our main export destination are expected to continue growing atsignificant rates (China, Brazil, India) with a sustained food demand.

• Most of projections envisage that food prices will remain high,representing an opportunity for producers. On the other hand, importers and consumers will extreme their quality / sustainability requests

CONCLUSIONS

• Argentina has already adopted nationals policies to take advantage of international opportunities.

•Argentina is currently world leader in food supply. International environment represents and opportunity to consolidate and diversify our exports: NEW MARKETS – NEW PRODUCTS.

• In a world with limited resources and climate change constrains, innovation is part of the solution.

• The PEA objective is consolidate Argentina as a world food supplier leader . The PEA shows our potential. To turn comparative advantages into competitive opportunities when need that private investments join official initiatives

THANK YOU

Maximiliano Morenomaxmor@minagri.gov.ar