Latin America can help solve the global food crisis by expanding farm production, the World Bank said this weekend, and Colombia said it was on board with plans for an 'agricultural revolution'.
Rising food prices have led to riots and social unrest across the world in recent months and while the World Bank said the price hikes have not necessarily plunged more Latin Americans into poverty, it is worried that they could.
However Pamela Cox, vice president for the Latin American and Caribbean region at the World Bank, said rising food costs could also benefit the region and dismissed arguments that the world will reach a point at which it cannot feed itself.
'For Latin America this is also good news, and I imagine in Canada as well,' she said.
'There's a lot of discussion on whether we've reached the frontier on water and land. That is not the case in Latin America. Latin America has abundant possibilities for producing agriculture,' she told Reuters on the sidelines of weekend meetings of Western Hemisphere economic leaders in Calgary, Alberta in the framework of the annual meeting of the Inter-American Development bank.
Boosting the global food supply could help soften prices, but could also help producer countries lift economic growth.
Colombian Finance Minister Juan Carlos Echeverry buys into that idea. In a speech on Saturday, he said his country's farm industry lags regional peers because for many years arable land was used for cocaine or controlled by the FARC rebel group.
Now, he plans to use money from oil royalties to develop the sector in the hopes of sparking an agriculture bonanza alongside a mining and energy boom.
'Compared to other Latin American countries like Brazil, Chile, Peru and now Mexico, we have to have an agricultural revolution,' Echeverry anticipated.
As a region, Latin America is a net food exporter and accounts for 10% of global agricultural exports. It produces over half the world's soybean exports, a third of the corn and 44% of the beef. It holds nearly a third of the world's unused land suitable for farming, the World Bank says.
Economists said current high prices are an incentive for sophisticated agribusiness in places such as Argentina and Brazil to expand into new lands and diversify products. Even net food importers in Central America and the Caribbean are eyeing farming with new interest.
'There is effectively margin to increase production,' said Alejandro Izquierdo, principal economist at the Inter-American Development Bank.
'There is a move in the region to look for new land and new production opportunities.'
The promise of high returns has prompted China to plan investments in Argentina to produce soybeans in areas of the country not previously considered apt for the crop.
In the meantime, as low-income households seek relief from rising food costs, governments should avoid price subsidies, said the World Bank's Cox.
Subsidies are costly, do not target the most needy and the downward pressure on prices often discourages local food production, she said.
Instead, the World Bank urged Latin American policymakers to increase existing social assistance payments targeted at poor families on the condition they keep their children in school and get health care.