South America is among the winners of the many trade conflicts instigated by US President Trump. Many buyers are increasingly turning to products from Brazil or Argentina. And their prospects therefore remain positive.
Whether it’s cereals, meat or, of course, oilseeds – nothing works on the global agricultural markets without South America. For key product groups, the subcontinent accounts for 20 to 60% of global agricultural exports – in many cases with an upward trend. Of the twelve countries in the region, four in particular feature on the world market as major suppliers of agricultural products. At the centre is the heavyweight Brazil, which ranks second only to the US in terms of agricultural product turnover. Another major player is Argentina. The South American quartet is completed by Paraguay and Uruguay. Both countries are excluded from this analysis due to their largely stable production and their comparatively small size.
Brazil is making the most of its resources
Over the past twenty years, there have been incredible developments in Brazilian agriculture:
- The soya harvest has tripled to 172 million tonnes,
- The maize harvest has quadrupled to 136 million tonnes,
- Poultry meat: + 75% to 15 million tonnes,
- Beef: + 50% to 12 million tonnes,
- Pork: + 75% to 4.5 million tonnes,
- Sugar: + 55% to 44 million tonnes,
- Coffee: + 50% to 3.9 million tonnes.
And these are only the most significant products in terms of volume. The dairy sector is missing from this list for the following reason: Brazil does not act as an exporter of cheese, butter and other dairy products. Here, the opposite is true. Brazilians are demanding increasing quantities of cheese and milk powder.
Brazil is one of the five largest buyers of whole milk powder on the world market, whilst the South American country ranks in the top 10 for cheese and skimmed milk powder. EU countries also sell cheese to Brazil, despite a high import duty of almost 30%. The Food and Agriculture Organisation of the United Nations (FAO) expects Brazil’s cheese imports to rise by 50% over the next ten years, reaching almost 90,000 tonnes. However, that is the extent of any significant “import dependency”, from which suppliers in the EU are also likely to benefit.
Land reserves as a key factor
The immense growth in Brazil’s agricultural production has been made possible primarily by one factor: boundless expansion of cultivated land. Of course, yields per hectare have also risen massively over the past twenty years.
For example, farmers in Brazil now harvest 90% more maize and almost 60% more soya beans than in 2004. But this accounts for only a small part of the increase in production (one-third for maize, one-quarter for soya beans). In fact, the combined area under cultivation for cereals and soya beans alone has almost doubled since 2004 to just under 75 million hectares. This increase in land area is roughly equivalent to the size of Germany. Added to this are 165 million hectares of pastureland (a fifth of the country’s total area), which forms the basis for the expanding beef production.
Low proportion of agricultural land
As the area of land used for agriculture has increased over the years, arable and pasture land has encroached upon Brazil’s tropical rainforests and savannah landscapes. Despite the immense increase in land area, the proportion of agricultural land in Brazil today stands at only around 27%, with arable land accounting for just 7%. By way of comparison: in Germany, the figures are 48% and 33%, whilst in the USA they are 45% and 17%. Every additional percentage point of arable land amounts to an increase of 8.5 million hectares for Brazil. The vast majority of the country (almost 60%) is still covered by forest.
The extent to which land used for agriculture will expand in the future is uncertain. Over the years, awareness has grown of the importance of the Amazon rainforest, which stretches across large parts of Brazil, for the global climate. This is not just about the overexploitation caused by deforestation for agricultural land; crude oil extraction and mineral mining are also coming under criticism.
However, the Brazilians will not leave these raw materials untouched without something in return. This was also evident at the World Climate Summit in Belém, Brazil, in November, where the countries of the Global South demanded more money from the industrialised nations to protect the rainforests, and Brazil’s President Lula da Silva presented the idea of a forest protection fund financed by the industrialised nations.
China’s import demand is growing more slowly
Another factor suggests, at the very least, that the expansion of cultivation areas will slow down in the future. This is because demand from China, the main market for Brazilian soya beans, is set to grow more slowly in the future. When it comes to soya beans, however, Brazil could at any time follow the path of countries such as Indonesia, Malaysia or the USA, which are fuelling domestic demand for vegetable oil through rising blending targets for biodiesel. Or farmers could switch crops and focus on the product that the growth market of Africa will increasingly need in the future: cereals. Either way, Brazil remains a key player in the global agricultural market.
Argentina is a leader in many agricultural products
In Argentina, the conditions are different from those in Brazil. This starts with political and economic uncertainty, the chronically high inflation rates even under President Milei, and the significant role of taxes on agricultural exports in the national budget (which encourages restraint in sales). This last point repeatedly leads to tensions between the government and the agricultural sector and dampens the latter’s propensity to invest. Added to this is the vulnerability to weather-related production slumps. Despite high fluctuations (ranging from 37 to 53 million tonnes over the past five years), maize production continues to trend upwards. In the case of wheat, this is not evident, despite the record harvest in 2021/22 and the similarly high estimate for the 2025/26 harvest; volumes fluctuate between 10 and 20 million tonnes over the years. Soya harvests are even more variable, with recent figures ranging from 25 to 50 million tonnes. In contrast, sunflower cultivation is experiencing a small upswing (production between 4 and 5 million tonnes).
Major supplier of cereals and oilseed meal
Compared with Brazil, the proportion of agricultural land is significantly higher at 43%, with arable farming accounting for 17% of land use. Soya beans dominate cultivation and occupy more than half of the arable land. Over the years, production has been concentrated in the Pampas. Conversely, cattle farming has increasingly shifted to feedlots or peripheral locations. The latter is leading to an accelerated conversion of land for agricultural use, particularly in the northern and western parts of the country, which in turn is provoking criticism due to environmental concerns.
Oilseed exports largely take the form of processed products, oil and meal, making Argentina the world’s largest supplier of soya meal and oil. In the sunflower sector, the country ranks among the top five. Alongside the EU, Asian countries in particular are seeking soya meal from Argentina. In terms of cereals, the Andean nation is also one of the largest suppliers of maize, wheat and barley.
Prospects for the soya and beef sector
The FAO sees significant upside potential, at least for Argentina’s soya meal sales. Driven by rising feed demand, which goes hand in hand with increasing global meat production (+40 million tonnes by 2034, particularly in Asia and Africa), Argentina’s soya meal sales could grow by up to 50% in the coming years. Increasing production of the co-product vegetable oil is also likely to be sold increasingly in these two regions. A similar picture emerges regarding the prospects for maize and wheat exports. Here too, rising consumption in Asia and Africa is driving growing demand on the world market, from which Argentina will also benefit.
For Argentina’s beef production, the FAO’s forecasts for the coming decade suggest only a modest increase of 5%. The estimated additional production of around 200,000 tonnes is likely to find buyers abroad, whilst domestically there is growing demand for more cost-effective alternatives such as pork and poultry.
Conclusion
Demand in the “South American” domestic market is also growing, primarily driven by rising incomes. With population growth mostly at 0.3 to 0.4% (and falling), this is hardly surprising. Accordingly, rising domestic meat consumption is also slowly driving up the region’s feed grain requirements. However, this does not alter the region’s growing export potential.
