Appetite grows for food trade between Latin America and the Middle East

London, July 2, 2014.- Peruvian asparagus, Uruguayan halal beef and frozen chickens from Brazil are some of the growing list of exports from Latin America to the Middle East. Egyptian dried apricots and chemical fertilisers from Saudi Arabia are among the items going in the opposite direction.

Volumes are still relatively small, accounting for less than 2 per cent of both of the regions’ international commerce. But over the past decade, trade flows between the two regions have been expanding quickly.

Part of this trend reflects a diversification of links and the emergence of new markets for Latin America. But the Middle East is also becoming an important trading partner in its own right.

In fact, according to the Caracas-based Latin American and Caribbean Economic System (SELA), a trade organisation, the increase in Latin American trade with the Middle East has been faster than with any other region.

Commodities dominate bilateral commerce. From the Middle East, Latin America obtains refined oil and chemicals, while foodstuffs take the reverse journey.

Latin America’s prowess as an agricultural producer is helping power the export drive. Last year, Brazilian food exports to the Arab countries reached a record 17m tonnes, with sugar and meat generating revenues of almost $5bn, according to the Arab-Brazilian Chamber of Commerce. Argentina’s exports of grains, cereals and other primary goods to the region earned $1.6bn last year, up from $1.3bn in 2012.

Uruguayan beef and dairy exports to the region have grown 125 per cent in two years.

Meanwhile, construction materials, high-quality cotton and fruit, such as grapes and avocados from Peru, now make up almost a fifth of the country’s exports to the United Arab Emirates, up from practically nothing five years ago.

More elaborate items for export, from footwear and textiles to cosmetics and bulldozers, have also helped advance trade with the Middle East, and are part of a wider push to expand Latin America’s exports beyond the dominant commodities label.

Much of the meat exported is fresh product, butchered in accordance with halal requirements.

Mauricio Mesquita Moreira, chief trade economist at the Inter-American Development Bank (IDB), says: “I wouldn’t put the Middle East as a priority partner for South America, but the composition of trade between these two is one of the most diversified”.

Slowly, some of the obstacles that have limited relations in the past are being overcome.

Trade organisations are working hard to increase awareness of the opportunity. “Strengthening ties is a huge hurdle, we need to work on brand awareness, but we’re already noticing a change,” says Alvaro Silva-Santisteban, director of Peru’s trade and investment office in the United Arab Emirates.

In 2011, Mr Silva-Santisteban could barely persuade three representatives from the UAE to attend his trade fair in Lima.

This year, there is a waiting list from fashion houses to supermarket chains and they will have four direct carriers to the continent to choose from.

Connectivity has become much better, mainly because of the expansion of Gulf-based airlines. Since 2007 Emirates, Etihad, Qatar and El Al Airways have all introduced nonstop flights from a number of Arab capitals to the Brazilian megacity of São Paulo. Royal Air Maroc starts direct flights from Casablanca this year.

Traffic has been growing quickly and both Emirates and Etihad have extended their routes to Buenos Aires and Rio de Janeiro.

According to research from the International Air Transport Association (Iata) traffic has increased 70 per cent since Emirates launched the first direct flight, and Panama recently signed an open skies agreement with the UAE.

Certification and regulatory obstacles still cause hiccups. A case of mad cow disease detected in an animal in the southern Brazilian state of Paraná led Saudi Arabia to suspend all beef imports in 2012.

That suspension is still in place, with Saudi imports of Brazilian meat falling 23 per cent in the year to May 2014.

But some of the other problems are being tackled. Much of the meat exported by Latin America is fresh product, butchered in accordance with halal requirements. Certification agencies – which also provide labelling in Arabic – are opening across a number of countries.

“We’ve already exported 4m tonnes of food products in the first quarter of this year. It’s booming,” says Michel Alaby, general manager of the São Paulo-based Arab-Brazilian Chamber of Commerce.

Gulf countries are currently investing millions in technology to improve their own domestic agriculture sources and provide much- needed food security for the region.

But, with its abundant land and willingness to engage with new partners, Latin America is already being served at the Arab dinner table.