Trouble in the Southern Hemisphere
Over the years I have compared North America and its agriculture to South America. I have indicated that the vast agricultural potential to our south would have to demonstrate political and financial stability over a decade period before I would give them equal status. Have the cracks in the southern potential started to occur?
In the 1980s, South America was a region of military dictators that were being replaced by democracy and capitalism. There was optimism that the market economics would lift these regions out of the doldrums. For a decade this occurred; however, storm clouds are emerging in these economies as some corrupt politicians have channeled the benefits away from the poor and middle classes.
For example, Argentina is deep in debt to other countries. Brazil has a fiscally austere government that has demonstrated slow progress on poverty. Similar trends are occurring in Bolivia, Chile and many of the countries in the region.
This is leading to the rise of Pink Tide, which is leftist government that is somewhat anti-American in trade and skeptical of the gains by democracy. Many feel that a strong man in control, as opposed to democracy, would lead to higher standards of living. If these economies continue to struggle, it will be interesting to see how the U.S.’s interest in the region fares in a potentially volatile political and financial landscape.
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Editors' note: Dave Kohl, The Corn and Soybean Digest Trends Editor, is an ag economist specializing in business management and ag finance. He recently retired from Virginia Tech, but continues to conduct applied research and travel extensively in the U.S. and Canada, teaching ag and banking seminars and speaking to producer and agribusiness groups.
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