Martindale Retrospectives Retrospective on Luis A. Arcentales, “Planting the Future: Chile’s Crusade for Agricultural Prosperity” from Chile in Transition Perspectives on Business and Economics, Volume 17, 1999 Luis A. Arcentales '99 is a managing director at The Rohatyn Group. He is also an advisory council member of the Martindale Center. Arcentales analyzed Chile’s economic success in agriculture, identifying internal and external changes that contributed to the development of Chile’s agricultural sector. Has the agricultural sector continued to find success in Chile since 1999? Chile is known for its rich soil and abundant natural resources. The country’s climate allows a wide variety of agriculture to flourish. In 1997, fruit produced most of Chile’s agricultural profits. Today, this still stands true. The most economically important fruits remain grapes (and wine) and apples. Forestry, fisheries, and grains are also major contributors. Chile’s agricultural development benefited from the political and economic climate; free trade agreements and a democratic government have enabled Chile’s agricultural sector to prosper. In 2004, Chile and the United States entered a free trade agreement. This FTA opens markets, eliminates tariffs on imported goods, reduces trade barriers, and requires enforcement of labor and environmental standards. In 2015, the agreement was fully implemented, and all exports from Chile entered the US freely and vice versa. This trade agreement advanced the development of Chile’s agricultural exports and strengthened relations with the US. In 2023, agricultural and related sectors made up “24.4 percent of total Chilean exports, 9 percent of total GDP, and around 10 percent of Chile’s labor force” (International Trade Administration, 2023). Overall, Chile’s economy has expanded in the 2020s, “driven by increasing domestic consumption, public investment and external demand” (Food Export…, 2023). However, Chile’s long-term economic growth and the health of the agricultural sector are difficult to forecast due to climate change, lingering effects of COVID, and inflationary pressures. Have there been developments in Chile’s agricultural sustainability since 1999? Sustainable development in agriculture has been a topic of discussion in Chile. Challenges to the availability of scarce natural resources have hindered agricultural development in Chile. In particular, “Chilean agriculture uses 72 percent of the country’s water resources” (International Trade Administration, 2023), with climate change causing droughts across Chile, where the rainfall deficit, depending on location, ranges from 20% percent to 90% (International Trade Administration, 2023). Chile’s existing FTA dismisses sustainability concerns such as water scarcity, emissions, and biodiversity preservation. Chile’s support for farmers is also among the lowest of all countries in the Organisation for Economic Co-operation and Development, contributing to agricultural labor shortages. Many farmers have opted for less labor-intensive jobs with higher pay in other sectors. Nevertheless, recent policy initiatives, like the Sustainability Strategy for the Chilean Agri-food Sector in August 2021, with the goal of identifying “the best agricultural practices for sustainable production of agricultural products” (OECD, 2022), have been introduced aiming to enhance sustainability. References Food Export Association of the Midwest USA and Food Export USA–Northeast. (2023). Chile country profile. International Trade Administration. (2023, December 7). Chile country commercial guide. US Department of Commerce. OECD. (2022). Agricultural policy monitoring and evaluation 2022: Reforming agricultural policies for climate change mitigation. OECD Publishing. doi.org/10.1787/7f4542bf-en Retrospective by Randi Conroy ‘25 Finance, with mass communication minor 3 August 2024
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