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Editorial Service Issue 14: Brazil
Tuesday, June 29, 2010
Bayer CropScience Editorial Service - Issue 14
Agriculture is flourishing in Latin America
Country report on Brazil
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Brazil feeds the world
Brazil is booming: the country has been hit less hard by the global economic downturn than other countries, and domestic demand is rising as well. It has established a strong position in world trade thanks mainly to agricultural commodities and the export of raw materials.
Brazil enjoys a wide range of natural resources which, once harvested, place it in a prime position on the world market. In terms of area and population, Brazil is the fifth largest country on earth. It is the most economically significant state in Latin America, and its current boom is due mainly to export trade: high world market prices and strong demand from China are boosting the export drive. But the home market is not lagging behind either, as the purchasing power of Brazilian consumers continues to grow.
A robust agribusiness sector that is ripe for expansion
Brazil's fertile soils, good weather and availability of water offer ideal growing conditions. Thanks to a combination of modern technology and a highly industrialized agricultural sector, Brazil has become one of the most important global agribusiness player. According to Oliver Döhne, who works for the German trade promotion agency Germany Trade & Invest in São Paulo, "After the record harvest in 2007/08, the industry did experience problems due to the financial crisis, but this has not stopped it moving towards the world number one position. Brazil's agribusiness sector is still small compared to its potential and that of its main rivals, however." Statistics produced by the FAO, the UN food and agriculture organization, indicate that only 59.5 million hectares are devoted to farming. Adds Döhne, "Many countries are now struggling to feed their growing populations, but Brazil still has vast reserves of land that could be used for farming: an additional 70 to 100 million hectares could be available excluding forest protected areas." Even the environmental organization WWF believes that Brazil could easily double its agricultural acreage without setting foot in the Amazon region.
A wide range of produce
Brazil is already the world's largest supplier of sugar, coffee, beef, poultry, ethanol, orange juice and tobacco. Coffee-growing in particular has a long tradition in Brazil, and this is reflected in yields. According to the German Coffee Association's 2009 annual report, it is currently the top global producer, putting 24.3 million sixty-kilogram bags on the market. 30 percent of all coffee on the world market is produced in Brazil. The coffee-growing areas lie in the tropical and sub-tropical regions of Minas Gerais, São Paulo, Paraná and Espírito Santo.
In contrast, the sugar-cane fields stretch from the north-east of the country through to the south. In the hilly north-east, the bamboo-like sweet grass is still harvested by hand, but in the flat south this process is almost entirely mechanized. Brazil's sugar-cane plantations cover an area of over eight million hectares. According to the Brazilian Institute for Geography and Statistics (Instituto Brasileiro de Geografia e Estatistika; IGBE), the sugar-cane harvest in 2008 was just over 650 million tons and is expected to rise by 6.4 percent to over 690 million tons in 2009. Most of the cane is processed into cane sugar, ethanol and cachaça, a Brazilian spirit distilled from sugar cane.
Against this background, also Bayer CropScience further extends its sugarcane-research. Together with leading Brazilian sugarcane technology center CTC, São Paulo, Brazil – the company intends to enter into a broad cooperation on the research and development of biotech sugarcane varieties. The main goal is develop varieties with higher sugar content, aiming to increase the production efficiency of ethanol. Early research results have indicated increases of about 30 to 40 percent. Sugarcane is the most productive crop for economically viable renewable energy with the best CO2 balance.
Brazil's exports also include soybeans, soybean derivatives, corn and pork: it is the world's second largest producer of soybeans after the United States, with the main production areas lying in the mid-west, south-east and south of the country. IGBE statistics put the 2008 soybean harvest at almost 60 million tons; by way of comparison, the 2005 figure was 50.2 million tons. It exports mainly to the European Union, China and Japan. Yields can exceed 4.5 tons per hectare in some places such as the Mato Grosso region thanks to sophisticated, sustainable methods and technologies.
Brazil is also the third largest exporter of corn in the world. 14.4 million hectares are given over to this crop, mainly in Rio Grande do Sul, Minas Gerais, Mato Grosso and Paraná in the south of the country. Average yields in 2008 were around 4,000 kilograms per hectare with strong possibilities of further productivity growth. Farmers can bring in two harvests a year thanks to favorable weather conditions and fertile soils, enabling a total production figure of just over 60 million tons in 2008 according to the IGBE.
Growth thanks to new technologies
According to Arturo Peyloubet, Marketing Director for Bayer CropScience in Brazil, "Brazilians are very receptive to new technologies that help boost yields. This is also shown by the fast adoption of new seeds and optimized hybrid varieties among farmers." The local market for crop protection products more than quadrupled between 1992 and 2006, and the long-term growth trend of the Brazilian agricultural market continues. But there is still room for improvement in efficiency: "Farmers need to improve their land management in order to achieve higher yields. We at Bayer CropScience can help them with this, with field studies, technical support, customer-focused advice and other activities. Soybean farmers in particular already have considerable technological knowledge," comments Peyloubet. Soybeans are currently grown on about 22 million hectares, a figure which could be multiplied by a factor of five without having to fell a single tree. One source of arable land is the vast areas of pasture which are not intensively managed at the moment.
Crop protection specialists are faced with constant challenges. One example is soybean rust. The fungus, Phakopsora pachyrhizi, causes soybean plants to lose all their leaves and can cut harvests by up to 80 percent in some cases. This aggressive fungus is particularly active in Latin America. Bayer's scientists have developed crop protection systems to tackle it: Nativo® and Sphere Max® which contains the active ingredient trifloxistrobin and Atento® as a seed treatment. These products are specially adapted to the various climate and regional conditions as well as customer needs, and are highly effective against soybean rust. Comparison trials carried out by the state-run agricultural research institute Embrapa (Empresa Brasileira de Pesquisa Agropecuaria) showed that these products have high performance to protect soybean plants.
Trade needs transport networks
When all the inputs, machinery, vehicles and industrial processing stages are taken into account, agribusiness accounts for 25 percent of gross domestic product of Brazil and 36 percent of exports (Germany Trade & Invest, August 2009). The only problem is the inadequate transport infrastructure, which is in urgent need of upgrading so that farming in the interior of the country can be put on a more intensive footing. The railways still play a comparatively minor role, carrying only 25 percent of goods transported. According to Arturo Peyloubet, Marketing Director at Bayer CropScience in Brazil, "Long-distance roads are the backbone of Brazil's transport infrastructure. Brazil has a long way to go to catch up with other countries, but things are set to improve thanks to work already being carried out on the railways, water system and road network, as well as pipeline projects."
Brazil has been particularly successful in using biofuel. "Nowadays practically 90 percent of all new cars sold are fitted with flexifuel engines, which can run on petrol, the alcohols methanol and ethanol, or any combination of these fuels. In 2009 service stations sold more ethanol than petrol," says Peyloubet.
Upswing at the sugar-loaf mountain
The Brazilian economy, the tenth largest in the world, is benefiting from exports. This trade accounts for 14 percent of the country’s gross domestic product (GDP), which according to the German Foreign Office stood at around US$ 1,586 billion in 2008. Brazil's principal exports are still agricultural commodities and mineral raw materials, but the country is also gaining a greater share of the world market with industrial products such as aircraft construction.
"Brazil has not escaped the economic crisis unscathed, but it is well placed for a lasting upturn once the world economic situation stabilizes," says Markus Jäger of Deutsche Bank Research. The upward trend in Brazil's economic performance did flatten out slightly in 2008, but growth still stands at 5.1 percent. Adds Jäger, "A robust credit rating, a stable banking system, a reasonable level of public debt and strong budgetary discipline will lead Brazil back to the path towards sustainable growth. Of course, Brazil's economy will not achieve six percent growth, but an average figure of four percent is certainly attainable.”
The International Monetary Fund (IMF) and the Organization for Economic Cooperation and Development (OECD) have praised Brazil's currency policy and debt management. Explains Jäger, "The outlook for growth has improved compared to other emerging markets and industrialized countries. Brazil is the largest economy in Latin America and should emerge from the world downturn on the winning side." Many low-income Brazilians have become consumers with cash to spend, and they are boosting domestic demand, mainly for food. Consumption now accounts for 60.7 percent of Brazil's GDP.
| Effective reforms Two-thirds of industrial manufacturing takes place in the south and south-east of the country, where 90 percent of Brazil's population lives. São Paulo has become the country’s largest industrial city and continues to attract incomers: its population has more than doubled over the past forty years, and now stands at over eleven million, with a further nine million living in the surrounding districts. The situation has improved in recent years thanks to good underlying economic conditions in general because of the governmental efforts. According to the IGBE, the unemployment rate has been falling steadily from 10.6 percent in 2006 to 7.6 percent in 2008. In the late 1980s Brazil was still among the most heavily indebted countries in the world, was languishing under a military dictatorship and its industries were not able to operate on the world market. As an emerging market, it is now standing shoulder to shoulder with other countries in the context of south-south cooperation. Experts on Brazil agree that it will probably achieve all of the United Nations' eight millennium goals by 2015, and will then also be given a permanent seat on the UN security council. | | |
Links that you may wish to follow up:
The website of Germany Trade & Invest, Germany's trade promotion agency contains up-to-date information about countries, markets and sectors which can be accessed via a database.
http://www.gtai.com/web_en/homepage
The OECD's website offers economic data and comprehensive statistics.
http://www.oecd.org/brazil
The website of the Brasileiro de Geografia e Estatística contains a wide range of data and facts about Brazil's agricultural sector and population structure.
http://www.ibge.gov.br/english
Germany's Foreign Office website offers information about Brazil's political situation, economy and population and a large number of links to other useful sites.
http://www.auswaertiges-amt.de/diplo/en/Laenderinformationen/01-Laender/Brasilien.html
This site sets out the United Nations' global millennium goals.
http://www.un.org/millenniumgoals
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