Future Is Close: In 10 Years Brazil Will Be Planet’s Main Food Warehouse

Brazilian cattleThe adjectives are many and voiced loudly all around: Brazil is the world’s warehouse; it is the world’s source of food. Up to a little while ago, these words were just said, not taken seriously. Now, however, a scenery with ballast, anchored to solid bases, is being drawn for Brazilian agribusiness.

The picture has the support of institutions like the Food and Agriculture Organization of the United Nations (FAO), the United States Department of Agriculture (USDA), the World Bank and the United Nations (UN) itself.

And the forecasts of these organizations show that the old idea of country of the future may, in fact, expand out of just the lyrics of songs and may reach the economy through the hands, arms and serious work of agriculture, livestock farming and agro-industry in Brazil. The year of glory may be 2017.

One of the reasons for the irrefutable Brazilian future leadership in the sector is that the country has favorable conditions for agricultural production. Brazil has natural resources that make it possible to expand production, accompanying consumer market growth tendencies, without knocking down any trees.

There are currently 388 million hectares of high-productivity fertile farmland – of which 90 million is still untouched. This factor alone already makes Brazil a country with a natural aptitude for agriculture and all the business related to its productive chains.

Another point to be considered is the fact that Brazil has invested heavily in agricultural research and technology in the last two decades and is now picking the fruit. The return comes in figures.

For example: with the modernization of agriculture it was possible, with little expansion of farmland, from 37.9 million hectares in 1990 to 45.6 million in 2007, to expand production from around 58 million tons to 127.6 million, the record crop to be picked by Brazil this year.

This scenery of conquests has caused the country to be considered the owner of the most modern and productive agricultural technology of the world.

To Eugênio Stefanello, a professor at the Federal University of Paraná and technician at the National Food Supply Company (Conab), these indices show that it is just a matter of time, organization and market strategy for Brazil to become the warehouse of the world. A world that, more and more, will need food for its inhabitants. It is estimated that the world population will have reached 8.5 billion by 2030.

"Populous countries like China and India, although they are great agricultural producers, will have difficulties to supply the demand, due to the saturation of farmland," explained the minister of Agriculture of Brazil, Luís Carlos Guedes Pinto. According to him, this has already started happening and is one of the explanations for the expansion of Brazilian exports to those countries, a fact that has been identified in recent years.

Between 2002 and 2006, foreign sales of Brazilian agribusiness grew 99%. They rose from US$ 24.8 billion to US$ 49.4 billion, according to figures supplied by the Ministry of Agriculture, Livestock and Supply. The growth continues in 2007.

In the first four months alone, sector foreign sales totaled US$ 16.5 billion – the value is 24.7% greater than that exported in the same period last year. The Middle East leads the ranking of regions that grew most as destinations for Brazilian exports – 67.4%, followed by the European Union (34.95%) and Africa (33.4%).

Brazil is already the main world exporter of ethanol, sugar, meats, cattle beef alone, coffee, orange juice and the soy complex (chaff, grain and oil). The country is also the second main exporter of soy grain, the second of chicken and the fourth of pork. In less than three decades Brazil has grown from an importer to the fifth main exporter of cotton.

The country is also the fifth main exporter of corn and is among the 20 main exporters of rice. In terms of production, the country is the main world producer of cattle beef, the third in terms of poultry and the fourth in terms of pork. Brazil is also the main producer of sugar, coffee, orange juice, the second main producer of soy (grain), and the fourth main producer of chaff and oil.


Brazilian sales of the sugar and alcohol complex grew the most – 243% in four years. In the case of ethanol, Brazil is way ahead of its main competitors. "Brazil has production expertise and is competitive in the entire productive chain, from sugarcane to industrialization and logistics, due to oil company Petrobras. The logistics bottleneck for alcohol is lower than for the transport of grain, for example. I therefore believe that by 2017, we will be the main global distributors of alcohol," stated Márcio Lopes e Freitas, president of the Organization of Brazilian Cooperatives (OCB).

According to figures supplied by the Ministry of Agriculture, Livestock and Supply, Brazil will be producing 38.6 billion liters of alcohol by 2017, more than double the production of 2005. The domestic consumption is estimated at 28.4 billion liters and exports at 10.3 billion liters.

To continue on the right route, the country just needs to find the balance between cane and other crops and livestock farming.

"I believe that there will be changes in the production of cattle beef, for example. Extensive livestock farming will be replaced by intensive farming. In meat cattle farming, the use of technology is great, the market leaders, for example, are confining 14 heads of cattle per hectare. By 2017, we will have more cattle farms within this standard. What used to be grazing ground will become sugarcane plantations," stated Freitas.

The OCB president, however, warns to the fact that the government needs to take a stand with regard to the changes that are to come. "The government must take measures to guide production. It is necessary to guarantee income in other areas, to stimulate the integration of sugarcane crops with livestock farming and grain," he finished off.

As an example of the correct steps to be taken for a future without surprises, Freitas mentions the case of wheat. "Brazil consumes more wheat than it produces and suffers with the Argentine posture. All the country needs is an agricultural policy for production here and the imbroglio will be solved. Planting wheat may be alternated with the plantation of soy and corn, it is a winter culture.

"Farmers just don’t plant it because the Argentineans have better conditions, so wheat gets here at cheaper prices. If we balance the Brazilian and Argentine prices and establish an industrial agreement, we will guarantee the supply of the domestic market and will generate income," explained the executive.

Meat Future

Brazil is currently the main world producer of cattle beef, the second main producer of chicken and the fourth of poultry. By 2015, the scenery forecasted by the Ministry of Agriculture, Livestock and Supply shows that the country will remain as the leader of cattle beef, producing around 2.2 million tons a year, will become the leader of chicken (4.4 million tons) and will remain among the three greatest producers of pork – around 1.9 million tons.

Figures for the first four months of the year show that the Agriculture ministry forecasts are on the right route. Shipments totaled 888,000 tons that generate to the country a total of US$ 1.4 billion.

Raw meats alone answer to US$ 1.11 billion – an increase of 50% when compared to the same period last year. The good performance caused the sector to review growth forecasts for 2007 and to estimate it at around 35%. Early this year, the forecasted growth was just 10%.

The growth reflects the new positioning of the sector on the foreign market and also recovery with regard to last year, when Brazil lost its position due to foot and mouth disease. According to figures supplied by the Brazilian Beef Industry and Exporters Association (Abiec), the country is offering importers a product with greater added value, like more noble cuts. Another point is that large slaughterhouses like Bertin and Friboi established partnerships with distributors and are selling cattle beef directly to supermarkets, without intermediaries.

The promotion of cattle beef has also gained space on the sector agenda. The Abiec has been promoting promotional barbecues in buyer countries, teaching how to cook Brazilian beef, adding value to typical Brazilian cuts. Last week, for example, two barbecues were promoted in Arab countries: in Jordan and Morocco. In coming months, there will be events in Germany and Russia.

Chicken and Pork

To José Augusto Lima de Sá, Foreign Relations director at food sector company Sadia, the future of chicken and pork is also promising. The results may be even better than those forecasted by the Ministry of Agriculture.

"I believe that new opportunities will arise. For example, up to 2015, we may have entered markets like China, India, Mexico and the United States. In China, we are only just starting. India, Mexico and the United States are markets that we have not even entered. And, imagine, that is a market of two billion consumers. And they may consume Brazilian chicken. In the case of pork, the market is much larger."

Lima de Sá believes that the energy question may also be an opportunity for Brazilian beef. "The impacts of bioenergy – with the US producing ethanol from corn – will be felt in all countries that produce animal protein, due to the use of the grain in animal feed, but Brazil will feel it less. We will be more competitive than the United States. We will, but it will be lower than in the European Union (EU), for example. It is therefore an opportunity for the country," he said.

Exchange Rate

Two factors may affect the situation of meats: exchange rates between the Brazilian real and the dollar and avian flu. Exchange rates, according to Lima de Sá, are bad (the Brazilian real is appreciated against the dollar), they make things harder, but the sector is already used to it. "It has never been easy for chicken, we have always had to compensate these ‘exchange losses’ with competitiveness, productivity and efficiency," stated the executive.

Regarding avian flu, recalls Lima de Sá, it is important to remain aware. "Brazil is lucky, the risk of the disease coming here is lower than that of other countries in Asia and Europe, due to the migratory route of birds. Before coming here it has to reach the United States and Canada, which have very rigorous control. But the presence of new cases, albeit in regions far from Brazil, may reduce the global consumption of chicken," he finished off.

Anba – www.anba.com.br


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