The Lure of Brazil as World’s Breadbasket

Brazilian minister Reinhold Stephanes Brazil's minister of Agriculture, Livestock and Supply, Reinhold Stephanes, claims that the Arab countries are a great market for national agribusiness. However, he defends that partnerships with the region should be developed as well. One such partnership would aim at importing fertilizers and pesticides, which some Arab countries manufacture.

The minister said that, in the face of heightened global demand for foods, Brazil should continue to supply to the Arab countries, which are traditional buyers. The minister believes that as a consequence of worldwide concern with a food crisis, non-agricultural countries are going to seek to strengthen ties with the sector's leading producer nations, such as Brazil.

The ministry is going to promote a mission to Egypt and Algeria, which are Arab nations, as well as to Iran, next June. The initiative counts on support from the Arab Brazilian Chamber of Commerce.

Stephanes, accompanied by the secretary of Foreign Relations in Agribusiness at the ministry, Célio Porto, met with the president at the Chamber, Antonio Sarkis Jr., the Marketing vice president, Rubens Hannun, and the secretary general, Michel Alaby, in the southeastern Brazilian city of São Paulo, in order to address the matter. Read below the minister's interview.

Early this year, representatives of the Ministry of Agriculture went on a mission to the United Arab Emirates and Saudi Arabia. In the month of June, a new, larger mission will be held to Egypt and Algeria, also to be promoted by the ministry. Does it mean that Brazilian agribusiness is more interested in the Arab world? Why are these missions being held at this particular time?

It is a region in which we currently have a large market, and where we may find great partners. The Brazilian vocation for agricultural production – which is not new, going back a long way – becomes stronger due to the worldwide need for food. Brazil is one of a few countries capable of feeding its entire population, being self-sufficient and still ranking among global leaders in growth of surplus production.

We should have a meeting in the next few days, certainly counting on the presence of the president (Luiz Inácio Lula da Silva), in order to study how Brazil may partake in a global expansion of product supply. One of the aims of such an expansion would be reducing this imbalance between supply and demand and avoiding a price hike, which would bring harm to all, including Brazil itself, as it would generate domestic inflationary pressure. Brazil is obviously willing to be in that position, as it has the privilege of adequate weather, adequate lands, of having developed extraordinary technology, of being a global leader in tropical farming technology and of having the workforce, a good production structure.

Other countries have basically the same conditions as Brazil, but do not possess the necessary technology or the production structure required. They might have it in the future, but it will take them some time. On the other hand, Brazil has a great need, it is a country highly dependent on fertilizers and pesticides, and some Arab countries have sufficient reserves or production capacity in the field, especially for petrochemical industry products. Therefore, we may consider not only exporting (to the Arab market), but also forming partnerships or importing.

Are partnerships one of the aims of this coming mission?

Yes, we are going to look at the possibility of establishing partnerships. And the Arab Brazilian Chamber of Commerce plays a key role there, namely organizing Brazilian businessmen who are interested in importing and placing them in touch with Arab businessmen and institutions capable of enabling these partnerships.

In the current international context of heightened food demand, do you think Brazilian agribusiness will be able to continue supplying the Arab market?

I believe that partnering countries with which Brazil already has consolidated trade have a preference. We must observe issues such as the honoring of contracts, the meeting of commitments and the recognition of historic partners. We must recognize who our historic partners are, and the Arabs are among them. They have always been on the fifth, fourth and at times even third position in our ranking of importer countries. Therefore, they must be respected.

Last year, Brazil even exported some ethanol to the United Arab Emirates. In what way do you believe that the country might work with the Arabs in the ethanol field? The Arabs are leading oil producers, but some regions have been showing interest in clean energies. Such is the case with Abu Dhabi, which is building a zero-carbon-emission city. Is there a chance of forming partnerships with the Arabs in this area?

Brazil is totally open in terms of placing its technology at the disposal of the world. In the case of the Arabs, they are oil producers, but do not have the capacity to produce clean energy, therefore they must import it. Should the Arabs wish to produce clean energy, then Brazil is at their disposal and has the technology for that. What is more, Brazil believes that we are only going to have a worldwide ethanol market when many other countries start producing and consuming it. Otherwise, the country shall remain as the sole producer nation with surplus production.

Brazil is aware of the fact that it must partake in the global clean energy process. The country is self-sufficient in petroleum as well, but it has produced clean energy for 30 years now. A total of 47% of the Brazilian energy matrix is comprised of clean energy. It is a trend in Brazil, it is a tradition and it did not emerge due to global warming. It emerged for other reasons, the weather being one, and another one being the raw material (sugarcane) that we developed, which is also very favorable. Brazil has this privilege and is very open in terms of exporting technology to whatever country is able to use it.

Obviously, we are also interested in partnerships as suppliers. But it is very clear to Brazil that any country that wants to import ethanol needs to have security and long-term contracts, as well as reasonably stable prices. That much is understood nowadays. Also, some countries are installing their production units here in Brazil and elsewhere in order to export to their own countries. Should the Arabs want to do that, it is a possibility as well.

Is there a particular sector in our trade with the Arabs that is more prone to growth, a specific type of product we can export even more of to them?

Our chicken production has enormous growth capacity and global demand is rising as well. The Arab countries are also very much interested in eggs, and there could be some kind of association in this field, a partnership for them to invest and operate here.

Early this year, we also exported US$ 60 million in wheat to the Arabs. Is Brazil capable of supplying the region with wheat?

No, but we do not adopt a policy of restricting exports either. We try and set the market free for exporting and importing. We do have a wheat production deficit, however, because we have adopted a policy, which was interesting for Brazil for a long time, of importing wheat, as it used to be cheaper. For several years, wheat counted on subsidies in the international market, and it was a relatively risky culture during our winter, therefore importing was better. Brazil once was self-sufficient in wheat. This is what occurs nowadays with rice, we import and we export, but we are not going to become suppliers to the Arabs in the field because we are not self-sufficient in it.

Late this year, a sugar plant is also going to be inaugurated, in Syria, in partnership with a Brazilian company, Crystalsev. Does this type of initiative, of Brazilian companies operating in the Arab countries, tend to grow?

It is a trend, and it has been happening extremely fast for some years now. Brazil has purchased plants abroad or installed plants abroad. We have either installed or purchased plants in Argentina, Australia, the United States, Russia… (Brazilian food manufacturer) Sadia has just installed itself in Russia. I believe that going abroad is a trend.

And are the Arabs investing or about to start investing in our agribusiness?

I have not been contacted by the Arabs. I was contacted by the Japanese, the British, there were several companies interested, some of them have begun operating, others are still negotiating, but I did not receive any Arab mission along those lines. Should there be any interest, though, we are open to it. I believe that all countries are concerned with food, because they are predicting a crisis, a worldwide imbalance between supply and demand, therefore those countries are concerned with establishing or strengthening ties with countries capable of producing and supplying food. The countries capable of doing so are African countries, Brazil and Argentina. In Argentina, albeit at a lower scale, there are possibilities. I would say that those are the three regions that possess the necessary conditions for doing that. There is a certain preference for Brazil, though, because Africa, for instance, still has a long way to go in terms of structuring itself.

At what rate should agribusiness exports as a whole and to the Arab countries grow this year?

We have been growing 16% per year in the last seven years, which is an extraordinary rate. And I believe that the trend is for that rate to be maintained this year and in the next few years. The growth rate of exports to the Arabs should be even greater.

Anba –


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