BRAZIL: POSITIONED TO GUARANTEE THE FOOD SECURITY OF THE WORLD
Brazil is one of the world’s leading producers and suppliers of food, fibers and agro-energy. Productivity gains obtained through technology and local farmers entrepreneurship, added to agriculture and livestock production chain organization. The most recent projections published in Agricultural Outlook by the United Nations Food and Agriculture Organization (FAO) and the Organization for Economic Cooperation and Development (OECD) estimate that, over the next ten years, Brazil’s production of various agricultural and livestock products will grow at rates far above the world average.
Brazil also possesses extensive areas of native vegetation recognized worldwide as important to biodiversity, water cycling, carbon storage and climate regulation. Brazilian agriculture and livestock sector is ready to commit to preserving this natural resource heritage, while at the same time expanding its production and supply of essential products to attend domestic and overseas demand.
Brazil and Agribusiness
Modern, efficient and competitive, Brazil has become one of the world's largest producers and exporters of agricultural products over the past two decades. Productivity gains, efficient management, research, innovation and technological development have revolutionized agribusiness in the country.
The growth in agribusiness results from a combination of the fact that the country has the greatest area of arable land in the world - 388 million hectares (almost 960 million acres) and the increased demand for food from the world's growing population, which is expected to reach around 9 billion by 2050. Brazil has attained leadership in agribusiness due to favorable economic conditions and long-term investment in research on tropical agriculture technologies and techniques. Its climate is favorable to agricultural activities, with much of the country receiving over 1,200 mm (47.2 inches) of rain a year and abundant sunlight. These factors allow for two crop cycles per year, without the need for irrigation in some regions.
Brazil's Agricultural Model
Agriculture in Brazil is extremely diverse, ranging from small farms to large estates. A considerable part of Brazil's agribusiness is organized into cooperatives, especially in the Southern region. Family farms also play a key strategic role and are responsible for nearly half of the domestic production of corn and over a third of the coffee consumed in the country every year. Additionally, large international groups like ADM, Agrium, Bunge, Cargill, Louis Dreyfus and Syngenta have established significant operations in Brazil.
Commitment to sustainable agricultural development
Brazil has an area of 851 million hectares, of which only 38.7% is agricultural land or pasture; 61% of the country's territory is covered by native vegetation, which corresponds to 517 million hectares.
Brazil's agribusiness is unique in that it is compatible with sustainable development and environmental conservation, and the country's government is committed to promoting sustainable economic development and preventing illegal deforestation. As a result of the government's initiative to protect the Amazon rainforest, in 2009 Brazil recorded the lowest rate of deforestation in the past 20 years. The Brazilian Forestry Code, which comprises the relevant federal legislation, is one of the strictest in the world. The code was updated in 2012. Additionally, Brazil has low carbon emissions when compared to the largest agricultural producers in the world.
The concern for food security has drawn investments to the industry and the issue has been a priority for both the public and private sectors around the world. The world's population grows as the availability of arable land decreases. Increased productivity has not been able to keep up with the increased demand for food. Over the past 10 years, for example, soybean production increased by 0.8% while demand for the crop increased by 3.4%. Similarly, corn production increased by 1.3% while demand increased by 3.6%. To meet global demand in 2025, it is estimated that soybean and corn yields must increase 120% and 360% respectively. At this rate, in 10 years, we will need twice the Brazilian production to meet the demand for these crops.
Asia plays an important role and has a special interest in food security. The region is home to 51% of the world's population and accounts for 19% of the world's gross product, but only has 18% of the world's available land and 23% of its renewable water resources. Asia also accounts for a significant portion of global consumption: 28% of the world's poultry, 20% of its beef, 31% of its dairy products and 37% of its sugar. Furthermore, Asia's middle class is the fastest growing in the world and in the coming decades its demands will be the highest in the world for that social class. In 2020, 66% of the world's middle class population will be in Asia and will account for 59% of the world's consumption.
The increase in cultivated land must be accompanied by advances and investments in agricultural technology. Fostering the development of new technological solutions to increase the productivity and competitiveness of Brazilian agribusiness is an essential part of overcoming the challenges of global food supply and is an attractive investment opportunity for foreign investors.
New Investments in Logistics Infrastructure to Supply the World
Investment opportunities are not just found in the production processes. There are also opportunities in the logistics infrastructure for the transportation of agricultural products, which is currently facing many challenges. The elimination of infrastructure bottlenecks tends to significantly benefit Brazilian agribusiness and the country's position as a major food exporter and supplier.
The number of containers transporting agricultural products handled by the import and export infrastructure in Brazil is low compared to the overall cargo. Seaports in Brazil and throughout the Southern Hemisphere are still not equipped for large ships. The agricultural expansion in the country was not accompanied by investments in the infrastructures for ports, warehouses and grain transportation, resulting in an imbalance between the production and the transportation logistics processes. The industry's growth over the last decade has revealed critical flaws in Brazil's infrastructure. The lack of infrastructure is especially critical in the Central-West, North and Northeast regions of Brazil. Today, around 58% of grains are produced in the Center-North of Brazil, but 83% of port activities take place in the Southeast and South of the country.
To improve the business environment and private investment opportunities, the new 2013 Ports Act encourages private investment in the industry, thereby promoting increased competition within and between ports to significantly increase the services offered. It sets forth guidelines for bids on new leases and the renewal of existing leases. The Ports Act also plans for improved integration between the different modes of transportation while taking into consideration the production chains and their logistics needs.
Additionally, Federal government programs, such as the Growth Acceleration Program and the Investment in Logistics Program, are building new transportation networks and logistics infrastructure. These initiatives will further boost the development of new agricultural regions, allowing producers to have their crops transported efficiently to consumption centers and to export ports in the country. Brazil's main export markets for agricultural products are the European Union, China, the USA, Russia and Japan.
Thanks to innovation and excellent growth, Brazil's agribusiness does not depend on government subsidies to be competitive. According to the OECD-FAO Agricultural Outlook 2010-2019, "Brazil has the fastest growing agricultural sector by far and is projected to increase production by more than 40% by 2019 when compared to the analysis of the 2007-09 period." Brazil is currently the world's leading supplier of a wide range of agricultural products, including meat, orange juice, soybeans, sugar, tobacco, coffee, ethanol, poultry and cellulose.