AGRICULTURE-BRAZIL: A New Colossus in Global Markets

By Mario Osava Reprint | | Print |

Mario Osava

RIO DE JANEIRO, Nov 4 2003 (IPS) - Brazil’s leadership in the fight to liberalise international agricultural markets is motivated by an important fact: the South American giant wants to give free rein to its enormous export potential, which currently runs into farm protectionism, particularly in the industrialised North.

Brazil this year became the world’s leading exporter of soya and beef, and has long been the number-one exporter of coffee, sugar and orange juice.

In the context of the World Trade Organisation’s negotiations, Brazil has emerged as a voice of the developing South, alongside China, India and South Africa, through the Group of 20, which formed in early September to counter the power wielded by the farm-subsidising trade superpowers, the European Union and United States.

Brazil’s unprecedented trade surplus this year – more than 22 billion dollars – is due entirely to agriculture and agro-industry. The favourable balance in farm business will even surpass that sum, but part will go towards countering the industrial sector deficit.

At 52 million tons, this year’s soya harvest is smaller than that of the United States, estimated at 72 million ton, but with less domestic consumption Brazil has more to export, allowing it to surpass U.S. foreign sales of the crop.

The current exportable harvest of grains, fibre and bran, and oil represents revenues of 8.37 billion dollars, according to the Brazilian Association of Vegetable Oil Industries. This has been Brazil’s leading export sector for the past decade.

At today’s growth rate, the country is set to become the world’s leader in overall agricultural production within a few years. The harvest has increased 52.5 percent in the past three years – a pace unthinkable for the farming sectors of industrialised nations.

The country achieved this boost by overcoming “the cultural colonisation that led to a focus on temperate climate crops,” and developing “a technology of tropical crops, favoured by photosynthesis, the greatest converter of solar energy,” says Luiz Hafers, vice-president of the National Coffee Council, which represents Brazil’s major coffee growers.

That pace could speed up if obstacles were eliminated, such as Brazil’s high interest rates on loans, “and if the barriers of foreign markets” were lifted, Hafers, former president of the Brazilian Rural Society, an agribusiness organisation, told IPS.

The distortions of international trade caused by protectionism and subsidies have led to sugar production in Europe costing nearly 700 dollars a ton, while export prices are the same as Brazil’s, around 180 dollars a ton, Hafers said.

The combined farm subsidies of the countries of the industrialised North are estimated to reach nearly a billion dollars a day.

In addition to Brazil’s traditional products – like coffee and sugar – the country is turning into a leading exporter of lumber, paper and cellulose, prawns and alcohol, Hafers said.

The decision of numerous countries to use ethanol as a gasoline additive, to replace other petroleum derivatives and reduce urban air pollution, is creating a giant market for sugarcane alcohol, which Brazilians have been putting in their gasoline tanks for more than 25 years.

Ethanol alcohol can be made from sugarcane, maize, sugar beets and other plants. But sugarcane-based alcohol is the cheapest to produce, particularly with the distilling technology developed by Brazilian companies.

Brazil is positioned as the only country that can respond to the growing global demand for ethanol in the coming years, says Peter Baron, executive director of the International Sugar Organisation.

No other country can produce ethanol at such low costs, said Baron, who participated in a seminar here on sugar and alcohol last week.

Because it involves fuel for automobiles, the potential market is of a totally different magnitude, far greater than the market for agricultural products destined to be used as food. In Brazil and the United States, vehicles are already running on ethanol or a mixture of the alcohol with gasoline.

Fruit crops represent another “under-exploited frontier” that offers the country broad opportunities, says agricultural economist Antonio Buainain, professor at the University of Campinas, near Sao Paulo.

Meat is another sector with a “spectacular” outlook for the future, he adds.

In August, Brazil became the world leader in beef export volumes, surpassing Australia and the United States. The National Confederation of Agriculture forecasts exports this year of 1.3 million tons, worth some 1.5 billion dollars and nearly 30 percent more than in 2002.

With an “under-utilised herd” of more than 170 million cattle, Brazil has a great deal of room for technical advances, which is why its potential growth is “immense”, says Buainain.

Poultry and pork production have also gained ground in the past two decades, and are increasingly competitive on international markets, allowing them to vie for space on all continents, he says.

Hafers, meanwhile, predicts that in 10 years Brazil will be a major exporter of dairy products, although currently it is a net importer of milk. He says he trusts the assessment offered by “a neighbour of my ranch in Bahía,” in the northeast.

Hafers’ neighbour is not a mere “armchair expert” on the matter.

The neighbour is a New Zealander rancher who left his country in order to invest in Brazil, which in his opinion “will be the greatest dairy superpower on earth” within a decade.

His prediction could become reality if farmers take full advantage of the productivity of the country’s pastures, which are favoured by the lack of a winter season, explained Hafers.