Roberto Rodrigues

Between Preservation
and Growth

Roberto Rodrigues
Roberto Rodrigues
The Organization for Economic Cooperation and Development (OECD) and Food and Agriculture Organization (FAO) state the following: for the world’s food availability to grow by 20 percent until 2020, Brazilian agriculture has to grow double – 40 percent. But despite exclusive advantages, the country’s agricultural sector also faces several challenges. So why do the OECD and FAO have this vision in relation to Brazil?

Brazil’s territory measures 851 million hectares. Of this total, only 72 million hectares are farmed and a further 20 percent are used as pastures. 61 percent of our territory is native forest from before Brazil’s discovery. We’ve calculated that 85 million additional hectares could be farmed. But of this potentially cultivable land – ten million of which we would transform from existing pastures – only about 15 million hectares can actually be converted due to rigid forestry laws. Today there is a much stronger level of awareness than in the past regarding sustainability in the private Brazilian sector.

Sustainable Technology

Sustainability is also mirrored in our agricultural technology. We have really interesting technology in Brazil and the numbers are impressive. In the last twenty years, the area planted with grains grew 40 percent. And the production of grains grew 220 percent. If we compare this to the productivity of twenty years ago, we would need an additional 68 million hectares to reap the harvest that was collected this year. This means that our technology is sustainable. We’ve increased the productivity so much, that we’ve preserved 68 million hectares. It demonstrates the importance of our technological standard and the competency of our people, which brings us to the next point.

In 2013 the Brazilian agribusiness trade balance was US$ 83 billion. Growth has been a constant for agribusiness, which continues to export more and import less: from 2002 to 2013, Brazilian agribusiness exports almost quadrupled from US$ 25 billion US$ 100 billion. In contrast, other sectors of the Brazilian economy have struggled. The total Brazilian trade balance of merely US$ 2.6 billion in 2013 reflects this. It also shows that agribusiness now guarantees the country’s entire trade balance. And half of this period was marked by one of the largest financial crises in international history. This shows that the competitiveness of Brazilian agriculture is not just established by technology, but also through the know-how of our rural producers. They have also transformed into significant agents for the preservation of natural resources, such as water, which also represents a further advantage. Few countries have comparable water availability. All these factors have led to the OECD and FAO to indicate Brazil as a country that can increase food production by 40 percent in just ten years.

Brazilian Foreign trade
Brazilian Foreign trade

But Brazilian agriculture also faces noticeable challenges – the principal problem being logistics and infrastructure. Brazil has spent many years without investment in this area. Only now has the Federal Government begun to get involved, forming public-private partnerships and giving out concessions. A number of roads have already undergone bids and we are now looking for bids on ports and railways. So this main bottleneck is starting to be confronted. We expect that this will show results around three years from now. Until then we will continue to suffer in relation to logistics.

Another point is that Brazil lacks a rural income policy. We already have a rural insurance law, which is now being revised in Congress with the inclusion of a disaster fund. However, we want this to advance so that rural insurance becomes more similar to developed countries. Other mechanisms like rural credit, credit flexibility and instruments that reduce rural producer dependency are paths that we are also slowly taking. The main idea is to continue privatization, lessen the burden of red tape and allow the stock exchange to gain more importance.

Promising Prospects

Another bottleneck is the lack of greater aggressiveness in commercial policy. We lack bilateral agreements and policies geared to adding value to our raw material. We must discontinue the sale of commodities and instead sell products further down the production chain. This missing policy is a recurrent theme that has been debated with great emphasis. In fact, 40 percent of internationally traded food products takes place within bilateral or multilateral agreements with reduced tariffs or steeper quotas. It is clear that without similar policies, we will end up losing the markets we had conquered over the past few years.

The last issue is an institutional matter: in Brazil we have four separate ministries for agriculture, familiar agriculture, fisheries and forestry. They all dispute the same funding, which leads to a certain loss in efficiency. The institutional structure needs to be reorganized in a way that reflects the importance of the agricultural sector. Although it represents 23 percent of national GDP (gross domestic product) and generates 30 percent of jobs, the importance of the agribusiness sector is only now being perceived on a broader scale. However, there is an interesting novelty coming up in 2014: the elections for the Presidency of the Republic. For the first time in several decades, the official candidates are seeking out leaders in agribusiness to discuss fundamental strategies. In the last 40 years, it was the rural leaders who sought out candidates to set forth actions to favor the sector, although with scant results. Presently, it seems that things are changing and there is strong hope that this time around, the opportunities will outweigh the challenges and these will be overcome.

Written by Roberto Rodrigues

Roberto Rodrigues

We’ve increased the productivity so much, that we‘ve preserved 68 million hectares. This means that our technology is sustainable.

Roberto Rodrigues is the Coordinator of the Getulio Vargas Foundation Agribusiness Center. Rodrigues is a strong supporter of the cooperative movement, and has chaired the Brazilian Cooperatives Organization, the World Committee on Agricultural Cooperatives and the International Cooperative Alliance. He also served as president of the prestigious Brazilian Rural Society and the Brazilian Agribusiness Association and is a member of the Board of dozens of Brazilian producer’s associations.

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