US projections indicate “golden decade” of Brazilian agribusiness

There is great room for Brazilian agribusiness to grow, according to projections made by the United States Department of Agriculture (USDA) and by the Brazilian Ministry of Agriculture.

Estimates indicate that, in the next ten years, Brazilian corn exports may grow by 45.8%; soybeans, 36.2%; cotton, 50.6%; beef, 41.8%; pork, 44.4%; and poultry, 43.6%.

A number of factors contribute to this, explains César de Castro Alves, from the agro consultancy at Itaú BBA: the availability of land, the favorable climate; the most developed infrastructure in relation to other countries that are on the same latitude; and the possibility of harvesting two to three crops per year. “Brazil is a unique case of technological advance in agribusiness”, he says.

He points out that there is an expanding international demand. Great opportunities for Brazil, according to him, are in China, where there is a large market to be explored, and in developed countries, such as the USA and the European Union.

Other aspects that also contribute, according to him, are the environment rich in entrepreneurship and innovation, which is evident with the expansion of “agritechs”, and the health and quality of Brazilian products.

need to do homework

But, to intensify the presence of the Brazilian product abroad, it is necessary to intensify the execution of trade agreements, says the specialist.

Currently, Brazil has agreements with Angola, Guyana, Mexico, Panama, São Cristóvão and Nevis, Suriname and Venezuela. Within Mercosur, there are partnerships with Bolivia, Chile, Colombia, Cuba, Egypt, Ecuador, India, Israel, Peru and the Southern African Customs Union.

The expansion of exports will also require an increase in production. And it can be obtained, according to Castro Alves, through productivity gains. “What has been happening in the field will continue to be replicated, through the incorporation of more technology.”

Another source of expansion in agriculture may come from the reuse of land previously used for cattle raising, mainly in the Midwest.

Brazil will also have to do their homework. One of the most important issues, according to experts interviewed by People’s Gazette, is the environmental. “This hinders the fluidity of commercial agreements”, emphasizes the Itaú BBA analyst. The path goes through to contain deforestation and fires. And for public relations work by the Brazilian government.

Another necessary advance is the issue of infrastructure, which can further improve the competitiveness of Brazilian production. “Agriculture has advanced even with shortages in this sector. Imagine if they were smaller or didn’t exist”, says the analyst.

The lack of public investments and problems in private concessions have reduced investments in road infrastructure, points out the National Transport Confederation (CNT).

“A very important gain in this regard was the possibility of selling part of the crop from the Midwest through Arco Norte. This made Brazilian grain production more competitive”, comments Castro Alves.

A new project, Ferrogrão, may reinforce the flow of corn and soybean crops in the North of the country. In the fourth quarter, the government expects to launch the public notice for the railway that links Sinop (MT) to the port of Miritituba (PA), over a length of 933 kilometers. The proposal was submitted for analysis by the Federal Court of Accounts (TCU) last year. However, the procedures related to the project were suspended in March by the Federal Supreme Court (STF).

Another need pointed out by Castro Alves is in relation to improving the educational level. “There are islands of excellence spread across Brazil, but more progress is needed.” One of the main challenges is knowing how to work with big data. According to the expert, few people are able to pilot new technologies.

Great opportunities for Brazilian cotton

One of the products with great expansion opportunities in the international scenario is cotton. USDA projections point to a 50.6% growth in Brazilian cotton exports, reaching 13.1 million bales (217.72 kg) in 2030/31 – the expectation is that the country will account for an eighth of the production worldwide.

Meeting international demand should be the main alternative for producers, since, according to studies by the Ministry of Agriculture, domestic consumption of this product should show a slight reduction in the next ten years, reaching around 676 thousand tons.

According to the Organization for Economic Cooperation and Development (OECD) and the Food and Agriculture Organization of the United Nations (FAO), this should highlight the importance of the international market for the sector’s growth in the coming years.

“Brazil has great potential, especially in terms of fiber quality and mastery of the off-season,” says the Itaú BBA specialist. And a large part of this growth can be directed to the Asian market.

Meat production may expand by 24% by 2031

The Ministry of Agriculture projects, for the next ten years, a growth of 24% in the production of chicken, beef and pork, taking it to 34 million tons in 2031. According to studies by the agency, the biggest expansions should occur in the offer of chicken (27.7%) and pork (25.8%).

The three types of meat may have strong expansion in the period. The USDA projects that, in 2030, Brazil will be the largest exporter of beef and chicken and the fourth in the ranking of pork sales, behind the European Union, the United States and Canada.

The US agency projects 23.5% growth in Brazilian pork exports; 30% for chicken and 33.8% for beef.

According to the meat market specialist at the Center for Advanced Studies in Applied Economics at the University of São Paulo (Cepea-USP), Thiago Bernardino de Carvalho, Brazil has good competitive conditions. “It’s low production costs, an efficient processing industry and good end prices.”

Castro Alves, from Itaú BBA, points out another powerful trump card: “There are no cases of avian flu or swine fever”. And FMD-free areas without vaccination are expanding.

Corn growth potential is great

Another product with great growth potential is corn. USDA projections point to an expansion of 45.8% in exports, reaching 60.2 million tons. This market, together with the demand for corn for the production of ethanol, may contribute to the expansion of the cereal crop.

The Ministry of Agriculture expects that, in the 2030/31 crop year, 124 million tons will be harvested. In the last one, there were 86.6 million tons, due to problems in the second harvest.

China, one of the biggest consumers of the grain, is not able to keep up with so much demand. The Asian country is rebuilding its swine herd, which has been affected in recent years by African swine fever.

The increase in corn production will not require expansion into new areas, according to the study carried out by the Ministry of Agriculture. “Soybean areas release most of the areas required by corn. The so-called crop reform areas, such as sugarcane, are also often used for corn, peanuts and others”, point out the ministry’s specialists. They also signal that increasing productivity is expected in the coming years.

Slower pace of soybean growth, with strong global demand

The pace of growth in soy production is expected to weaken over the next ten years, says the Ministry of Agriculture. If, in the last ten years, it grew 103%, with a 33% increase in productivity, the forecast is for an expansion of 29.5% until 2030/31.

The expectation is that the area planted with soybeans will increase by 26.9%. It is the crop that should expand the area the most and this increase should take place in areas of Matopiba – a region formed by parts of the states of Maranhão, Tocantins, Piauí and Bahia.

“These are lands with high productive potential”, point out the researchers from the Ministry of Agriculture. The additional need for areas can also be met by replacing crops and taking advantage of areas dedicated to pastures.

The USDA’s base scenario projects that, in the next few years, Brazil will supply the largest share of the world demand for soybeans, with 55.5%.

This is the sixth report in the series “O Brasil que Grows”, which presents some of the most advanced sectors in the country. Follow the series on this link.