Find out the available agribusiness opportunities in Brazil and how foreign agribusiness actors can take advantage of them. Brazil is one of the BRIC countries and the fifth largest country in the world covering 8,511,000 square kilometers, with 209 million people inhabiting the country.
Brazil is a country that is made for agribusiness. The country possesses pleasant climate conditions, geographical diversity including a coastline, low-cost labor, varied climates in favor of livestock and unexplored fertile lands. Brazil borders with 10 countries in South-America making them an important trade partner. Brazil is currently the ninth-largest economy in the world based on nominal GDP making them attractive for foreign entrepreneurs.
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What is the nature of agribusiness in brazil?
Brazil’s significant influence on global agribusiness is undisputable. Brazil is the world’s largest producer and exporter of sugar, coffee, and orange juice, and the country is also a major world producer and exporter of products like soybeans, ethanol, poultry chicken, corn, pork, and beef. Brazil’s agribusiness industries represent 19% of the country’s GDP. Moreover, one-third of Brazil’s employment in agribusiness and almost making up 44% of their exports. Agriculture and livestock have always been a major contributor to the country’s wealth.
Over the last few years, the modernization of Brazil’s agribusiness has increased significantly. For example, tractor sales surged by 50% over the last 11 years. Innovative agribusiness activity has helped the country to climb out of its economic recession in 2014-2016.
Agribusiness value chains
There are several products that are important for Brazil’s value chain. We outline some of the most important agribusiness products in Brazil.
Soybean
The soybean is very important to the Brazilian economy; this is the most exported agricultural product for the country. Around 80% of soybean production occurs in the south of Brazil, mainly in Mato Grosso and Parana. Brazil produces 32.5% of the world’s total soybean production. The main export destination of Brazilian soybean is China. In 2016, 55.3% of the soybean production was being exported which 78.1% to China.
Coffee
Coffee production in Brazil has been stable over the past couple of years. The small fluctuation of the coffee in production occurred because of the cycle of the coffee trees, with high production in the first year and a decreased production in the year after.
Brazil contributes 35.3% to the total world production of coffee and the main export destination of Brazilian coffee is the European Union. The main regions of Brazil’s coffee production are in the Southeast of the country, mainly in Minas Gerais and Espírito Santo.
Orange juice
Orange juice production in Brazil is mainly produced for external markets, one of the biggest markets are the United States and the European Union. Brazil’s share in orange juice is 64.8% of the world production percentage. The Brazilian orange juice industry is only ruled by a few players but they obtain very well established and good infrastructure in their production. However, we have seen a decrease in the production and consumption of orange juice. There are some key issues such as the competition with other beverages and the diseases in the orange fields.
Agribusiness opportunities in Brazil
In 2050, it is expected that the world will have a population of 9.3 billion people. To ensure food security for a population of that size, the world would need almost 50% more food than what is currently being produced. Brazil still has a large proportion of underutilized lands with a high fertility rate. This land offers many opportunities for foreign agriculture-focussed companies looking to expand and innovate their agribusiness practices in Brazil.
The price of food is rising and as the WTO negotiations continue about agribusiness, there will be a slow decrease in trade barriers and an increase in the demand for products. This pressure will likely put more focus on global agricultural production to produce more. Worldwide, governments are looking for new food products and substitutes to supply growing, more health-conscious populations.
Right now, Biofuel products are becoming more popular. As the oil resources of the world start to shrink, people search for new ways to sustainably generate and expend energy.
In this case, the production of sugar cane, corn, soybean will be increasingly important in the future because this is part of their key value chain. The search for combining decreasing emissions and substitution energy will result in agribusiness. The biofuel trend will increase the demand for agriculture products so there lay many opportunities in the future in this field.
Agritech is also a factor that changes the agribusiness environment. Agribusiness is becoming a necessity for the upcoming years, innovation in the way agribusiness sectors functions to improve productivity, food security, and sustainability. For example, Agronow, a company that has developed cloud-based software for satellite imaging of farms and doing a productivity analysis of crops as well as identification of pest attacks. It allows to store historical data for benchmarking and climate impact analysis.
Main challenges
Despite the growing global demand for food and biofuel, agribusiness in Brazil is facing challenges. Brazil has an inefficient tax, they border 10 Latin American countries but still lack some free trade agreements, and corruption are still present in the Brazilian society.
In many countries, agribusiness is not of a priority industry for the government, which causes an absence of strategy and organized investments. Brazil, for instance, faces significant issues in infrastructure, from where production starts to the ports. Over the years, Brazil’s lack of long-term planning on transport infrastructure has caused problems to its trade. However, The government is trying to improve the problems that they have and Brazil is facing many investments because of the many opportunities the country brings.
Reach out to Biz Latin Hub for local assistance on agribusiness in Brazil
Agriculture is very important for the economy of Brazil. Despite the thriving future for agribusiness in Brazil, the country still faces some challenges that require government investment and innovative and creative agribusiness actors to overcome. Many opportunities lay ahead for Brazil’s future agribusiness activities.
Foreign executives that are considering doing business in Brazil should consider contacting a local partner. At Biz Latin Hub we can support your business for guidance in market entry and back-office services to start your expansion successfully. Please contact Biz Latin Hub at contact@bizlatinhub.com to understand how we could be of assistance.
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