BRAZILIAN AGRIBUSINESS – EVOLUTION, CHALLENGES AND PROSPECTS 

Preface
The current scenario indicates that in 10 years Brazil will be the largest agricultural country in the world.  The agribusiness activity is thriving, is safe and profitable.  (BORGES 2007).  With a diverse climate, regular rainfall, abundant solar energy and nearly 13% of all the fresh water available in the planet, Brazil has 388 million hectares of high productive fertile agricultural land, of which 90 million have not been explored yet. These circumstances set the country as a place with natural vocation for agriculture and related products.  Agribusiness is today the main engine of the Brazilian economy and accounts for one in every three reais generated in the country.  (MAP 2005).
In the current world structure, Brazil stands as a worldwide storage in terms of agribusiness.  According to Rodrigues (2006), the country possesses 22% of the agricultural land in the world besides high technology used in the fields, making Brazilian agribusiness, a modern, efficient and competitive sector in the international market. This whole view of the current Brazilian agribusiness conforms with an evolution that dates back to the sixteenth century.  Therefore, it is important to point out their historical background.

Agribusiness
According to Batalha (2202), in the economic point of view, agribusiness is all business related to agriculture.  It is customary to divide agribusiness in three stages:  The first stage deals with proper farming (or “inside farming”) representing farmers, whether small, medium or large, either in the form of individuals or corporations.
The second stage, deals with business related to farming (or “outside farming”), represented by industries and commercial companies that together supply inputs for agricultural production.  For example:  manufacturers of fertilizer, chemical pesticides, equipment, etc., and in the third stage, are the farming contractors (or “post farming”), which include buying, transport, processing and sale of agricultural products until it reaches the final consumer.  This definition conforms to meat processing plants, the textile and footwear industries, packers, supermarkets and food distributors.
The correct definition of agribusiness is a lot older than imagined and it covers any type of agricultural activity.   In 1957, two American researchers admitted that it would be no longer appropriate to evaluate economy in its traditional way, i.e., by isolating  sectors which produced inputs, processed products and sold them. (JUNIOR PADILHA, 2004).
As for Callado (2006), agribusiness is the combination of companies that produce agricultural inputs, farms, processing companies and all distribution.  In Brazil the term is used when referring to agriculture in large scale based on planting or herds and on big farmlands. As a rule, these are found in large estates and on leased farms.
The term includes all sectors related to planting and livestock such as commercialization of seeds, machinery and equipment, agricultural industries, the abattoirs, transport of production and distribution.  This type of agriculture is known as agribusiness (WIKIPEDIA, 2009).
The concept of agribusiness implies the idea of a production line interlinked and interdependent.  The modern agriculture, even the home farm, has gone beyond the physical boundaries of the property.  It depends more and more on inputs from outside the farm and decision as to what, quantity and when to produce is strongly related to the consumer market.  There are different agents in the production process under permanent negotiation of quantities and prices, including the farmer.
Davis and Goldberg (1957) define agribusiness as being “the total sum of production operations and distribution of agricultural supplies, production operations on the farm, storage, processing and distribution of agricultural products and their related products”.  This concept tries to bond all sectors within agriculture, transferring the analysis center from inside to outside the farm, replacing partial analysis of studies on agricultural economy, by systemic analysis of agriculture.
In Brazil this systemic approach was explicitly used by Araújo, Wedekin and Pinazza (1990) with the purpose of obtaining basic dimensions of the Brazilian agribusiness.  These writers concluded that Brazilian agribusiness accounted for 46% of expenses related to household consumption, equivalent to 32% of the Brazilian GDP in 1980.  Thefore, agribusiness is all business involving agricultural products.

Biography and Evolution of Brazilian Agribusiness
The Brazilian economy history, with its social, political and cultural implications, has deep roots in agribusiness. It was the exploration of a timber, Brazil wood (pau Brasil), that gave our country its final name.  The occupation of the Brazilian territory initiated during the 16th century and was supported by the donation of land through land grants, monoculture of sugar cane and slavery regime, which were responsible for the expansion of large estates (latifundia).  Before the expansion of this monoculture system, the extraction of Brazil wood had already been settled, as the prime economic activity in the country.
The extinction of Brazil wood coincided with the introduction of sugar cane farming, which served as a base and support for the economy during that period.  The colonization and development process is linked to several agro-industrial cycles, such as: sugar cane,  with  its great development in the Northeast; rubber, which gives exuberance to the Amazon transforming Manaus in a global metropolis at the beginning of the century, and soon after, coffee becomes the most important source of domestic savings and the main financier of the industrialization process; more recently, soybeans gained eminence as the main Brazilian commodity for export, (RENAI, 2007).
From agricultural savings, agro-industries such as winery and furniture, beef, pork and poultry were established. Development in the South of Brasil is also linked to agribusiness.  Livestock farming dominates the pampas; exploration of timber in the mountains and agriculture are developed with the participation of various ethnic groups that make up the distinct population of the region.
In summary, it is evident that as from the 1930’s, with greater intensity between 1960 and 1980, farmers gradually became experts involved exclusively in farming and cattle breeding operations; in turn, the activities of storage, processing and distribution of agricultural products and the supply of inputs and production factors, were transferred to productive and service organizations outside the farm, both national and/or multinational, stimulating agro-industry even more. (VILARINHO, 2006).
Brazilian agribusiness had a major boost between the decades of 1970 and 1990, with the development of Science and Technology, providing domain of regions before considered “improper” for agriculture.  This resulted in the offering of a large number of products.  The country was then regarded as the one who mastered “tropical agriculture”, attracting the attention of all our partners and competitors worldwide.
At present, products derived from soybean, beef and by-products, sugar and alcohol, wood (paper, cellulose and others), coffee, tea, tobacco, cotton and cotton fibers, fruit and by-products, vegetables, cereals and by-products and natural rubber, are important items on the list of Brazilian exports. (VILARINHO, 2006). The Agribusiness Complex evolution composition confirms that agribusiness by-products add value to agricultural raw material where the sectors of storage, processing and final distribution, constitute a major vector in the final value of the product being sold to consumers, consolidated by the strong connection between agriculture and industry.

Prospects for Brazilian Agribusiness
For Contini (2001), prospects are promising.  Brazil withholds abundant land, flat and cheap, with a reservation of 80 million hectares, experienced farmers capable of transforming this potentiality into commercial products and enough agricultural knowledge and technology to transform resources into products. From whatever angle the market is analyzed, it is impressive what Brazil acquired in the agribusiness field.
Due to extremely favorable conditions for the continued expansion of this market such as ample territory, accessible labor and various matters regarding international circumstances, the country is regarded by many specialists as main candidate to the  top position of the world’s food supplier.
By 2015 Brazilian participation in the international market of soybeans, should increase from the current 36% to 46%.  As far as poultry, this increase will be from 58% to 66%.  In the areas where Brazil’s participation in the global trade is still small, changes should be even more significant.  In the pork business for instance, Brazil should quadruplicate its participation acquiring half of the international market according to forecasts.  In the near future, the pork business will be as important as beef and poultry businesses are today for the country’s balance of trade  (NETO, 2007 apud SEIBEL, 2007).

Agribusiness is the largest business in the world and in Brazil.  In the world, it generates US$ 6,5 trillion/year and in Brazil around R$ 350 billion or 26% of the GDP (29% according to the National Confederation of Agriculture-CNA).  Most of this amount relates to business outside farms, covering supply of inputs, processing of raw materials and product distribution.  (STEFANELO, 2002). Besides its high competitiveness, the use of high technology and the creation of jobs and wealth for the country, these are points that reinforce the importance of agribusiness in Brazil.
The Social-Economic importance of Brazilian Agribusiness
Agribusiness is also important for the generation of income and wealth for the country.  On the social aspect, it is the economic sector that still employs more manpower, around 17 million people that added to the 10 million more from other components of the agribusiness, represents a total of 27 million people. It is the sector that employs more manpower in relation to the production value:  for each R$ 1 million, the number of jobs in 1995 was 182 for agriculture, 25 for mineral extraction and 38 for building construction. (CONTINI, 2001).
Agribusiness as a whole, covers more than 1/3 of the Brazilian GDP.  Even recognizing the benefits of the transformation from an agricultural society to an industrial society, one must not forget that the latter has a limited capacity of absorbing manpower.     Agriculture and agro-industrial sectors and related areas are important for the increase of income and employment, specifically in the less developed areas. (RENAI, 2007).
In the context of the recent currency crisis, agribusiness has been a factor that minimized the instability of Brazil’s foreign accounts.  Agriculture clearly contributed towards exports with a positive trade balance of US$ 40,18 billion in 2006 and of US$ 49.7 billions in 2007.  (See Table 1).
Table 1 – The Brazilian Agribusiness Trade Balance (US$ billions)

Source: Mapa-Ministério da Agricultura, Pecuária e Abastecimento, 2009 (Ministry of Agriculture, Livestock and Supply)
The above Table shows the surplus of the Brazilian agribusiness, becoming evident that the sector has an important role in the balance of our accounts.  According to those figures, the surplus growth in the period between 2000 and 2007 was of 235%, an impressive growth of the sector.
However, already affected by the effects of the crisis, the agribusiness trade balance suffered a decrease of 0.53% of the GDP in the first quarter of 2009. Between January and May of that year, the accumulated surplus was US$ 19,737 billion.  While exports totaled US$ 24,103 billion, imports reached US$ 4,366 billion.  In spite of the balance, the result is 12.49% lower than the one registered during the same period of 2008. (CNA, 2009).
When the effects of the crisis are over, the prospects are those already announced for Brazil: that agribusiness might come out of this crisis stronger than when it went in.
Agribusiness challenges in Brazil
According to Unclad (United Nations Conference on Trade and Development) indexes, Brazil will be the largest agricultural country in the world, in ten years. In 2006 exports increased by 19,29% in comparison to 2005.  As far as surplus, the increase was about US$ 58,4 billion, an increase of 10,8% more than the US$ 52,04 billion in 2006.  The country leads the world in exports of sugar, coffee, orange juice and soybeans.  It has also taken the lead on the beef and poultry segments after surpassing traditional competitors such as the United States and Australia.  This favorable position should be further consolidated in the forthcoming years. (BORGES, 2007).
This puts Brazil amongst the world leaders in the production of soybeans, corn, sugar, coffee, beef and poultry.  However, all these good results, as well as future expectations may be at a serious risk of suffering a heavy setback if the problems related to logistic infra-structure are not solved – the major obstacle for the development of agribusiness in Brazil, particularly the highway system. 
According to a recent survey on this subject, prepared by CNT-Confederação Nacional do Transporte (2007) (National Confederation of Transport), of the 84.832km evaluated 37% were found to be in a very bad maintenance condition e another 32% presented some sort of imperfection.  Consequently, areas with agribusiness potential such as the Northeast have not been able to succeed.  Agribusiness is the sector mostly affected by the inefficiency of transport channels, which is responsible for a loss of 16% of the GDP according to a study made by the Center for Logistic Studies at the University of Rio de Janeiro.
The logistic deficiency in the country practically involves the whole transportation infrastructure.  Although the railways received some investment with privatization, they are still far from fulfilling the demand of the agribusiness sector as being a viable alternative to road transport.  Besides the network expansion of 30.000km (almost the same as Japan’s, a country 22 times smaller than Brazil), the modernization of machinery is urgent.  With the current trains and tracks, the average speed of the compounds does not exceed the slow speed of 25km/hr (BORGES, 2007).
Also, according to the same source, we make little use of transport channels with great potential, which is the case of the 42 thousand kilometers of waterways, of which only 10 thousand are effectively in use.  As a result, systems such as the Tietê-Paraná with 2.400kilometers that has already consumed US$ 2 billion in public investments from various governments, has only a flow of 2 million tons of cargo per year, just 10% of its total capacity.
In the maritime transport of cabotage (another channel with great potential in Brazil) we have a similar situation.  Although privatization has contributed towards the modernization of the ports, excessive manpower (three to nine times higher than in European or South American ports) still maintains low productivity standards.  While the international rate container handling is 40 containers per hour, at the Brazilian ports this average is 27.  This is one of the reasons why every year, queues of 150km are formed, of trucks waiting to unload their cargo at the port of Paranaguá (PR).
Aware that alone it cannot change this situation, the federal government has now sought the support of private enterprises, through the Public-Private Partnership plan which intends to invest R$ 13.68 billion on 23 projects for the restoration of highways, railways, ports and irrigation channels, in the forthcoming years.  Convinced that only the Public-Private Partnership  will not be sufficient to provide the country with a good infrastructure, the federal government created in 2007, the PAC-Program to Accelerate Growth which was launched to eliminate this gap and remove risks of further obstacles in the coming years.  (PAC, 2009).
The purpose of this program is to increase investments in infrastructure to: eliminate main obstacles that may restrict economic growth; reduce costs and increase productivity of companies; stimulate the increase of private investments; and reduce regional differences.  The anticipated investment in logistic infrastructure of the PAC is of R$ 58 billion, by 2010.
It is necessary to emphasize that in addition to investments, private enterprise  still has much to contribute to the development of infrastructure in the country by encouraging the creation of centers of intermodal transport (integration between systems: by road, railway, sea, river and air), in order to reduce costs and increase service quality.
An example of the potential of these centers is represented by a study of Geipot (a transport planning Brazilian company linked to the Ministry of Transports).  In 2000, the company already warned that the better use and a rational utilization of transport channels would save about US$ 75 million on the annual cost of grain transport.  To illustrate what we are talking about, it is sufficient to emphasize that a single convoy on the Madeira River waterway has a capacity of 18 thousand tons of grain, replacing 600 trucks of  30 tons each on the roads between Cuiabá (MT) ) / Santos (SP) and Cuiabá (MT) /Paranaguá (PR).  This reduction of transport costs would directly contribute to reducing the costs of our products making them more competitive in international markets, not to mention the economy of fuel and freight, reducing traffic and the deterioration of highways.
Another serious obstacle for the full development of agribusiness, is related to the tax system.  With an open economy abroad, i.e., with the possibility of exporting and importing any agribusiness product, tax system should be compatible with that of our competitors.  Since our competitors, including those in the Mercosul have lower taxes, it is difficult for Brazilian producers to compete in foreign markets, sometimes, even losing its own domestic market because of cheaper imported products.
There is no way for a farmer and an agro-industry to be competitive when governments  are eager to create new taxes or increase current taxes, and have  complex mechanisms for collection which only increase production costs.  A tax reform is urgently needed with the reduction of tax load and the simplification of tax procedures. Moreover sanitary control measures that are also listed as important issues, are being neglected by the government.
The damage potential that this can cause producers has already been shown in recent years. According to Seibel (2007), due to outbreaks of foot and mouth disease in Mato Grosso do Sul and in Paraná, over 50 countries imposed an embargo on beef from these states which are among the largest domestic producers. Besides the ban on beef Brazilian agribusiness suffered with the outbreak of bird flu, which disrupted exports, even though the country did not register any case of the disease.
As it can be seen, the obstacles for the expansion of Brazilian agribusiness are enormous but solutions do exist and need to be put into practice.  What it is expected is that the federal, state and municipal governments, as well as private enterprises  maintain their determination to modernize infrastructure and solve domestic problems in order that the country becomes the force of agribusiness.

MODERNIZATION

The good performance of exports and the increasing availability of jobs in the production network cannot be credited only to the vocation of Brazilian agribusiness. Scientific and technological development and modernization of farming activity obtained through researches and from the expansion of machinery and implement industries, equally contributed to transform the country into one of the world’s most respectable agribusiness political programs.  The adoption of animal and vegetable sanitation program guaranteeing the production of healthy food has also helped the country to achieve this condition.

However, it is clear that favorable climate, fertile soil, availability of water and unparalleled biodiversity, in addition to skilled labor, give Brazil a unique condition for the development of agriculture and all activities related to agribusiness.   Brazil is one of the few countries in the world where it is possible to plant and to breed animals in temperate and tropical areas.  Favored by nature, Brazilian agriculture can obtain two annual crops of grain while cattle are stretched out on the prairies between the South and the Pantanal of Mato Grosso – the planet’s largest wetlands.

To strengthen these competitive advantages and making the agribusiness investment even more attractive, the government has modernized its agricultural policy.  The backbone of this process is the rural insurance.  Indispensable to guarantee farmers income, it is also essential to generate jobs in the rural areas, to technological advances and to the effective incorporation of the sector in the stock market.

Other modern tools of agricultural policy, such as the “Fundo de Investimento do Agronegócio (FIA)” (Agribusiness Investment Fund), the “Certificado de Depósito Agropecuário” (Agribusiness Deposit Certificate) and the “Warrant Agropecuário” (Agribusiness Warrant), have been developed and improved by the Ministry of Agriculture, Livestock and Supply. By doing this, the government hopes to draw from investment funds, part of the assets of more than US$ 165 billion towards the financing of agricultural activities to further stimulate the sector through rural credit.


The government has recently updated the contracts with sale option (Contratos de Opção de Venda) introducing private enterprises into the public policy of the sector.  By doing this, it increases the potential leverage of the public resources used in agriculture and gives more freedom to the private sector.  These changes will certainly stimulate agribusiness even further which, in recent years, has been responsible for the total surplus of the Brazilian trade balance.

With a population of over 190 million people, Brazil has one of the largest consumer markets in the world.  Today, approximately 80% of the Brazilian production of food is consumed internally and only 20% are shipped to over 209 countries.  In 2003, Brazil sold more than 1.800 different products to foreign markets.  In addition to traditional importers such as Europe, United States and countries from Mercosul (Argentina, Uruguay and Paraguay), Brazil has expanded the sale of agribusiness products to markets in Asia, Middle East and Africa.

OVERPRODUCTION

The Brazilian agribusiness performance is unequal. In recent years, no other country in the world has had a significant growth in agribusiness such as Brazil. The crop of grains for example, bounced from 57.8 million tons to 123.1 million tons between the seasons of 1990/1991 and 2002/2003.  During that period, the progress of livestock was also impressive, especially in the poultry industry where production increased 234% - or an incredible 16.7% per year, going from 2.3 million to 7.8 million tons.  Therefore, it is no coincidence that the sector which holds a high productivity and excellent sanitary levels, as well as high technology, has recently attracted more and more international investments.

Since 1990, the production of grain in Brazil increased 131%.  During this period, the cultivated area expanded only 16.1%, from 36.8 million to 43.0 million hectares.  Therefore, the quantity obtained was due to an increase of 85.5% in the productivity rate during the last 13 seasons.  The yield of main crops increased from 1.5 to 2.8 tons per hectare.  Supporting this progress, are the results of agriculture researches, responsible for the development of 529 new cultivars, specifically adapted to every climate and soil in the main producing regions of Brazil.  The application of environmentally correct and more advanced techniques should also be considered, such as plantation in dry grass, soil correction and recovery of degenerated pastures and other tillage.

With at least 90 million hectares of unused farmland, Brazil could increase at least three times its current grain production, going from the present 123.2 million to 367.2 million tons.  This volume however may be even greater, considering that 30% of the 220 million hectares currently occupied by pastures should be incorporated into agricultural production, as a result of the significant productivity increase of livestock.   The country is capable of easily reaching a planted area of 140 million hectares with the expansion of agricultural boundaries in the Midwest and in the Northeast.  All this can be obtained without causing any impact to the Amazon and in full accordance and compliance with environmental legislation.

LIVESTOCK

Following the example of agriculture, livestock registers a spectacular increase.  Between 1990 and 2003, beef production increased 85,2% - or 6.1% per year – from 4.1 million to 7.6 million tons.  During this period, the production of pork meat increased 173,3% or 12,4% per year, from 1 million to 2,87 million tons.  The meat complex which includes other types of meat, also invest in research on genetic improvement and the certificate of origin of the product.  All to offer consumers a safe and top quality food such as the “green bull”, an animal fed only on pasture, very different from the systems utilized in other producing countries. 

Keeper of the largest commercial cattle herd in the world, Brazil has more than 83% of its 183 million animals in areas free of foot and mouth disease, which is highly contagious and economically devastating.  The country is also considered by the European Union Veterinary Committee as a low risk area for “mad cow” disease that has decimated entire masses in Europe and has recently reached the American continent.

At the same time, most of the Brazilian territory is free of diseases such as “Newcastle”, which can wipe out entire flocks of chickens and even infect humans, and the classical swine fever, lethal to young animals.  Also, the country does not have any case of “bird flu” a highly contagious virus that has infected chickens in Asia, North America and Europe.  In the poultry sector, the country is the second largest in the world and it has the third largest herd of pigs.

ALCOHOL AND SUGAR

Introduced in Brazil to consolidate the Portuguese colonization and at the same time to guarantee large profits to the metropolis, sugar cane has become one of the most important products of the Brazilian agribusiness.  From the peak of the so-called sugar cane period (16th and 17th centuries) to this date, the cultivation has maintained a strong participation in the domestic economy.  The country is the largest producer of sugar cane in the world with a cultivated area of 5.4 million hectares and an annual crop of 354 million tons.  As a result, it is also the most important producer of sugar and ethanol.

According to consolidated figures from the Secretary of Production and Trade (SPC), the sugar exports reached 12.9 million tons with an income of US$ 2.1 billion,  2.2% higher than registered in 2002.  The main destinations of our product were Russia, Nigeria, United Arab Emirates, Canada and Egypt.  The production in 2003/2004 reached 24.8 million tons of sugar.

Sugar cane is also raw material for the extraction of ethanol.  Each ton of sugar has   potential power of 1.2 barrel of oil.  In 2003, ethanol was used as fuel for 15% of the automotive fleet of the country and in 2008 it reached 25%.  In 2003/2004, Brazil produced 14.4 billion liters of ethanol.  In 2003 shipments reached 800 million of liters.

A non-polluting fuel, ethanol is a product that interests more and more nations willing to reduce the emission of gases harmful to human health.  Countries such as China and Japan have already expressed their intention to import ethanol. Prospect is that ethanol exports have a significant increase in the coming years.

COFFEE

From Ethiopia in the Northeast of Africa to Brazil, coffee has come a long way.  First it migrated to the Arabian Peninsula between 600 and 700AD, conquering Moors and Christians.  During the Mid Ages, it reached Europe where it was known as the “vine of Arabia”.   In the beginning of the 18th Century the first seeds of the product reached the Brazilian territory, brought from the French Guyana.  After frustrating attempts to develop the cultivation in the North, coffee planting was settled in the Southeast of the country and later it was expanded to Paraná and Bahia, transforming Brazil in the world’s largest producer and exporter of coffee.

With a planted area of 2.2 million hectares, Brazil had a crop of 28,82 million sacks in 2003/04.  In 2003, Brazilian exports of coffee reached 1.43 million tons, totaling sales of US$ 1.51 billion.  The main destinations were the United States, Germany, Italy and Japan.  The country holds 28% of the world market of coffee beans.


MEAT AND LEATHER

The Brazilian meat industry is today one of the most modern in the world.  The high standard of sanitation and quality of beef, pork and poultry products have raised exports of meat to US$ 4.1 billion in 2003 with an increase of 31% in comparison with 2002.  Brazil now leads the ranking as the largest exporter of beef and poultry.

Exports of raw and industrialized beef increased 40% in 2003 reaching US$ 1.5 billion. 
The total volume was 1.4 million tons and was shipped mainly to Chile, The Netherlands, Egypt, United Kingdom, Italy, Saudi Arabia and Germany amongst others.  This performance has placed the country as first in the world ranking of beef industry sales, surpassing Australia who until then, lead the international trade of the product.

In 2003, the country took over the ranking leadership as the largest exporter in the poultry sector, with an increase of 20% in relation to 2002.  The Brazilian exports of raw and industrialized chicken totaled US$ 1.8 billion, representing about 2 million tons.  Most shipments went to Saudi Arabia, Japan, The Netherlands, Germany, Russia and Hong Kong.

Brazil has also registered an increase of 12% on export sales of pork meat reaching US$ 526 million or about 550 tons.  Russia, Hong Kong, Argentina, Singapore and Uruguay were the main importers of Brazilian pork meat.

Exports of leather increased more than 10.2% in 2003 reaching US$ 1.06 billion.  Leather products showed the best results increasing by 29,5% its business volume, corresponding to nearly US$ 469 million, thus reaching 44% of  the total exports of leather.  The export sales of leather products were almost US$ 1.4 billion in 2003.  Leather footwear accounted for 91.5% of exports.  The United States bought 91.5% of all the leather products followed by the United Kingdom and Canada.

SOYBEAN

Originally from China, soybean is now the main grain of Brazilian agribusiness.  The country is the second largest producer of oilseeds, with a crop of 52 million tons and a cultivated area of 18.4 million hectares in the 2002/2003 season.
Soy has been known for more than five thousand years.  It reached Brazil in 1882 when it was introduced in the very hot territory of Bahia. As from 1940 it started to gain importance in agriculture.  After nearly 64 years, it has become the most prominent Brazilian agribusiness.  In 2003, Brazil took the lead in the international market of soy complex (grain, bran and oil) with exports of US$ 8.1 billion, 31% more than 2002.
The expansion of soybean planting is one of the greatest examples of Brazilian agricultural potential and vocation.  Up to the 1980’s the oilseed crops were concentrated in the Southern States of Rio Grande do Sul, Paraná and Santa Catarina.  Due to the development of cultivars adapted to soil and climate in different regions of Brazil, soybean has also spread to the Midwest: in the states of Mato Grosso, Mato Grosso do Sul, Goiás and in the Distrito Federal, and part of the Northeast, specifically in the west of Bahia and in the south of the states of Maranhão and Piauí.
The increase of soybean in Brazil was also fantastic.  In 1990/91, 15.3 million tons were harvested on a planted area of 9,7 million hectares.  With a crop of 52 million tons in 2002/03 production more than tripled in 12 seasons as a result of yield gains.
JUICES AND FRUIT

Fruit growing is strategic for Brazilian agribusiness.  With a surplus of US$ 267 million in 2003, the fruit industry occupies an area of 3.4 million hectares.  Gross sales resulted from fruit production are between R$ 1 thousand and R$ 20 thousand per hectare.  Today, the domestic market absorbs 21 million tons per year and the exported excess is around 17 million tons.

With a diversified fruit planting, Brazil is one of the largest centers in the world in the  production of fruit juices.  Last year, exports reached US$ 1,25 billion.  From the total, 95.5% represents orange juice of which the country is the largest producer and exporter.  The sector generated foreign exchange earnings of US$ 1.2 billion in 2003, 14.6% above the amount sold for export in 2002.  The main destinations were Belgium, The Netherlands, United States and Japan.

Brazil is the third worldwide center of fruit planting with an annual production of about 38 million tons.  In 2003 exports of fresh fruit reached US$ 335.3 million with an increase of 39% in comparison to the US$ 241 million obtained in 2002.  This year the increase should be around 15%, reaching US$ 375 million.  As a result of this, it becomes more and more possible for Brazil to reach by the end of this decade, its goal of US$ 1 billion worth of exports of fresh fruit.

Aware of the enormous potential of the country in the cultivation of fruit, and with full conditions of expanding its participation in the international market, the Ministry of Agriculture, Livestock and Supply and producers, are investing in a system of cultivation of fruit with high standards of quality and sanitation.  It is   the Integrated Fruit Production (IFP) program which foresees the utilization of environmental sustainability principles, food security, and socially right economic viability, using technologies unharmful to environment and to mankind.

Fruits cultivated in the integrated production system are sent to the market with a conformity label, certifying its quality and sanitation.  Since it was established, the IFP has enabled 63% reduction in pesticide use in orchards of mango, 50% of papaya, 32% of grapes and 30% of apple.

FOREST PRODUCTS

The Brazilian industry of pulp and paper has a vocation for exports because of its competitiveness,  which has been reflected on its increasing participation in the international trade.  In 2003, exports of pulp increased more than 50% in relation to the previous year, from US$ 1.1 billion to US$ 1.7 billion.  The main destinations were the United States, China, Japan and EU countries.  As for the export of paper, it reached US$ 1 billion in 2003, 21.5% above the amount of US$ 900 million sold in 2002.
Pulp, paper, wood and articles thereof constitute an important item on the list of Brazilian exports.  Last year, the country exported US$ 4.9 billion of forest products, representing an increase of 28.6% in comparison to 2002.
Exports of wood and articles thereof increased 18.4%, from US$ 2.2 billion in 2002 to US$ 2.6 billion in 2003.  The United States is Brazil’s main importer absorbing 44% of sales.  Other important destinations were United Kingdom, China, Belgium, France, Japan and Spain.

COTTON
The cultivation of cotton in Brazil is expected to increase in coming years.  The expansion of cotton farming indicates that the country may also take a leading role in the world cotton production.  Plantation has increased mainly in the states of Mato Grosso, Mato Grosso do Sul, and Bahia. With the use of high technology, cotton crops are showing encouraging results in terms of production and productivity.
The exports of plume have doubled in just one season, from US$ 93 million in 2002 to US$ 188.5 million in 2003.  In the 2003/4 season, the country produced 1.2 million tons of plumes against 847.5 million tons in the previous year.  This represents an increase of 46.3% meaning an additional 392.6 million tons in cotton production.  The planted area should rise from 735.1 million hectares to 1 million hectares.

COCOA
Cocoa used to be a sacred drink for American natives. It began to have commercial importance in Brazil at the end of 17th century.  Although it was originally cultivated in the North, cocoa only gained impulse after being introduced in the South of Bahia where it found favorable natural conditions to expand.  To this date, the region is the main cocoa production center, with an important participation in the Brazilian economy and politics, for decades.  Exports of cocoa and its products increased 55.4% in 2003, rising from US$ 206 million in 2002 to US$ 321 million in 2003.
ORGANIC AGRICULTURE

The increasing demand for toxic free products has given an impulse to organic agriculture in Brazil.  With a sustainable management system that exempts the use of artificial pesticides, this agricultural system focuses on environmental conservation, biodiversity, biological cycles and quality of life.  The sector has a planted area of 842 thousand hectares and traded U$ 1 billion in 2003.  The country has 19 thousand certified organic farms and 174 processing farms across different regions.

Organic farming in Brazil is expanding at an annual rate of 20% with a significant participation in the domestic market and it should soon expand into the international market.  The increasing demand for organic products is strongly related to consumer’s requirement for better quality food and its impact on the environment.  The expansion of organic farming is also related to the development of a fair market for producers and consumers and with high job opportunities.

In 2003 Brazil passed a law specific for organic agriculture and at the same time, developed a work plan to implement the Development Program on Organic Agriculture created in the 2004-2007 Plan.  As a result, the Brazilian government values the segment and structures the physical and financial actions for the sector.

RESEARCH AND DEVELOPMENT

Knowledge and technology are necessary tools for the sustainable growth of agribusiness in Brazil.  The Brazilian Agricultural Research Corporation (Embrapa) plays a vital role in the development of research and in the production of new agricultural techniques, contributing with agribusiness.

Known for the increase of the Brazilian grain production which reached 9.5% in 2003, Embrapa leads the National Agricultural Research System (SNPA).  This network includes state agricultural centers, some Brazilian universities and other private institutions, besides its research and development units.  The Embrapa Virtual Labs Abroad, (Labex) currently established in the United States, and in France, are also part of the system.

Simulation studies performed by the Institute of Applied Economic Research (IPEA), showed that investments in research and development programs, can increase the grain production in Brazil to 295 million tons, with the use of technology already available but currently only used by some Brazilian producers.  According to experts in the area, Embrapa develops 52% of projects in agriculture in Brazil.  State governments contribute with 20% and universities with 21%.

77% of the variety of rice offered in Brazil between 1976 and 1999; 30% of beans and 37% of soybean were part of the seed varieties developed by Embrapa.  Among the materials developed by the company up to 2004,  91 varieties of rice, 38 of beans, 68 of corn, 87 of wheat, 37 of cotton and 210 varieties of soybeans were counted.

The enormous potential of the Brazilian agribusiness associated with the capacity of its institutions and the recognized creativity of its researchers, offer excellent opportunities for foreign and private sectors to invest on research and development in the country. Cosmetics, nutraceuticals, the use of biotechnology for the development of breeds and varieties resistant to parasites, diseases, pests, hydric pressure and long droughts, along with computer farming and precision agriculture, are some of the areas which present the best investment opportunities for public-private partnerships for the generation of technical and scientific knowledge.

Final Considerations
As noticed, the importance of agribusiness to our economy is certain.  Agribusiness has become the key sector for Brazil to be included in world trade.  In spite of the great advantages found in Brazilian agribusiness and of its great prospects, it encounters many problems and challenges that need to be overcome and that depend essentially on both public and private investments, as well as changes in domestic economy policies.
The obstacles for the expansion of Brazilian agribusiness are many but they can be overcome.  Although the potential for the trade of Brazilian agribusiness is huge, it could be even greater if there were serious agricultural and infrastructure policies.  And yet, the Inclusion Support Service (SAI) of Brazil occupies a prominent position among the world’s food producing countries. Higher income and the logistical problems generate high costs.
However, Brazilian agribusiness is persistent and despite these obstacles, its share in the international market has increased.  This implies that our advantages such as abundant land, production potential, favorable climate, availability of fresh water and renewable energy, and business skills, strategically supersede any problem, making agribusiness our main business.
Therefore, it is necessary to create new public policies aiming the country’s infrastructure, through, for example the PPP, which discusses with the private sector the reconstruction of Brazil’s logistical network in all segments.
It is also up to the Brazilian government, the modernization of machinery and equipment that give support to the high performance in the field.  It is also necessary to articulate and implement more flexible and efficient credit policies for agriculture.  The high interest rates import duties for agricultural equipment have, over the years, restricted the use of new and high technologies in certain regions such as the Northeast of Brazil. 

Boasting the potential of Brazilian agribusiness is what the government has been doing, however, seeking practical and definite solutions to give continuous sustainability to the sector, has definitely not been more than a decoy of old Brazilian policy.  In today’s contingences, it has already passed the discussion state and it should take mould in the production viability, in the correct guidelines promoted by the government and in the very quick particular capacity to produce, to rationalize and to actually transform investments in financial and social earnings.
In recent years, few countries have had a significant increase in the international agribusiness market as Brazil has had.  Figures show that in 1993 exports were US$ 15.94 billion with a surplus of US$ 11.7 billion.  In 10 years the country doubled its exports of agricultural products and had a growth of more than 100% in the trade balance.  These results prompted the United Nations Conference on Trade and Development (UNCTAD) to foresee that Brazil will be the world’s largest food producer in the next decade.
 
Sources:

www.folha.uol.com.br  - Folha Online (2008-08-04). Website visited on 2008-08-09.

http://www.agricultura.gov.br – Last update: 23/11/2004 Website visited on 2006-08-08.

Carlos Lourenço y Barbosa de Lima: "Evolução do agronegócio brasileiro,
desafios e perspectivas" en Observatorio de la Economía Latinoamericana, Número 118, 2009.
Complete text on http://www.eumed.net/cursecon/ecolat/br/

Further information: estatistica@agriculura.gov.br