marcos s. jank
TRANSCRIPT
Brazilian Agribusiness Overview and Global Dynamics
Piracicaba, Brazil | 15st July 2019
MARCOS S. JANK
ESALQ-USP Summer School – July 20194th Special Program on Tropical Ag Production Systems
Resume (Marcos Jank)
✓ Chair Professor of the Luiz de Queiroz Chair on Integrated Agri-Food Systems at ESALQ-USP
✓ Senior Professor of Global Agribusiness at INSPER
✓ President of the Asia-Brazil Agro Alliance (ABAA), an initiative to enhance the profile of
Brazilian agribusiness in Asian economies, located in Singapore (2017-19)
✓ Vice-President of Corporate Affairs and Business Development of BRF Asia-Pacific (2013-16)
✓ CEO of the Brazilian Sugarcane Industry Association (UNICA) – (2007-12)
✓ President of the Brazilian Institute for International Trade Negotiations (ICONE) - 2002-07
✓ Expert in Integration and Trade at the Inter-American Development Bank (IDB) - 2001-02
✓ Associate Professor at the University of São Paulo’s (USP) Colleges of Economics (FEA),
Agricultural Sciences (ESALQ) and International Relations (IRI) – 1989-2007
✓ Board Member of RUMO Logistics, COMERC Energy, and at the International Food Policy
Research Institute (IFPRI) in Washington DC
✓ Education: Tenure in Agricultural Economics at ESALQ-USP, Doctorate in Business Economics
at USP College of Economics and Business (FEA), M.Sc. in ag policy at IAM Montpellier-
France, B.Sc. degree in Agronomy at ESALQ
What made Brazil one of the top and most competitive agrifood exporters?
1960-1980 2000-2020
• Massive government interventions- Purchases and
storage- Subsidized rural
credit - Price controls- Commodity price
support mechanisms
• High tariffs
• Export taxes
• Net imports (cotton, dairy, wheat, etc.)
• 3rd world exporter> 200 destinations
• Top tropical ag techTransformation of acidic and poor soils into fertile land; “tropicalization” of crops and animal production systems (soy, grasses, zebu), crop-livestock integration, double cropping, no-till, integrated supply chains
• Economies of scale
• High productivity TFP: 3,5% p.y.
• Bioenergy Food + Fuel + Energy
INNOVATION Investments in tropical R&D
DEREGULATION Significant reductions in government interventions and trade barriers
LIBERALISATION Market-oriented policies, competition against global protectionism (US, EU, Asia)
MIGRATIONSkilled farmers move to new areas SOUTH →MS, MT, GO →MATOPIBA
Land Potential and
Water Availability
0
1
2
3
4
5
6
7
8
9
10
0
10
20
30
40
50
60
70
80
90
100
Wate
r(T
rilli
on
m3/y
ear)
Land (
Mill
ion
Hecta
re)
Arable LAND Available WATER
Note: LAND: available, non-protected and non cultivated, include pastures that could be converted into agriculture. WATER: all sources of renewable water.
Sources: Fischer e Shah (2010), mentioned in World Bank, 2010 (Rising Global Interest in Farmland: Can it Yield Sustainable and Equitable Benefits?), ICONE, FAO.
1995 - 2017
1985 - 1995
1975 - 1985
1965 - 1975
before 1965
Expansion of the Brazilian agricultural frontier
Decades of 1970 and 1980
based on tropical R&D, official rural credit and
intervention prices
Decades of 1990 and 2000
based on efficiency gains (productivity and
scale), deregulation and stronger demand
100
120
140
160
180
200
220
240
260
280
Total Factor Productivity
(TFP) growth in agriculture
Source: USDA/ERS, International Agricultural Productivity data productNote: The TFP (Total Factor Productivity) representes the aggregate efficiency of land, labor and capital resources. Higher TFP means more efficient the production outcomes.
Ind
ex
(1
98
0=
10
0)
BrazilChina
Australia
World Average
India
TFP → Land, Labor and Capital efficiency
Brazil´s TFP: 3.4% p.a.
USA
South Africa
Russia
BRAZILIAN AGRIBUSINESS Lower Levels of Subsidies to Farmers
0
10
20
30
40
50
60
70
Vie
tna
m
Ne
w Z
ea
lan
d
Au
str
alia
Bra
zil
Ch
ile
So
uth
Afric
a
Me
xic
o
Ca
nad
a
Un
ite
d S
tate
s
Isra
el
Co
lom
bia
Ka
za
kh
sta
n
EU
Tu
rke
y
Ch
ina
Ind
one
sia
Ja
pa
n
Ko
rea
Ice
lan
d
No
rwa
y
Sw
itze
rla
nd
Pe
rce
nta
ge
o
f g
ross f
arm
re
ce
ipts
Source: OECD (2015)OECD Producer Support Estimate (PSE): total
transfers from consumers and taxpayers to farmers
Overview of the
Brazilian Agri-Food sector
• Agribusiness share (Brazil 2019): GDP (25%),Total exports (44%), Labor (20%)
• 3rd world ag exporter (> 200 destinations) and 5th in total area.
• Availability of natural resources: land, water, climate conditions.
• Tropical Agriculture: transformation of acidic and poor soils into fertile land; genetic
improvement of crops and animal production (soy, grasses, zebu), crop-livestock
integration, double cropping, no-till, large scale systems, integrated supply chains
• Benchmark in biofuels (ethanol, biodiesel and bioelectricity).
• Intensive Food Chain coordination.
• Commodity based exports: volumes and low costs, value-added still a challenge.
• Farmers: young, motivated, risk takers, intense internal migrations.
• New agricultural frontiers, especially pasture conversions.
Inputs, Machinery and
Equipments
Agriculture &
Livestock
Agri-Food
Processing
Distribution
channels
Final
Consumption
TROPICAL AGRICULTUREProductivity + Sustainability
Source: https://www.nexojornal.com.br
Tropicalization of the Soybean Crop
Temperate Temperate
Tropical TropicalTONS OF
SOYBEAN
TONS OF
SOYBEAN
0.5 million
1.0 million
1.5 million
2.0 million
0.5 million
1.0 million
1.5 million
2.0 million
Tropicalization of Cropping Systems
WheatCorn
TemperateTemperate
Tropical
Tropical
Source: https://www.nexojornal.com.br
TONS
TONS
500 thousand
1 million
1.5 million
50 thousand
100 thousand
Integrated Crop-Livestock Systems(365 days a year)
INTEGRATED SYSTEMS ARE BECOMING A NORM FOR RECOVERY OF DEGRADED LAND
14 MILLION HA OF INTEGRATED SYSTEMS, AND GROWING...
February April June
June June-October November-December
Photos: J.C.M Sá
Systemic, Integrated
Production Systems
Cycling crops and livestock – and adding trees…
INTEGRATED SYSTEMS ARE BECOMING A NORM FOR RECOVERY OF DEGRADED LAND
14 MILLION HA OF INTEGRATED SYSTEMS, AND GROWING...
Low Emission, Sustainable Systems
TREES INCORPORATED IN THE AGRICULTURAL SYSTEMS
CROP – LIVESTOCK – FORESTRY
Evolution of Brazilian soy exportsTh
ou
san
d t
on
s
72.000
Other countries
CHINA
CORN planted area in Brazil
146
11.389
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,0001
97
7/7
8
19
79
/80
19
81
/82
19
83
/84
19
85
/86
19
87
/88
19
89
/90
19
91
/92
19
93
/94
19
95
/96
19
97
/98
19
99
/00
20
01
/02
20
03
/04
20
05
/06
20
07
/08
20
09
/10
20
11
/12
20
13
/14
20
15
/16
20
17
/18
(¹)
Mill
ion
of
he
ctar
es
MILHO 1ª SAFRA MILHO 2ª SAFRA
4.9
92
ha
Source: CONAB*Prediction
Corn 1st crop Corn 2nd crop
Tho
usa
nd
to
ns
34.000
Brazilian CORN exports
Exports
Imports
From Vertical Coordination to
Globally Integrated Supply Chains
Feed Processing DistributionFarmers RetailGrains,
Oilseeds
Food Safety, Quality, Innovation, Traceability, Certifications
Technology, Productivity, Sustainability, Infrastructure, Value Added
Low yields &
conversions
Heterogeneity
disintegration
Diseases
low quality
Lack of
refrigeration
Pollution,
loss & waste
INTEGRATED FOOD SUPPLY CHAINS
Vertical input industries → farmers → processors
Horizontal crop/livestock/planted forests integration
Across the board PTAs and strategic partnerships
0
20
40
60
80
100
120
140
160
180
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
US
D b
illi
on
8%2%Argentina
India
EU
USA
China
Brazil
Indonesia
Canada
Austrália
Mexico
2017 (%) CAGR %
11% 5%
10% 5%
6% 8%
6% 6%
4% 4%
2% 4%
2% 6%
2% 10%
Thailand 2% 4%
3% 6%
Top Agri-Food EXPORTERS in the World (value in US dollars)
Source: USDA and UN Comtrade Data Brazil and China rank 3rd and 4th on world ag exports → high
growth rates and strong competitiveness
0
20
40
60
80
100
120
140
160
180
200
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
US
D b
illi
on
Rússia
EU
USA
China
Japan
Canada
South KoreaMexico
India
2017 (%) CAGR %
12% 3%
11% 12%
10% 12%
3% 5%
2% 6%2% 4%2% 2%
5% 1%
1% 12%
China+HK
11% 5%
Top world agri-food IMPORTERS(value in US dollars)
Source: USDA and UN Comtrade Data.Note: China + Hong Kong may occur double counting
JAPAN is the 4th top importer, responding for 5% of the
world total import value (~US$ 80 billion).
-100
-80
-60
-40
-20
-
20
40
60
80
100
US
D b
illi
on
Brazilian Trade Balance(2000-2017)
Agri-food
USD 82 bi
Source: MAPA (Agrostat) and Sistema Alice.Note: Definition of agri-food as per MAPA
Agribusiness is responsible for the positive results of the
Brazilian trade balance throughout the period, avoiding a
crisis in the external accounts.
Trade balance
USD 67 bi
Other sectors
USD -15 bi
Source: USDA, Agrostat (MAPA)Notes: production and exports ranking in volume. 1 – Raw sugarcane; 2- Coffee not rosted; 3 – Soybean Oil crude; 4 – Cotton not carded or combed
Brazil’s Ranking
World Agricultural Trade (2017)
MAIN PRODUCTS PRODUCTION EXPORTSDESTINATIONS
(No COUNTRIES)
Sugar 1 1st 1st 81
Coffee 2 1st 1st 88
Orange Juice 1st 1st 64
Soybean grain 2nd 1st 34
Chicken meat 2nd 1st 141
Bovine meat 2nd 2nd 135
Corn 3rd 2nd 66
Soybean meal 4th 2nd 59
Soybean Oil3 4th 2nd 23
Pork meat 4th 4th 72
Cotton4 5th 4th 31
Population and GDP
across the World
0
1
2
3
4
5
6
Bill
ion
pe
op
le Population growth
Source: World Population Prospects: The 2017 Revision, UM; World Bank DataNote: For data on population, Asia includes Central Asia and Middle East; and Western World includes Europe, North America and Oceania.
Asia
Africa
Developed countries
LAC
0%
10%
20%
30%
40%
50%
60%
70%
80%
1970 1980 1990 2000 2010 2017
Share of world GDP (US$)
Asia-Pacific
Europe, USA and Canada
Latin AmericaM. East/North AfricaSub-Saharan Africa
-100
-80
-60
-40
-20
0
20
40
60
80
199
0
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
200
0
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
201
6
201
7
201
8
201
9
202
0
202
1
202
2
202
3
202
4
202
5
202
6
202
7
US
D b
illi
on Latin America and
Caribbean (7% p.a.)
North America (3% p.a.)
Oceania (2%.)
Agricultural trade balancesby region (constant value)
Western Europe (-1%)
Sub-Saharan
Africa (7%)
Middle East & North Africa
(5%)
South and East Asia
(5% p.a.)
Eastern Europe & Central
Asia (8% p.a. since 2013)
Source: OECD-FAO Agricultural Outlook 2018-2027, OECD and FAO. Constant values for 2004-2006.
0
10
20
30
40
50
60
70
80
90
100
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
US
D b
illi
on
-1%
Soybean complex
Forest products
Meat and leather
Sugar and ethanol
Coffee
33%
19%
13%
5%
12%
Cotton
Tobacco
Corn and cereal
Others
2%2%3%5%
2017 (%) CAGR %
10%
2%
6%
8%
2%
4%-1%1%
Orange juice
5% 3%
Source: MAPA (Agrostat).Note: Soybean complex = grains + oil + meal. Definition of agri-food as per MAPA, which takes into account 2949 products.
BRAZILAgri-food EXPORTS by products
Top 4 agri-food chains → 77%
-
5
10
15
20
25
30
35
Soybeancomplex
Meats andleather
Sugar andethanol
Forestproducts
Coffee +Tobacco +
Fruits + Juices
Corn + Cotton Other + dairyproducts
US
D b
illi
on
Ohers
Africa
Latin America
USA/Canada
Europe
Middle East
Others Asia
Greater China
BRAZILDestination of Brazilian Agri-Food
Exports by Product (2017)
Source: MAPA (Agrostat).Note: Greater China: Continental China + Hong Kong + Macau; Asia Ex-China includes Eastern Asia (ex. China), South Asia, Southeast Asia, Russia and Central Asia; Europe includes European Union, EFTA e Eastern Europe. MAPA’s definition of agri-food used, which takes into account 2949 products.
32
18
1211
10
67
0
5
10
15
20
25
30
35
40
US
D b
illi
on
Europe (18%)
China and
Hong Kong (37%)
Asia ex-China (15%)
LAC (8%)
Middle East (9%)
USA/Canada (7%)
Africa (6%)
BRAZILAgri-Food Exports by Destination (value)
Source: MAPA (Agrostat). Note: Asia Ex-China includes Eastern Asia (ex. China), South Asia, Southeast Asia, Russia and Central Asia; Europe includes European Union, EFTA e Eastern Europe. MAPA’s definition of agri-food used, which takes into account 2949 agri-food products.
Total exports (2018): USD 102 bi
Exports to 200+ countries
3rd world exporter
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Europe
China and HK
Asia ex-China
Latin America
Middle East
USA and Canada
Africa
19%
3%
13%
5%
43%
11%
4%
6%
7%
8%
9%
18%
15%
37%
BRAZILAgri-Food Exports by Destination
Asia receives 53% of Brazilian Agri-Food exports
Source: MAPA (Agrostat). Note: “Asia ex- China”’ includes East, South and Southeast Asia, Russia, and Central Asia, but excludes China; “Europe”’ includes the European Union, the European Free Trade Association (EFTA), and Eastern Europe. Definition of Brazilian agribusiness according to MAPA, which includes 2,949 products.
0
6
12
18
24
30
36
42
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
US
D b
illi
on
Soybean complex
Meats and leather
Cereals and cotton
Source: MAPA (Agrostat).Note: Soybean complex = grain + oil + meal. Definition of Brazilian agribusiness according to MAPA, which includes 2,949 agricultural products. 2018 (%) refers to the products’ share of the total exports in 2018; CAGR (%) is the Compound Annual Growth Rate between 2007 and 2018.
BRAZILAgricultural exports by product (value)
Product CAGR
Corn 13%
Cotton 9%
Celulose 5%
Soybean 3%
Pork meat 2%
Average BR 1%
Sugar -1%
Coffee -1%
Chicken meat -1%
Bovine meat -2%
Tobacco -3%
Ethanol -11%
Brazilian exports market share growth in selected commodities (2006-2017)
BRAZILSoybean complex exports
Source: MAPA (Agrostat).Note: Soybean complex = soybean grain + oil + meal
Destination: 87 countries
Open markets
Source: MAPA (Agrostat).
BRAZILPoultry exports
Destination: 141 countries
Main restrictions
Delays in the plant approval process.
Operational issues: rejection of loads, delays in ports,
registrations, signatures.
Tariffs, Quotas and Escalations.
Health restrictions (avian influenza, salmonella, listeria).
Religious concerns (Halal process).
Markets opened with restrictionsOpen markets Closed markets
Destination: 133 countries
Source: MAPA (Agrostat).
BRAZILBeef exports
Main restrictions
Delays in the plant approval process.
Health restrictions (foot-and-mouth disease, BSE).
Bureaucratic constraints: rejection of loads,
delays in ports, registrations, signatures.
Technical restrictions (traceability).
Religious concerns (Halal process).
Markets opened with restrictionsOpen markets Closed markets
Source: MAPA (Agrostat).
BRAZILPork meat exports
Destination: 72 countries
Main restrictions
Religious concerns (Haraam).
Delays in the plant approval process.
Tariffs and Tariff Rate Quotas.
Health restrictions (mainly foot-and-mouth disease)
Technical restrictions (Ractopamina)
Markets opened with restrictionsOpen markets Closed markets
0
5
10
15
20
25
30
35
40
45
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
US
D b
illio
n
Oilseeds
(mainly soybean)
Cereals (corn)
Meat & leather
Sugar
Forest products
Others
57%
15%
8%
8%
5%3%
2017 (%)
ASIABrazilian Agri-Food Exports (USD)
Source: MAPA (Agrostat)
Cotton
4%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Source: MAPA (Agrostat) and MDIC.
GREATER CHINA
Top Brazilian Exports (100% Value)
Soybeans
Cellulose
Beef and leatherPoultry
Sugar
Iron ore and mineral fuels (oil)
Others
39%
7%2%3%
6%
41%
Free access Restricted Highly Restricted
Wood pulp
Coffee
Sugar (50%)
Soybeans
Wheat Rice
Chicken(14%)
Beef(12%)
Pork(18%)
Corn(54%)
No imports
Cotton
China’s access to top
agri-food export commodities
% indicated = Tariff rates faced by Brazil into China; Nil = no exports in 2015. Source: TradeMap using UN ComTrade data
Source: Emily French (2017). The silent giant - emerging economies & shifting market demands for the grain industry. Global Grains Asia 2017, Presentation by Consiliagra.
OECD (G7) vs. OBOR (emerging economies)
OECD Trade expansion 1950+
USA
Europe
China
India
Mid East
Africa
South
America
Emerging economies 2010+
SE Asia
Japan
Oceania
Emerging economies and
the new growth in demand
1. Commodity TRADE among emerging economies: energy, minerals and agribusiness.
2. Overseas INVESTMENTS to secure raw material supply: processing, trading, infrastructure.
3. GLOBAL INTEGRATION: supply or value chains?
Top priority issues are
challenging trade-offs
How to achieve?
…with import restrictions and self-sufficiency policies?
Food Security Food Safety & Quality
AffordabilityLow Inflation
Sustainability
Trade is still very limited in the agri-food sector…
✓ Trade: economic efficiency and sustainability
Feed (grains) vs. Animal Protein → better carbon/water/energy footprints
Opportunities and ChallengesBrazilian Agribusiness International Agenda
1. Fighting global ag protectionism: reinforce the WTO, coalitions on
sectoral agendas (sugar, grains vs. animal protein, etc.)
2. Re-launch trade negotiations, starting by EU-Mercosur agreement.
3. Research and innovation in tropical conditions: genetics,
biotechnology, mechanization, geo-technology, precision
agriculture, big data, drones, blockchains.
4. Value-added products and branding.
5. Food safety, quality, traceability.
6. Sustainability, climate-smart agriculture, bioenergy.
7. Building integrated agri-food value chains to address global food
security and food safety challenges: exploring competitive
advantages, cross-investments, consolidation.
