Have you ever heard that Brazilian Agribusiness is one of the sectors that continued in a high during the Covid-19 pandemic? Some of the factors that influenced this scenario were the international relations.
Who explains more about this subject is Thiago Bernardino, professor of the MBAs USP/Esalq. He starts his speech explaining that Brazil is a country that currently exports more products than it imports and that export indexes grew in 2020, compared to 2019.
This argument is based on information released by the Ministry of Agriculture, Livestock and Supply (Mapa) that confirms the positive balance of the commercial balance of exports of the Brazilian Agribusiness. “There were US$ 100.81 billion in exports in 2020. It is a growth of 4.1% in comparison to 2019”, comments Bernardino.
“The imports, however, presented a fall. It was 5.2% less, reaching US$ 13.05 billion. Thus, we conclude that the balance surpasses in US$ 87.76 billion for the sector.”
Differentials of the Brazilian Agribusiness
To justify this increase in exports and consequent positive balance of the commercial balance of the Brazilian Agribusiness, Bernardino lists two main factors: competitiveness of the main export products (grains and meats) and exchange.
“Brazil presents a competitive advantage in the field, in the conditions of production, in technology and in the human capital. Put this together with a scenario in which the import is expensive and it is possible to understand the growth of export”, he stresses it.
Relations with other countries
To understand the relationship of the Brazilian Agribusiness with other countries, it is necessary to keep in mind the five largest and main export sectors in 2020, according to Mapa:
- Soy complex
- Forest products
- Sugar-ethanol complex
- Cereals, flours and preparations
We also need to know who we relate to. “China is, today, our main destiny. Then we have the United States of America (USA) and countries of the European Union (EU)”, details Bernardino. The professor still emphasizes the growth of Asian and Middle East countries as importers of Brazilian products. A trend to keep an eye on for the next years.
With a panorama of the current scenario of the Brazilian Agribusiness in hands, it is important to certify that we agree that international relations are fundamental and very strategic for Brazil. “The Gross Domestic Product (GDP) of the Agribusiness represents between 20% and 25%, varying according to the year. So, Agribusiness is an important part of the wealth of the country”, highlights Bernardino
And how do we reach new markets if not with international relations? More than exporting, the professor comments on the importance of other negotiations, such as agreements to offer solutions in terms of food and purchase of industrialized and processed products.
Competitiveness + Markets + Strategy
Everything that has been said so far about the Brazilian Agribusiness is illustrated by Bernardino with the example of China. “In the last two years, China has become the main destination of our products. They have a problem of growing population and little area for production. The country also faced health problems in the protein chain, which aggravated and made them seek possibilities in the world.”
Even if there are other important producers of agriculture and protein, Brazil is a large market of supply due to the volume of production. “Countries like USA and Argentina, or even Ukraine, can be competitors, but in terms of potential to meet an increasingly growing market, only the USA can rival Brazil”, says Bernardino.
The Brazilian Agribusiness in crises
According to the professor, the pandemic of Covid-19 brought an interesting scenario for the Brazilian Agribusiness and food producing countries. “Food is a primary product, it is a door. People stop buying cars or clothing to feed.”
He still explains that, because of this, the agricultural sector stands out in times of crises, wars or financial difficulties, and opens opportunities. “This scenario of pandemic, competitive advantage and exchange fluctuations facilitates the international relations of Brazil”, comments Bernardino.
Among the other types of international relations mentioned by the professor, he cites that while emerging and developing countries have approached Brazil, negotiations between the Brazilian government and countries of the EU and USA have reached another level.
“Brazilian policies and those related to the Amazon Forest form another type of business environment. On the one hand, we have a relationship based on the need to purchase the product, by productive efficiency and volume. On the other hand, it has the environmental question.”
Therefore, Bernardino points out that international relations are very political and economic. “It is necessary to know how and when to speak and have negotiating ability. It is necessary to understand what our buyers, countries consumers and importers want and present our numbers and results”, he advises.
The future of the Brazilian Agribusiness
But, after all, what do you expect of the Brazilian Agribusiness? Bernardino replies: “We can expect negotiations increasingly guided on environmental issues, social, economic and welfare of protectionism in producing countries. The world sees in Brazil the great exit in the production of food. The words skill and negotiation are very important.”
Incentives and investments can also enter this scenario. “We can consider, for example, that certain sector can receive technological aid, of infrastructure and in human capital, because there is the interest in developing some areas”, he concludes.
What are your thoughts on this information about the Brazilian Agribusiness? Did you know of all this? Let’s talk!