Brazil has progressively emerged as a major agricultural powerhouse during the past few years: A net importer of agricultural products in the 1970s, the country now ranks among the world’s five largest agricultural producers and exporters. While Brazil now serves as a model for many developing countries thanks to this impressive achievement, we invite you to read the analysis issued in March by the Center for Studies and Strategic Foresight (CEP) of the French Ministry of Agriculture, and are publishing here several excerpts of the study1
. It serves as a persuasive reminder that the Brazilian “miracle” is first and foremost the result of a dynamic and comprehensive policy to support agriculture, from upstream to downstream. Therefore, the popular imagery of the Brazilian agriculture as liberal, not very interventionist and open to the world cannot withstand a closer scrutiny of its agricultural policy, which discloses numerous intervention channels used by Brazil to support its agricultural activities with the objective to strengthen its position of upcoming global agricultural power. In this context, momagri has expanded the SGPA (Global Support to Agricultural Production)2
indicator, whose results will be available in the coming weeks, to include an analysis of Brazil’s agricultural policy.
Momagri Editorial Board
The world’s largest country in terms of land size and South America’s largest nation in terms of land and population size, Brazil is currently a key player in the international arena and a great power among emerging countries.
As the world’s sixth largest economy, Brazil ranks third among the world’s major agricultural exporters and fourth for food products. With 25 percent of global investment, the country is the principal recipient and source of foreign direct investment in Latin America and fifth recipient nation in the world. Thanks to its agricultural and oil resources, Brazil also ranks second worldwide for bioethanol production.
Blessed with the world’s largest reserves of farmable and not cultivated land, Brazil has carved out its regional and international rank thanks, to strong exporting agricultural activities, radical economic reforms and an aggressive trade and influence policy.
Even while manufacturing and services are showing a steep growth, agriculture is still a driving force of the Brazilian economy with 5.8 percent of GDP (against 2 percent in France), and with the agribusiness share reaching 23 percent. In 2009, agriculture accounted for 19.3 percent of the labor force, or 19 million people, thus strongly contributing to poverty reduction. Agribusiness employment accounted for 2.7 percent of the labor force.
Enjoying a vigorous growth of agricultural GDP, Brazil is today the world’s largest producer and exporter of a wide range of products: soybean, coffee, cane sugar, orange juice, meat and tobacco. In spite of weak governmental support to producers3
as compared with OECD countries, and a domestic consumption that captures 79 percent of agricultural production, agribusiness accounts for over 38 percent of Brazil’s exports, and a $77.5 billion trade surplus in 2011, while the country was still a net importer of agricultural goods in the 1970s. In fact, agriculture has been a strong factor in the country’s macroeconomic stability through currency flows on one hand, and on the other, its contribution to energy security with bioethanol development.
Agriculture also benefited from macroeconomic and structural reforms initiated from the 1990s onward, with the goal of better economic stability, inflation reduction and trade expansion. These reforms paved the way for competitive agricultural operations, thanks to reduced production costs (inputs) and governmental interventions to control prices for key commodities (coffee, sugar and wheat).
A significant expansion of credit and the simplification of the tax system, combined with a social policy for the underprivileged sections of the population under the Lula presidency (2003-10) strongly helped companies, spurred investment and boosted domestic consumption.
Still impacted by financial crises, agriculture’s growth has accelerated starting in 2003, partly thanks to a productivity model based on high mechanization, improved concentration and significant labor force reserves. Encouraged to move away from social conflicts linked to land overcrowding and colonization of new production areas, investment in agricultural research boosted crop productivity by over 151 percent in 30 years.
In the framework of the ambitious Growth Acceleration Program (PAC) launched in 2007, followed by a second program phase, investments in infrastructure should also advance agriculture, which has been long penalized in terms of logistics in the country’s inland regions. The specialization and development of single-crop farming, together with man-made enhancement of soils through pastureland expansion and irrigation, have bolstered economic growth. Today, five commodities (soybean, sugar, meat, corn and milk) account for 68 percent of the total national agricultural production value, with soybean and related products making up 38.7 percent of Brazilian agribusiness exports.
Drawing on its natural comparative assets, Brazil’s “economic miracle” is also the result of bold reforms and policies that paved the way for its international advancement.
1 The complete study is available from http://agriculture.gouv.fr/Analyse-no41-mars-2012-Entre
3 CEP’s note: “According to OECD calculation methods which, for example, do not include debt relief measures”.