“As the fifth largest country in the world by area, the sixth largest by population, and nineth biggest economy, Brazil is a major producer, consumer, and exporter of a wide range of agricultural products. It is one of the world’s biggest agricultural powerhouses. Agribusiness is the key driver of the Brazilian economy. The South American country has become an important producer and trader of soybeans and corn and now competes with the United States in world markets.” Brazil is the fifth largest country in the world and the largest in the southern hemisphere. It has the 9th largest economy by GDP and a population of about 206 million people. The country represents the gateway to the Mercosur trade block, including Argentina, Paraguay, Uruguay and Venezuela, as well as with special relationships with Bolivia, Chile, Colombia, Ecuador, Peru, Guiana and Suriname, which together form a common market of more than 310 million consumers. Brazil has an enormous internal growth potential, a broad industrial base and infrastructure and a diversified economy. Brazil is a traditional leader among emerging markets. A BRICS member, many multi-national companies consider it as an essential market for global businesses. Approximately 80% of the Fortune Top 500 have subsidiaries in the country. With a USD 2.4 trillion economy, and a large middle-class consumer base, it is a top 10 destination for global Foreign Direct Investment (FDI). Brazil faces sharp differences in terms of economic output between its various regions. The economic power is concentrated in the southern and south-eastern regions of the country, especially in the State of Sao Paulo which contributes with 33% of the national GDP itself. The top exports of Brazil are soybeans, iron ore, crude petroleum, raw sugar and poultry meat. The top export destinations of Brazil are China, the United States, Argentina, the Netherlands and Germany. The top import origins are the United States, China, Germany, Argentina and South Korea. Up to the mid 90’s, local industry was protected from imports and overall tax burden was high. Trade barriers were set because of the need to develop local industries and reduce foreign debt. However, in the last few years, import duties have been gradually reduced and import of various products have been encouraged, specially when local prices are higher or when there is a shortage of local production. HUGE AGRICULTURAL POTANTIAL Brazil is a competitive player in the world agricultural markets. The agribusiness is an important pillar of the Brazilian economy, representing over 30% of the country’s GDP. The Latin country is the second largest exporter of processed foods in volume and fifth in value, with abundant resources and a sound installed capacity. The country is expected to supply up to 40% of the global food demand up to 2050 and, in order to reach this potential, the agribusiness sector is demanding new technologies for food processing to ensure its role as one of the major food suppliers in the world. Brazil is a major player in global agricultural trade, accounting for 7.3 percent of global agricultural exports. It is the world’s third-largest exporter of agricultural products, behind only the EU and the United States. Soybean products remain the largest export, followed by sugarcane products (sugar and ethanol), meat, coffee and cereals. WORLD’S 3rd BIGGEST AGRICULTURAL PRODUCER With 75 million hectares of its lands dedicated to agriculture production and 8.8 % of arable areas in the territory, Brazil is naturally suited to large agricultural production. The country is currently the world’s 3rd biggest agricultural producer Despite the economic recession in 2015-16 and slight recovery in 2017, Brazilian agribusiness’ GDP grew 13 % in last year. The Brazilian Ministry of Agriculture (MAPA) acknowledges that 67 % of the agriculture properties already use some sort of high precision technology. By investing in R&D, Internet of Things, Big Data and Biotechnology, this key economic sector is revolutionizing from beginning to the end of its production line. Brazil’s agricultural production has grown rapidly over the past two decades, driven by rising global demand, strong prices, and technological advances. Changes in crop management practices and expansion in area harvested have enabled Brazil to become a leading exporter of soybeans, corn, sugar, meat, coffee, and ethanol. With continuing productivity increases and additional land available for farming, further growth in agricultural production and exports is anticipated. At the same time, growing per capita income and population growth will continue to fuel demand in Brazil for agricultural products, including higher value commodities. The Brazilian agricultural sector has been transformed from a traditional system of production with low use of modern technologies to a world agricultural leader. Brazil’s science and technology investments and other public policies have been crucial for enabling the country to discover its agricultural potential and increase farm production. However, there are some drawbacks that limit the agricultural production potential such as reliance on imported inputs, mainly fertilizers, limited access and excessive bureaucracy to agricultural financing and insurance options, low storage capacity in farms, inadequate logistics and transports infrastructure. TO BECOME THE LARGEST PRODUCER OF SOYBEANS Brazil has become an important producer and trader of soybeans and corn and now competes with the United States in world markets. Between 2010 and 2017, Brazilian exports of corn and soybeans increased by 145%, climbing to 97 million tons. As the second largest producer of soybeans worldwide, Brazil accounts for 30 percent of the global production of the crop. Brazil will surpass the United States as the largest producer of soybeans this year, taking over the top ranking for the first time in history. The U.S. is expected to harvest 116.48 million tons of soybeans in 2018, falling short of Brazil’s estimated collection of 117 million tons for its crop year. Brazil’s toppling of the United States as the world’s largest soybean producer stems from logistical improvements, gains from planting second corn as a rotation crop, all of which increase farmer yields, Brazil’s Vegetable Oils Industry Association (Abiove) said. Soybeans grown in Brazil have higher protein levels than those grown in many other parts of the world, and thereby fetch higher prices in international markets. The South American country is expected to post further gains thanks to ample area to expand planting, as it has been growing its planted area at a pace between 500,000 and 700,000 hectares per year. By growing 500,000 hectares, it can add up to 2 million tonnes of soy to the market per season. Demand on international markets also remain strong, with Brazil expected to export a record 72 million tonnes this year. Brazil, already the world’s largest soybean exporter, is expected to expand this lead in the coming years thanks to its unique ability to expand planted area. Brazilian grain export facilities along the Amazon River are picking up a larger share of the country’s growing exports, and waterways are playing a larger role in carrying corn and soybeans to port. According to United States Department of Agriculture (USDA) report in April, 2018/19 corn production is forecast at 90 million tons. 2018/2019 corn consumption is forecast at 63.5 million tons, as the Brazilian poultry and swine sectors will require increased feedstocks for expanded production due to a small expected uptick in poultry and swine exports and domestic consumption as the Brazilian economy recovers. And 2018/2019 corn exports are forecast at 30 million tons to reflect increased domestic consumption and lower expected ending stocks at the end of this marketing year. The largest export market for the Brazilian corn is Iran. Other larger markets for Brazilian corn include Egypt, Japan, Spain and Vietnam. RICE IS A STAPLE FOOD IN BRAZIL Another important agricultural product for Brazil is rice. Rice is a staple food in Brazil, with most Brazilians consuming it one to two times daily. 2018/19 milled rice production is forecast at 8.2 million tons on an expected return to higher yields. Total rice area in Brazil has declined for 8 of the last 10 years as rice is replaced with more profitable crops like corn or soy. 2017/2018 consumption is forecast static at 8 million tons in response to smaller domestic production. 2018/2019 consumption is forecast slightly higher at 8.1 million tons on expected population growth. NOT SUFFICIENT IN WHEAT While Brazil is a major producer of everything from corn to beef to sugar, wheat is one of the rare crops where the nation is a net-buyer, relying on shipments for about half of domestic consumption. The South American country is struggling to find wheat supplies and is facing the prospect of more expensive bread, pasta and cookies. This year, the country is even more dependent on imports amid low inventories and after a poor crop in 2017, Bloomberg reports. Tighter supplies mean wholesale prices have surged more than 50% this year in some regions. The problem is that wheat availability has grown scarce in Argentina, which supplies Brazil with about 80% of its imports. Some millers and wheat buyers are lobbying for relief from tariffs that could make it cheaper to import from suppliers beyond Argentina, such as the US, Canada and Russia. “We’ve been talking to the Agriculture Ministry about a tax exemption possibility as mills are very concerned about the wheat shortage,” Rubens Barbosa, the president of industry group Abitrigo, told to Bloomberg. The production of wheat is expected to rise 14% as higher prices have encouraged producers to increase the planted area. Wheat production is concentrated in South region. MAPITOBA (States of Maranhão, Piauí, Tocantins and Bahia) is the main expansion region for grains. 2017/2018 wheat production is estimated at 4.264 million tons, down by more than a third from the previous year as a result of adverse weather during critical development stages of the crop and some abandoned hectares. 2018/2019 production is forecast at 6 million tons on a return to more normal yields. Like other crops in this region, wheat area has been squeezed in recent years by expanding soybean hectares, as farmers try to increase revenue with a relatively more profitable crop. USDA estimates 2017/2018 wheat imports at 7 million tons. Imported wheat makes up roughly half of Brazil’s domestic consumption, with most imports being duty-free purchases from MERCOSUL-partner Argentina. In December 2017, the Brazilian Ministry of Agriculture (MAPA) published a new set of regulations to allow the importation of Russian wheat for the first time. Unmilled Russian wheat had been banned for phytosanitary reasons, but the new regulation allows imports into Brazil’s Northeast region for mills located close to ports, in an effort to limit the spread of any potential disease risk. 2018/2019 imports are forecast at a stagnant 7 million tons, to compliment an expected return to normal yield and production levels. Brazil generally imports higher-quality wheat so that millers can blend it with domestic supplies to achieve the desired flour quality for bakeries to make small crusty French-style baguettes (pão francês). 2017/2018 consumption is forecast at 12 million tons, on the low level of domestic production and the slower pace of trade. Wheat industry sources believe that the slower pace of trade means that millers are choosing to draw down wheat stocks. 2018/2019 consumption is forecast slightly higher at 12.55 million tons, based on expected population growth and a small per-capita increase in consumption as the Brazilian economy continues to recover from recession. Brazil is a negligible exporter of wheat, with small quantities of unmilled wheat exported to Asian counties like Vietnam and small volumes of wheat flour and pasta exported to Venezuela. BRAZIL WHEAT MILLING INDUSTRY According to ABITRIGO, there are over 200 flour mills in Brazil and the milling capacity is estimated at 18 million to 19 million tons. Consumption of wheat flour in Brazil in 2017 fell 0.42% to 8,409 million tonnes, according to the Brazilian Association of Wheat Industry (ABITRIGO). ABITRIGO statistics shows, 7,964 million tons of flour were produced in Brazilian mills and 445 thousand tons imported. “The fall in purchasing power made the Brazilian revise some habits acquired in times of economic boom. The eating at the restaurants have diminished, as well as the consumption of foods of greater added value reduced,” said in a note the president of ABITRIGO, Rubens Barbosa. The per capita flour consumption is 40.5 kg. and this is well below from other regional countries such as Argentina and Chile. Pointing out that Brazil has a serious potential in terms of flour industry, “There is great room for growth of wheat products consumption in Brazil.” ABITRIGO’s then-president Sergio Amaral told Miller Magazine three years ago. REFERENCES: www.fao.org www.usda.gov www.export.gov https://www.igc.int/en