Global Equity Brazil

04.19.2010 - Agriculture: Superpower is ready to feed the world

Malthusians worried about the world's ability to feed itself might like to listen to Roberto Rodrigues, an agribusiness consultant and former Brazilian agriculture minister.

"The idea that there will be a shortage of food is just plain wrong," he says. "Production in Brazil is growing in all areas."

From a middling agricultural country, it has grown into a superpower in the past two decades, becoming the world's biggest exporter of beef, chicken, orange juice, green coffee, sugar, ethanol, tobacco and the "soya complex" of beans, meal and oil, as well as fourth biggest exporter of maize and pork.

Unlike much of Brazil's economy, where productivity gains have been less than spectacular, agriculture has achieved its new status almost entirely on the basis of more efficient management and the development and application of technology.

Between the harvests of 1990-91 and 2008-09, for example, production of grains rose from 58m to 144m tonnes. Over the same period, the amount of land planted with grains increased by just 26 per cent, from 37.9m hectares to 47.7m ha. Productivity, measured in tonnes per hectare, almost doubled.

Between 1980 and 2008, the number of diary cows rose from 16.5m to 21.5m, while production of milk increased from 11.2bn to 27.1bn litres - a productivity gain of 86 per cent. Between 1994 and 2009, production of beef rose 77 per cent, of pork by 133 per cent and of chicken, by 217 per cent.

Yet Brazil's importance as a global supplier lies more in its potential than past performance. Of its total territory of 851m ha, some 340m are suitable for agriculture. Of those, 72m are under crops and 172m under pasture. That leaves 96m ha of available agricultural land, without touching a tree in the Amazon forest or encroaching on other sensitive areas.

Yet farmers and ranchers have nevertheless been cutting down Brazil's forests at an alarming rate. Although the rate of deforestation in the Amazon slowed from 27,000 sq km in 2004 to 11,200 sq km in 2007, it has since risen somewhat.

The government says the overall decline was caused by better monitoring and control, although many scientists say fluctuating commodity prices played a bigger role in the fall and subsequent increase.

Much available agricultural land is in parts of the country where land title is relatively well established and the law relatively well enforced. In most of the Amazon, neither is the case. It is easy for small ranchers, for example, to clear an area of forest, use it for low-intensity ranching for a few years until its nutrients are exhausted, and move on.

Better monitoring and market-led initiatives hold out some hope that the rate of deforestation will slow. Meanwhile, farmers are concentrating on raising productivity.

The number of cattle has increased from 78.6m in 1970 to 169.9m today, while land under pasture has risen by much less, from 154.1m ha to 172m ha.

In São Paulo state, there are 1.55 head of cattle a hectare of pasture: if that ratio, itself low by international standards, were repeated nationwide, another 62m hectares would become available for crops.

Higher-density ranching is one advance made possible by scientists at agricultural research centres in the country, who have developed better strains of grass, for example. Brazil is also helped by its tropical climate, with generally predictable amounts of sunshine and rainfall.

Greater efficiency has led to monocropping, especially of sugar cane and soya. Huge areas are covered with vast seas of crops, dotted with irrigation circles.

Mr Rodrigues, who is from a long line of farmers, says he recently visited his son's farm in the northern state of Maranhão.

When he asked for some fresh eggs and some salad from the vegetable garden, his son told him he could get those from the supermarket.

"That's the way it has to be today," he says. "Concentration on the most efficient means of production." Farmers' expertise has advanced enormously, but they still face external problems. Bad roads and other logistical problems add greatly to the cost of getting produce to market.

Unlike many other agricultural nations, Brazil has almost no rural insurance to protect farmers from factors beyond their control; apart from the weather, they are also at the mercy of interest rates, foreign exchange rates, trade negotiations and more.

Mr Rodrigues says it is not true, as many in the sector complain, that Brazil has no agricultural policy. What it lacks, he says, is an overall strategy for the sector, co-ordinated by more than one ministry.

In spite of such problems, Mr Rodrigues says Brazil's status as an agricultural superpower can only grow. He says he knows of 22 foreign investment funds looking for opportunities.

"If I were an investor, I would put my money in logistics and fertiliser," he says. "The opportunities are fantastic. And people are coming without our doing anything to invite them."