A new vision for agriculture
momagri, movement for a world agricultural organization, is a think tank chaired by Christian Pèes.
It brings together, managers from the agricultural world and important people from external perspectives,
such as health, development, strategy and defense. Its objective is to promote regulation
of agricultural markets by creating new evaluation tools, such as economic models and indicators,
and by drawing up proposals for an agricultural and international food policy.
A look at the news

Brazilian agriculture under the spotlight

July 25, 2016

The upcoming start of the Rio Olympic Games provides an opportunity to take a look at the Brazilian agriculture. A recent report from the Dutch bank Rabobank1 indicates that Brazil benefits from a high production potential that is still unused. It is an asset that could allow the country to increase its ability to supply international markets with agricultural commodities, especially regarding soybean.

In the past decade, the Brazilian agriculture has experienced an exponential growth of its soybean exports, which increased by 120 percent, reaching 55 million tons in 20152 from 25 million in 2006. This growth should continue and Rabobank estimates that the country could export up to 16 additional tons in the next ten years. This prospect is based on the 75 million hectares (185 million acres) of under-used grassland3.

One should remember that Brazilian agriculture represents a major strategic asset, and accounts for the country’s first source of foreign currencies. In addition to land resources, the keys to the Brazilian success can also be explained by its two agricultural policies: One for agribusiness and the other for family farming. If we speak a great deal about the Brazilian agricultural development potential, we often ignore that Brazil keeps strengthening its support to agriculture through various channels: Intervention purchases, interest rate subsidies, direct support to agricultural prices and an advantageous tax system.

The development of ethanol production particularly owes a great deal to public interventions and the stimulation of consumption. According to Unica, Brazil’s main association of sugarcane farmers, for the 2015/2016 harvest Brazil produced 590 million tons of sugarcane, with 58% for ethanol production and 42% for sugar production4. As the top sugar exporter, Brazil is thus using a policy to encourage consumption as a mean to regulate this strategic sector. Considering the over-supply of the international sugar market, the rate of incorporating ethanol in gas has been raised to 27%, quite above the European rates!

The consolidation of the Brazilian agricultural policy is general. In the 2008-2014 years, Brazilian global support to the national agriculture increased by 114% (+76 billion reals) indicates the SGPAA (Momagri’s Global Support to Agricultural and Food Production indicator), reaching 142 billion reals from 142 billion. This increase reflects Brazil’s ambitious objectives in terms of food security and economic development and export growth. If Brazil continues to invest in its future, the socio-political, logistics and climate risks are nevertheless remaining a Damocles sword that will also condition the potential of Brazilian production.

1 https://d21buns5ku92am.cloudfront.net/27385/documents/30824-Rabobank[...].pdf
2 Ibidem
3 Ibidem
4 http://www.unica.com.br/news/25950095920336510230/south-central-2015-por-cento2F2016-harvest-should-reach-590-million-tons-of-processed-cane-por-cento2C-with-priority-on-ethanol-production/

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