While Australian agriculture is renowned for its high quality product, traceability and food safety, Brazil is fast catching up.
While Australian agriculture is renowned for its high-quality product, traceability and food safety, Brazil is fast catching up.
Agriculture is especially important to Brazil’s economy, showing growth in 2015 despite overall economic contraction and political instability. According to the Brazilian Institute of Geography and Statistics, in 2015, Brazil's GDP shrank by 3.8%, while the Agriculture sector grew.
In the early 1990s, Brazil had stabilised its economy and large financial investment helped the country to expand into agricultural technology. Today, farms from small to large producers are highly mechanised, achieving efficiencies and lower cost production.
The timing is right for agriculture in Brazil, with significant opportunity to attract investment and deliver increased exports to new and existing markets. Recently it was suggested that the government might be in discussions to ease farm land foreign ownership restrictions. If this happens, over the coming months and years there is likely to be a significant increase in investment into the sector, providing rapid growth.
Two commodities we have seen the rise of in Brazil firsthand are beef and coffee.
Brazil leads the world in exports for many commodities. The country is working to position themselves as leaders in the world cattle industry by 2020. The expectation is that domestic production of red meat will supply 44.5% of the world exports by then.
The recent amended regulation to allow for beef exportation to the US is long overdue. Whilst access to one more market may not mean a lot for Australia in isolation, we normally see that once access to a market like the US is granted, others follow shortly thereafter. Brazil’s ability to capture market share in China is testament to their ability to get product into the market quickly and efficiently.
World coffee consumption is only on the increase, with at least 2% per year growth for traditional coffee and 10% for so-called “specialty coffees”. Brazil is positioned well and leads the world for coffee exportation.
The most significant change we have seen in coffee production in Brazil has been achieved through the investment in technology, resulting in a significant reduction of labour, increases in production efficiency and higher gains across the board from small to large producers.
Brazil’s coffee industry has a very efficient and highly organised structure and can continue to serve the market well into the future.
Record gains in production of soybeans, coffee and sugar are expected this year, and near record for corn.
Is Australia Ready?
The important message for Australian producers is that they need to get organised now and that means doing the following:
- Avoiding customer concentration, finding many suitable markets;
- Building customer relations now that will last a life time;
- Producing culturally sensitive produce; and
- Investing heavily in production and the supply chain to ensure produce is delivered consistently and as low cost as possible.
The window isn’t going to close but others will try and climb through it with us.