The Economist Intelligence Unit conducted the research and analysis and wrote the report, which focuses on the strengths of and challenges faced by the sector, what is needed for Brazil to become the world's leading agribusiness superpower, and how companies are gaining global stature.
Brazil is the world’s fifth-largest country by geographical area and the largest in terms of arable land. Although only a fraction of its land is exploited, the country produces a highly diverse array of agricultural goods. This puts Brazil in a unique position to lead the global agricultural sector in the medium to long term. With an abundant supply of natural resources—water, land and a favourable climate—it has the opportunity to be the largest agribusiness superpower, supplying the world market while also providing affordable food for its own population.
The country already ranks as the top global supplier of products as diverse as beef, orange juice and ethanol, and is expected to continue to expand its exports in other areas as well, such as cotton, soybean oil and cellulose. Its markets are also diverse: China is now the largest market for Brazilian agribusiness products, and sales to Eastern Europe, the Middle East and Africa are also growing rapidly.
To maintain this trajectory, Brazil must build on the significant improvements in productivity that underpin its current success and overcome the barriers to full realisation of its potential. Obstacles range from scarcity of credit to logistical logjams, from protectionist measures in key markets to environmental concerns.
Frontier regions are a testament to what is right, and wrong, with Brazil’s agribusiness sector. The rich harvests from the country’s vast hinterland have more than paid back public and private investment in research to create new plant varieties adapted to the region’s soil and climate. Large-scale production and professional management have helped to offset the high costs and tight margins of farming such areas. Attracted by the promise of growth, investors have both financed agriculture’s expansion and provided technological know-how. Yet agricultural endeavours in these regions are burdened by inadequate transport and insufficient storage capacity. Productivity in such segments as beef production and corn remains low. Margins remain tight.
The industry’s strong performance today is based on changes in business models, farming practices and technology over the past 30 years. For Brazil to fulfill its potential as a global agribusiness powerhouse in the coming decades, companies must continue to innovate, transforming how and where they do business.
Leading companies have successfully tested different paths to expanding Brazil’s agribusiness beyond the country’s borders. To overcome protectionist barriers in the US and Europe, they have diversified their offerings, improved sanitary controls and acquired foreign competitors. They have increased the value of products sold in developed markets, but also have penetrated emerging markets worldwide.
Further investments and transformations are needed so that the agribusiness sector can thrive in the coming decades. These include:
- Infrastructure—transport, port and storage—must be upgraded to meet current and future needs.
- Land must be used more productively through innovative farming techniques. Growth will come through better use of existing crop and pasture land, not just the opening of new areas.
- Research must continue to ensure development of crop varieties adapted to Brazil’s climate and soil conditions.
