Agribusiness makes the Brazilian economy stronger

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The country is the world’s largest exporter of meat and soybeans. Agribusiness gave it a trade surplus of nearly $90 billion in 2021.

Brazil, with an area of 8.5 million square kilometres, is the largest country in Latin America and the fifth largest on the planet; It has a GDP of US$1.84 billion with a population of 210 million inhabitants, which means that its product is similar to that of India (which has 1.4 billion inhabitants), and four times that of Argentina.

The great historical novelty of the Brazilian economy from the ’80s is the appearance on a large scale of agribusiness (agribusiness), which transformed Brazil from a country that imported more than 70% of the food needed to supply its population in the world’s leading exporter of agrifood, led by meat and soybeans which gave it a trade surplus of almost US $ 90,000 million in 2021.

The development of agribusiness is inseparable from the expansion of its agri-food frontier, especially in the Cerrado region, which has more than 100 million hectares.

Agribusiness is, above all, a technological phenomenon, where the role of Embrapa, the large agricultural research company in Brazil, has played an absolutely crucial role.

While in 2000, the total production and agri-food exports amounted to US$ 21,000 million, and in 2021 they climbed to US$ 122,000 million.

What happened with grains is truly remarkable: in 1999, 37 million hectares were destined for production, while it covered more than 72 million hectares in 2021, which implies an increase in the planted area of more than 90% in that period.

Fundamental to these figures is the phenomenal increase in productivity, which increased by more than 260% in that stage; and went from 83 million tons in 2000 to 300 million tons in 2021, with yields showing a 3% annual boom.

Brazil is the fourth largest grain producer in the world, behind China, the US, and India, and produced 239 million tons in 2020 while exporting 123 million tons.

It is also the second grain exporter in the world (after the US) and has 19% of the international market; in the last 20 years, it has exported more than 1,100 million tons, which is 12.6% of world exports.

Agribusiness now dominates world soybean exports, with more than 50% of the world’s soybeans, and as of 2020, it overtook the US for first place in the world with 126 million tons produced and 84 million tons exported.

It is also the world’s leading producer and exporter of beef. The Brazilian herd reached 217 million head in 2020, followed by the Indian herd with 190 million head.

Corn production would reach 120 million tons in the 2022/2023 campaign, with a planted area of 22.5 million hectares, while exports are projected at 46.5 million tons, which represents an increase of more than 80%. compared to 2021.

Add an exceptional boom of 221% in the first half of 2022 as a direct consequence of the war in Ukraine, which eliminated, at least temporarily, Russia and Ukraine from the world market.

Brazil’s position in the world corn market can be summarized in these terms: 87% of the world corn trade is in the hands of 4 countries: the US, Brazil, Ukraine, and Argentina; and according to USDA (United States Department of Agriculture) the world corn market would amount to 183 million tons in 2022 / 2023; and forecasts a rise in corn exports from the US and Brazil to China of more than 300%.

Agribusiness, in short, is the most competitive and innovative sector of the Brazilian economy and is directly responsible for the trade surplus of more than US$90 billion that it will have this year.

It is also what has allowed the Central Bank of Brasilia to have reserves of more than US$380,000 million; and the politically decisive fact is that the representatives of agribusiness in the Brasilia congress, integrated into the Agrifood Front, whose bench amounts to more than 270 parliamentarians, is absolutely essential to ensure the governability of the country.

Brazil, in economic and macroeconomic terms, depends fundamentally on agribusiness.

Source: the Clarin

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