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Brazil's Agribusiness Leaders See Bright Future

Ag economy remains a country leader

The Brazilian economy has gone through rough times but is now showing signs of recovery for 2017, and agribusiness is set to be the first to emerge from the slump.

“Agriculture was the only segment of the Brazilian economy to stay in the black in 2015 and 2016. This achievement is thanks to producers, companies, research, and the tireless search for new technologies that help produce more and produce better,” said Jorge Espanha, president of Merial Animal Health.

Data released by the Confederation of Crops and Livestock (CNA) and by the Center for Advanced Studies in Applied Economics (CEPEA) revealed that the gross domestic product (GDP) of Brazilian agribusiness grew 2.71% from January to July 2016 compared with the same period the previous year.

This shows that the political and economic difficulties did not sway producers, who relentlessly believed and invested in their businesses. “Agribusiness has been one of the strengths of the economy, despite the macroeconomic instability. It’s a sector that maintains the GNP,” said Rodrigo Bonato, sales director of John Deere Brazil.

In the third quarter of 2016, the Agribusiness Confidence Index (ICAgro) was up 4.2 points over the previous quarter. According to the Federation of Industries of the State of São Paulo (Fiesp) and the Organization of Brazilian Cooperatives (OCB), who are responsible for the study, this is a record-high rating and confirms the optimism of the sector. See the predictions by the representatives of agribusiness for 2017.

JORGE ESPANHA, PRESIDENT OF MERIAL ANIMAL HEALTH BRAZIL
The balance for the year is positive despite the difficulties. In 2016, finished cattle and milk production stood out, with profitable price rates for most of the year. Beef, pork, and chicken had positive performances, with growth in volume and revenue. Looking forward, a decline in national consumption of proteins, unemployment, and inflation must also be taken into account. Beef consumption for example, which reached almost 40 kg per capita/year in 2013, now stands at 28 kg. In this scenario, consumption per capita of chicken has remained over 40 kg while the figure for pork is 15 kg.  We are betting on recovery of the Brazilian economy for consumption levels to bounce back. Cattle farming is one of the most productive activities in the country. Brazil has over 210 million head of cattle, raised on 167 million hectares. Average production rates are a little over 1 AU (animal units per hectare). This proportion can be doubled. Investment in health, nutrition, and genetics is vital.

RODRIGO BONATO, SALES DIRECTOR FOR JOHN DEERE-BRAZIL

I’d like to point out an important advance: We are seeing a revolutionary opportunity for tropical agriculture in Brazil, with increasing adoption of crop growing, cattle raising, and forest integration. Brazil currently has 11.5 million hectares under this system. We can use the provision of sun and water wisely, achieving productivity in harmony with the environment.
The challenge now is to combine technology with economic operations and assertive management. Technologies such as precision agriculture, integrated systems connectivity, systemized grain planting and cleaning, and deployment of data in farm administration are some examples of innovations. The evolution will be connecting the office with the machines, the machines talking to each other, and the data returning from the field to the computer in real-time, allowing improvements to be made in real time. Our vision is to continue offering machines that are less iron and more intelligence.”

ARIEL MAFFI, VICE PRESIDENT OF RUMINANTS FOR DSM

The current political and economic phase in Brazil calls for greater efficiency in the meat and milk production chains. Regarding livestock, producers have responded positively to the challenges of rising costs of some supplies; those who remained attentive to the use of technology in the field have increased yields and profitability. In 2016, one of the major milestones was the opening up of the U.S. market to Brazilian beef. Although volumes are low, this represents an important event in that many countries follow in the footsteps of the North Americans with solid prospects for the opening up of further new markets. For 2017, the meat market has capacity for expansion on both local and international levels, particularly with the use of ingredients that increase the yield and quality of the finished product. There is scope for a large production increase in this area by adopting technologies.

EDUARDO ESTRADA, HEAD OF CROP SCIENCE DIVISION OF BAYER BRAZIL

I believe technology will be an increasingly important ally, especially in the area of digital farming, which offers new opportunities to support farmers in decision-making based on data, leading to efficiency and management gains. For Bayer, 2016 was an important year. We globally announced the purchase of Monsanto, a move set to bring significant benefits. For 2017, our main objective is to offer integrated solutions, contributing to higher yields.

GUSTAVO JUNQUEIRA, PRESIDENT OF THE BRAZILIAN RURAL SOCIETY

We should expect a tough year ahead, with tighter access to credit, but we shall find solutions for this situation and continue helping Brazil. The challenge is knowing how we can continue expanding agriculture within a structure in which the State will be less present with fewer benefits and less financing coming from the government. We will have to cut financial and bureaucracy costs to get access to cheaper capital. Thus, Brazil needs to review the rules governing agricultural financing. Another point is the opening up of new markets – 2017 is a year that will see an expansion in international trade. We have the competence, we are improving the quality of our products, and this will make us more competitive. We have new technologies. What we really have to do is transform producers into farm entrepreneurs. This involves education, guidance, and planning.

LAERCIO GIAMPANI, DIRECTOR-GENERAL OF SYNGENTA BRAZIL

The shortage of credit available to producers has forced them to review their investments in technology. It is important to note that despite the unfavorable scenario, Syngenta has maintained its investments in research & development. We launch eight soybean varieties annually, all providing major increases in yield. We can report an increase in the market for seeds because we have invested in this, with a focus on achieving gains in yield and profitability for producers. We believe there will be more favorable weather and economic conditions and expect growth in business. The level of investment in biotechnology is set to increase, stimulating the seeds market. And our planning factors in this issue.

LAIR HANZEN, PRESIDENT OF YARA BRAZIL AND SENIOR VP OF YARA INTERNATIONAL

This year exceeded expectations for the fertilizer segment. Up to October, according to data from the National Association for Fertilizer Spreading, fertilizer sales hit record highs nationwide, with volumes up by around 10% on 2015. Our perspective is very good, chiefly owing to the trading relationship that remains attractive for producers. The forecast is that the coming year shall remain favorable with an increase in global demand for food. It is hard to envisage world food production without Brazil. According to the Food and Agriculture Organization (FAO) of the United Nations, in less than 10 years Brazil will become the largest food producer on the planet, ahead of the U.S. In order to fulfill this mission, we need to upgrade production in the Brazilian fields, harvesting more from each pocket of land. Fertilizers are currently responsible for almost half of world food production. Therefore, we recognize that our mission here is essential and shall continue investing to support Brazilian agribusiness.

FÁBIO MEIRELLES ANALYZES

THE PERFORMANCE OF AGRIBUSINESS

The president of the Federation of Agriculture and Livestock of São Paulo State (Faesp), Fábio Meirelles is one of the most emblematic voices in Brazilian agribusiness. Representing the entity since 1975 with numerous achievements to his name, such as the creation of Senat, Meirelles’ trajectory melds with the history of São Paulo agriculture. In an exclusive interview with Successful Farming Brasil, Meirelles goes over what we can expect from the sector in 2017.

SF – What are the prospects for agribusiness in 2017?

FM – It’s really hard to map out perspectives from one year to the next in this current stage. There are 13 million unemployed in Brazil. This is a calamity, a difficult situation. But, amid this critical phase, the only sector working at the same levels as before is agriculture. It is active, especially in São Paulo state. The positive outlook we have is that we won’t stop producing. With losses or otherwise, we’ll carry on working, won’t abandon the land and shall produce. The country is only not facing worse problems because we produce our own food, whereas in 1964 everything was imported.

SF – What is your assessment of the Harvest Plan?

FM  – The Harvest Plan is of huge importance, it defines the rules underpinning Brazilian agribusiness. What we can’t have is lack of budget or delay in releasing funds. Unfortunately, this is taking place not only in agriculture but across the whole economic sector.

SF – Does agribusiness need new public policies?

FM – We always back policies that can boost production and increase yields. Yet, clearly, the government will examine the risks, the budget, and its own needs.

SF – What have been the achievements of Brazilian agribusiness?

FM – In the past, coffee was the national driving force. A single product sustained Brazil’s development. But a magnificent evolution took place. This evolution was so fantastic that we built up a new agriculture and livestock system and animal and plant health system. Soybeans are very important, as are corn, sugarcane, and coffee. Agriculture and livestock is saving the day.
   We are the world’s biggest water conservers. Crop-cattle raising integration is a reality. We currently have around 90 million hectares of farmable land. This is because cattle-raising has passed 50 million hectares over to agriculture without loss. Today, production (beef cattle] can move from 1.3 head per hectare to 3 head for cattle-raising.

SF – And ambitions for the future?

FM – We have to strengthen our agri-industry. We can no longer sell our product by the ton, we have to sell it by the gram. This means that we have to continue to add value to agricultural and livestock products. Rather than take tomatoes to sell in the city, growers can refine products like tomato sauce on the farm itself. I advocate processing of produce and creating conditions conducive for easier sale.

SF – What is your view regarding producers’ level of expertise?

FM – Senar has issued almost 4 million certificates in São Paulo. Farmers are far more intelligent and capable than you might think. The man from the field is wise. He has the expertise. He created the agriculture and livestock farming structure. We cannot overlook the value of men from the field, they have great pride in their profession.