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Q & A: Blairo Maggi, Brazil’s Ag Minister
Blairo Maggi has been known to be the largest soybean farmer in the world. After serving his term as minister, it’s widely believed that he will return to his Senate seat in Brazil’s upcoming elections in April. It’s worth noting that Maggi is currently under investigation for an incident that allegedly occurred while he served as Mato Grosso’s Governor. He’s accused of allegedly “hindering the work of authorities or having allowed the execution of illicit acts in any government agency.”
Maggi has denied the allegations.
SF: What is the current reality for agriculture in Brazil? Can farmers maintain their operations and cover production costs?
BM: Over the past 40 years, Brazil has changed from a major food importer to one of the biggest agribusiness players worldwide. We are going through a profound change in this industry. In the 2016/2017 harvest, for example, we reported a production of 238 million metric tons of grains. This is an impressive result. On the Brazilian trade balance, agribusiness has reported a surplus of $75 billion. We exported $85 billion against only $10 billion in imports. These are very positive results.
Concerning production costs, I am constantly thinking about farmers’ incomes. I believe they need to generate income not only to fulfill the commitments made but also to achieve profits. After all, they need to stay active.
In this sense, what I have seen over the past few years is an increase in the offer of technology services, such as software, apps, seeds with biotechnology, and modern features that improve activities at the farms. Unfortunately, these services and products are increasingly more expensive. This has made many of these technologies inaccessible to rural producers. In my opinion, a price realignment study should be conducted for products and inputs offered to farmers so they can acquire such technologies and make further progress in their production.
SF: Why does the investment in infrastructure for transporting soy and corn take so long? What is the greater obstacle to clearing investment in infrastructure?
BM: If we stop and analyze, there has been major progress in relation to infrastructure for distributing the production. Obviously, it could be better, but we need to consider that, over the last 30 years, Brazil has made quite a progress. When I arrived at Mato Grosso in the 1980s, there were no roads. The situation is very different today. The distribution of the entire agricultural production, especially from the Midwest region, has improved a lot, and the expectation is that it improves even more.
The reversal of the logistic path for a considerable part of the Brazilian soy and corn exports and the expanded capacity of the Northern Arc exporting lanes (comprising ports in the north and northeast regions) resulted from private endeavors implemented with support from the federal government. This has greatly facilitated the grain exports.
This situation can further improve from studies conducted by Embrapa Territorial about investments in infrastructure, especially for distributing the production. We will make it available not only to the government but also to the public. We are working so things progress better and have a schedule.
Currently, the export via these ports totals 26 million metric tons shipped, or 24% of the Brazilian exports. The Northern Arc already has capacity to ship 40 million metric tons a year of agricultural bulks, and this volume should be expanded.
The equalization of the Brazilian transportation matrix should be achieved with expansion in the railway mode and the use of potentially navigable rivers, as it occurs on the Madeira and Tapajós rivers, and in the medium term with the Tocantins river. Consequently, the dependence on the road transportation mode should decrease with an increase in the modes that have better performance for large volumes and longer distances. This results in a promising outlook for cargo transportation over the next few years.
We will also have an improvement in the conditions for logistics and infrastructure after the works on the BR 163 highway are concluded, which shall occur over the next few years. To give an idea of this increase, from January to November 2017 there was an increase of 13% in sales to other countries when compared with 2016. We exported 65.8 million metric tons of soy and 25.2 million metric tons of corn.
SF: Are you optimistic Mexico will buy more Brazilian products if the U.S. leaves NAFTA?
BM: Yes, I am. We have had preliminary discussions with Mexicans and are keeping in touch. But I don’t believe the U.S. will leave NAFTA. I believe President Trump will maintain the commercial partnership with Mexico.
SF: What will be the biggest change in the Brazilian agricultural industry you foresee for the next five years?
BM: In my opinion, Brazil needs to have a greater policy for opening to the foreign sector. To sell beyond the agreements made, the negotiation of sanitary certificates, Brazil needs to be ready to also import, to make the trade balance even more equal. Currently, Brazil exports $85 billion and imports $10 billion. This is one of the main changes that the Brazilian agribusiness segment needs to make. If we look at major exporters such as the U.S. and China, we will see that they are also major importers. Trading is a two-way street. Those who buy also want to sell.
SF: What are the biggest challenges for Brazilian farmers at the moment?
BM: Despite the growth we have seen in the Brazilian agribusiness, we still have many challenges to face. Bureaucracy is one of them. We have created a program in the Ministry called Agro+, aiming at simplifying and modernizing internal procedures and rules targeted at the segment. More than 800 demands have been solved since the program was launched in August 2016. But we need to remain aware, because bureaucracy is always renewing.
We have capacity, we are competitive. We cannot fear the entrance of foreign products.
SF: Have you read the newest agriculture magazine in Brazil, Successful Farming Brazil?
BM: Yes, I have. I think it is a modern magazine, with a deeper view on agribusiness. We need outlets like this. Congratulations to everyone who makes Successful Farming magazine.
SF: What is your perception of U.S. agriculture and American farmers?
BM: I have gone to North America several times. Even when we were just starting a more technological agriculture, we copied many things being done in the U.S. The country is a major supplier of machinery to Brazil, such as cotton harvesters, seeders, and more robust equipment. To sum up, the Americans are always ahead in relation to this issue. Our concern is to not be too far from them in these issues.
I have always admired how American farmers get things done. They have support from the government, technological support to move forward, good productivity and protection systems to ensure their income in times of crisis and extremely low prices. The agriculture model we have established in Brazil is very similar to the ones established by the Americans.
I think they are very entrepreneurial. But, as I always say, agriculture is not much different throughout the world. The farmer is a genetically modified being. He takes all the money he has and also asks for a loan. He throws everything in the ground, spreads so it doesn’t clump, and then prays for rain or prays that it doesn’t rain. Then he prays to be paid, and next year, there we go again.
I have great admiration for American farmers – for what they do and for what they have taught us to do.