How Smart Farming is Helping Brazil Feed the World
With innovation and technology, Brazil emerges as a dominant player in global agriculture
16 June 2021
The U.N. projects global population will reach 9.7 billion by 2050, a 35% increase from today. In order to support the growing population, global agricultural output must double. As the world's fifth-largest country and home to 22% of the planet's cultivable land, Brazil will play a key role in the future of agriculture. Over the past 40 years, Brazil transformed from being a food importer to one of the world's top producers and exporters. Brazil is now the largest producer and exporter of beef in the world. In addition, it currently ranks first for global soy production and exports, and chicken exports. Other main crops and livestock in Brazil include cotton, corn, pork, milk, sugarcane and coffee. Production explodes due to improvements in Brazil's agriculture technology and farming efficiency Brazil achieved a significant production increase with a minimal increase in agricultural area. Research and innovation made this possible. Seed technology, crop rotation, double cropping, cutting edge machinery and precision agriculture improve output and efficiency. Brazilian farmers also use crop protection and fertilizer to maintain high outputs. Investment in tropical agricultural research and agritech is strong, suggesting that Brazil's production and efficiency will continue to grow in the coming years. Increases in agricultural production and exports positioned Brazil to become a major player in the global market. In 2013, Brazil overtook the U.S. as the world's top soybean exporter. Soybean prices in the U.S. have reached record lows, while soybeans sold for the Brazilian reais are approaching record highs. Competition has shifted from the Northern Hemisphere to the Southern Hemisphere, a trend that will likely continue. Agribusiness accounted for 21.4% of Brazil's GDP and 19.5% of its jobs in 2020. According to data from the World Bank, the GDP grew 9.11% over the past 40 years, with an average annual growth rate of nearly 5% since 1995. GDP growth has contributed to poverty and hunger reduction and improved quality of life for Brazilians. Agricultural exports positively impact Brazil's trade balance, offsetting deficits in other economic sectors and providing an influx of foreign currency (OECD-FAO Agricultural Outlook, 2015). Additionally, the agricultural boom has a positive effect on farming and livestock land prices. Prices typically increase in times of favorable food commodity prices and remain stable during lower commodity price periods. Growing appetite for meat boost's agriculture demand and increases GDP Growing demand for meat and dairy is another driver of the Brazilian agribusiness sector. Global consumption of beef, pork, poultry and sheep was nearly 325 million tonnes in 2020 and is projected to increase 12% by 2029 (OECD). This will fuel demand across the agribusiness sector, as crops like corn and grain are required to feed livestock. Brazil has ample supplies of corn and soybean meal for livestock feed, available for both domestic use and foreign exports. The country is the world's third largest corn producer and exporter. Still, more than 60% of Brazil's corn consumption goes to domestic poultry and hog farming. Brazil is well-positioned to maintain and increase meat production in response to a growing GDP and meat demand. Thriving export market expands during Covid-19 pandemic In 2020, the gross valuation of Brazil's agribusiness sector reached $126 billion . Despite economic effects from the COVID-19 pandemic, Brazil remained an agricultural exporter. There is strong potential for the country to expand its participation in the market in the coming years. Brazil has the weather, land and technology necessary for a thriving agribusiness sector. It is well-positioned to withstand changing competition in the marketplace and projected population global growth. Market dynamics are rapidly evolving in response to Brazil's growing agricultural dominance. IHS Markit provides the most up-to-date information on Brazil's agriculture statistics including prices and analyses on Brazilian crop, livestock and land markets. Specific data includes: Our purpose-built data and analysis platform is specifically dedicated to Brazilian agriculture and the unique economic signals of that market. To learn about information contained in the platform and how you can use it to help make investment decisions, download our new Brazil Food and Commodities Economics white paper now. Sources: Population: https://www.un.org/en/global-issues/population Food requirements: https://www.nationalgeographic.com/foodfeatures/feeding-9-billion/ Number of agritech stratups https://tracxn.com/explore/AgriTech-Startups-in-Brazil GDP stats: https://www.oecd-ilibrary.org/docserver/agr_outlook-2015-5-en.pdf?expires=1623351046&id=id&accname=guest&checksum=FA887E08368935DC8D95D76211207510 GDP stats: https://www.macrotrends.net/countries/BRA/brazil/gdp-growth-rate Meat consumption: https://data.oecd.org/chart/6dX3 https://www.oecd-ilibrary.org/sites/29248f46-en/index.html?itemId=/content/component/29248f46-en
Source: https://ihsmarkit.com/research-analysis/innovation-technology-brazil-emerges-dominant-agribusiness.html
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