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Brazil's is the world's third-largest agricultural exporter (in value terms), after the United States (US) and the European Union (EU). As the country continues to make significant investments in its agricultural sector and increasingly pursues policies to encourage agricultural production, Brazil is expected to have an expanding presence in export markets for agricultural commodities, providing strong competition for U.S. exporters.

In Brazil, rapid export growth has been accompanied by changes in the composition of agricultural exports away from tropical products to processed products. Processed products now account for about three-fifths of agricultural exports, while primary bulk commodities account for about two-fifths. Brazil is now the world's largest exporter of sugar, coffee, orange juice, tobacco, beef, and poultry meat; the second-largest exporter of soybeans, soybean meal, and ethanol; and the fourth-largest pork exporter. Brazil's agricultural exports represent about a quarter of its total exports, reflecting the transformation of Brazil's economy since 1960 when agriculture's share of total exports was over four-fifths of the total. Brazil's major agricultural trading partners include the United States, the EU, Russia, Canada, Japan, Chile, Argentina, Middle East, and increasingly, China.

Brazil also imports farm commodities it does not produce competitively, including wheat and rice. These are two commodities that Brazilian consumers are expected to demand at a slightly faster rate over the next decade, as incomes grow. Wheat imports, which for the past decade have accounted for over two-thirds of supply, reached 7.8 million tons in 2010, an almost 1- million-ton increase over 2009. The main suppliers of wheat to Brazil over the past decade have been Argentina, the United States, and Canada. Brazil is usually a net importer of rice and its imports increased 16 percent in 2010 (or about 0.8 million tons), compared to a year earlier.

Brazil also imports farm commodities it does not produce competitively, including wheat and rice. These are two commodities that Brazilian consumers are expected to demand at a slightly faster rate over the next decade, as incomes grow. Wheat imports, which for the past decade have accounted for over two-thirds of supply, reached 7.8 million tons in 2010, an almost 1- million-ton increase over 2009. The main suppliers of wheat to Brazil over the past decade have been Argentina, the United States, and Canada. Brazil is usually a net importer of rice and its imports increased 16 percent in 2010 (or about 0.8 million tons), compared to a year earlier.

Crops

The world's two leading soybean exporters are the United States and Brazil, which together accounted for 76 percent of world trade in 2010. Driven by continuous yield and area gains, Brazil may overtake the United States as the world's leading soybean exporter in the next few years.

In 2010, Brazil's soybean exports increased 0.5 million tons to a record 29 million tons driven by strong sales to China, which now takes two-thirds of Brazil's soybean exports. Continued strong growth in global demand for protein meal and vegetable oil, particularly in China and other Asian countries (Thailand, Vietnam), has led to increasing exports from Brazil. In 2010, soymeal exports from Brazil totaled 13.7 million tons, increasing 1.7 percent per year over the past decade. Brazil is the world's second-largest soymeal exporter after Argentina and accounts for 23 percent of the global export market. Soyoil exports from Brazil in 2010 were 1.6 million tons, making it the world's second-largest exporter after Argentina, and ahead of the U.S. Continued strong demand from China is expected to maintain rapid growth in Brazil's soybean and soybean-product exports throughout the next decade.

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In the past, corn has been a subsistence crop in Brazil, but this is no longer the case. Specialized producers have entered corn production, attracted by the expansion of the mixed feed industry and the EU's demand for corn that has not been genetically modified (GM). On the domestic side, the simultaneous development of the feed and poultry industries has been the driving force behind the expansion and modernization of corn production in Brazil. Rapid adoption of high yielding hybrid seeds has also been a factor. Due to yield gains, there is now sufficient corn for the poultry sector and the export market. Over the past decade, Brazil's corn exports have been increasing 47.5 percent per year, reaching 10.8 million tons in 2010, the highest since 2007. This rapid growth in Brazilian corn exports coincides with lower U.S. corn exports as the U.S. uses more corn domestically in the production of ethanol.

Brazil is one of the world's leading cotton producers and an important competitor of the United States in Asian and European cotton markets. Since 2007, Brazil has ranked fifth among world cotton producers, and accounted for at least 5 percent of world cotton output. In 2009, Brazil's cotton exports rose 23 percent from the previous year to a record 2.7 million bales, accounting for 9 percent of global cotton exports. This situation has come about as a result of trade liberalization, and the emergence of new cotton producing regions benefiting from targeted government support. Brazil's access to additional agricultural land and recent favorable cotton prices suggest the country's cotton production could rise even more than previously expected.

Livestock

Brazil's strong export performance in the last several years has included and enlarged an industry that generated over US$13.3 billion in exports of fresh, chilled, frozen, and prepared meats in 2010, doubling the 2004 level. Major Brazilian markets for fresh/chilled/frozen meats in 2010 included the EU-27 ($2.1 billion), Russia ($1.9 billion), Hong Kong ($1.1 billion), and Saudi Arabia ($1.1 billion) (GTIS data).

With one of the world's largest commercial cattle herds, Brazil is the world's second-largest commercial beef producer, behind the United States. Most of Brazil's beef cattle are grass fed, with less than 4 percent finished in feedlots. In 2004, Brazil became the largest world beef exporter (by volume) surpassing Australia and the United States. U.S. beef exports did incur restrictions over the 2004 through 2007, due to bovine spongiform encephalopathy (BSE). Since 2006 Brazil has been the largest beef exporter in terms of beef export value and volume. Brazilian beef exports valued at $4.4 billion in 2010 represented 7 percent of the total value of Brazil's agricultural exports.

The presence of foot-and-mouth disease (FMD) in the country, sanitary problems associated with cattle slaughter, and sale of lower value cuts account for Brazil's low per-ton export value relative to U.S. and Australian beef exports. FMD also prevents Brazilian exports of fresh, chilled, and frozen beef to important North American markets-the United States, Canada, and Mexico-as well as Japan, South Korea, and Taiwan. Chilled, fresh, and frozen exports account for 88 percent of Brazil's beef trade and prepared/preserved beef accounts for nearly 12 percent.

Brazil remains the leading global poultry exporter as low production costs allow the Brazilian poultry sector to remain competitive in global trade. Brazil's poultry meat exports account for 39 percent of global trade. More than two-thirds of exports are frozen chicken parts, the remainder is whole frozen chickens and small amounts of prepared and preserved products. Export destinations include the EU, the Middle East, Japan, Russia, and Hong Kong.

Brazil is the world's fourth-largest pork exporter, accounting for 11 percent of global pork trade in 2010. Pork exports are largely frozen cuts, and Russia is the primary market. Other export destinations are Hong Kong, Ukraine, and Argentina.

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Brazil's low costs for feedstuffs, extensive pasture land, rapid adoption of innovative livestock production technologies, and a vast livestock gene pool suggests a large part of Brazil's agricultural future lies in animal products. However, future increases in meat exports and greater access to the global market will depend on the success of current efforts to improve its disease status and Brazil's ability to implement and maintain sanitary controls.

Sugar and Ethanol

In Brazil, sugarcane is the major feedstock in the production of both sugar and ethanol. Cultivated sugarcane area has expanded rapidly over the past decade; with current plantings on about 9 million hectares (22 million acres), sugarcane is the third leading crop after soybeans and corn. Brazil is now the world's largest sugarcane producer (652 million tons in 2010), accounting for one-third of world production, ahead of India and China. The expansion of sugarcane output since 2000 can also be attributed to productivity growth. Sugarcane yields per hectare have increased by 33 percent to the current national average of more than 80 tons per hectare or about 36 short tons per acre.

Brazil is a leading supplier of raw and refined sugar to world markets and the world's second largest ethanol exporter, after the United States. Since 2009 global sugar prices have increased dramatically and have become increasingly volatile. World raw sugar prices reached 30 cents per pound in early 2010, fell to under 14 cents per pound during the 2010-11 Brazilian harvest, before increasing again to over 33 cents per pound in November 2010. This volatility coincided with a decline in global stocks of sugar. Weather-related production decreases in China, India, and Pakistan (three of the largest sugar consuming countries) are a major reason for the lower sugar stockpiles. In the span of two years, these countries switched from supplying 12 percent of world exports to claiming nearly 13 percent of sugar provided on the international market. With higher international sugar prices, a larger share of the Brazilian sugarcane crop was allocated to sugar production.

Brazil's ethanol industry was initiated in 1975 when the Government moved to establish the alcohol program known as Proálcool. This program was designed to replace imported crude oil with domestically produced ethanol by adding ethanol to gasoline and at the same time counter oversupply of sugar and low international sugar prices by allocating more sugarcane for sugar production. In 2010, around 55 percent of sugarcane crushed in Brazil was distilled into ethanol, the remainder being used for sugar production, marking a significant change from the earlyProálcoolyears.

Brazil's ethanol industry has expanded rapidly, with production capacity increasing from 11 billion liters (2.9 billion gallons) in 2000 to 31 billion liters (8 billion gallons) in 2010. Ethanol yields at distilleries have grown 4 percent per year since 2000, as the plants have adopted more efficient processing technologies.

Ethanol accounts for 56 percent of automobile fuel used in Brazil, compared to 8 percent in the United States. Consumption of ethanol continues to be regulated indirectly through obligatory blending of ethanol with gasoline, much as in the United States.

Brazil may be best positioned to fill the growing world demand for ethanol based on its low-cost resource base for ethanol production and its ability to expand sugarcane area and increase productivity of both sugarcane and ethanol production. However, Brazil's ethanol export supply depends on its domestic ethanol use mandate, world sugar and oil prices, the currency exchange rate, and the infrastructure to move ethanol to ports.

Last updated: Wednesday, May 30, 2012

For more information contact: Constanza Valdes

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