Source: Agriculture and Agri-Food Canada, Market Analysis Division

SUMMARY

Brazil is one of the largest soybean producers in the world and has become the second largest exporter of soybeans. Its long-term potential to increase the production of soybeans at a low cost is one of the main factors to watch in relation to infrastructure and credit problems which constrain expansion. It has also played a major role in the on-going negotiations of the World Trade Organization as the leader, along with India, of the Group of Developing countries (G20). It is also a leader in the production and use of ethanol derived from its high sugar production. This issue of the Bi-weekly Bulletin examines the situation and outlook for Brazil for grains, oilseeds, pulses and special crops.

INTRODUCTION

Agriculture contributes 10% to Brazil’s Gross Domestic Product (GDP) and employs 20% of the country’s labour force. If agriculture related sectors, such as; packaging, crop inputs, biofuels and agricultural equipment are included, Agriculture would contribute nearly 30% to the GDP.

The main agriculture products produced in Brazil are: coffee, soybeans, wheat, rice, corn, sugar cane, cocoa, citrus, beef and poultry. The main exports are: cocoa, coffee, soybeans, beef, poultry, tobacco, orange juice, various tropical fruits and nuts.

Brazil faces major competitors on the international market from United States (US), the European Union (EU),
Canada, Australia, New Zealand and other emerging nations such as Thailand, Malaysia, South Africa, Mexico and Chile.

Canadian agri-food exports to Brazil have declined steadily from CAN$394 million (M) in 1996 to CAN$39M in 2005. This is largely due to the depreciation of the Brazilian real (R), along with competition from Mercosur countries, in which wheat exports, Canada’s dominant export to Brazil, were replaced by less expensive Argentine wheat. Canada continues to have a substantial negative trade balance with Brazil (CAN$512M in 2005) for agricultural and agri-food products, despite the fact that Brazil is a large importer. Canada’s market share of Brazilian imports was less than 1% in 2005.

The successful negotiation of the Canada-Brazil Consultative Committee on Agriculture in June 2006 will provide both countries an instrument to improve the bilateral relationship and work strategically together towards areas of mutual interest. However, further branding and promotion by Agriculture and Agri-Food Canada’s interdepartmental Brazil Team, will be necessary in order to gain a more balanced agri-food trading relationship with Brazil.

Full report in PDF format: http://www.seedquest.com/News/releases/2006/pdf/16353.pdf