Brazil: agriculture breaks records and is equivalent to Argentina's GDP
The record harvest of more than 300 million tonnes expected for Brazil this year demonstrates the weight that agribusiness has taken within the Brazilian economy. Between 2002 and 2022, the country's agricultural GDP jumped from $122 billion to more than $500 billion, the equivalent of an entire Argentina.
According to industry analysts, Brazilian agribusiness has shown extraordinary growth over the past 40 years, especially an explosion in the last 20 years. As can be seen in Brazil's growth profile over the last 40 years, the Brazilian economy has managed to position itself strongly in productive and industrial segments based on its natural resources.
Thus, Brazil continues to be a major producer of iron ore for the world, starting this process in the 1960s with Vale's supply agreements to Japan, and consequently has achieved a strong development of the national steel and metalworking industry. On the other hand, the energy sector is also growing exponentially, anchored in the development of the offshore oil sector, with the beginning of its development after the second oil crisis in the early 80s, later transforming it into one of the 10 largest oil producers in the world, but also in renewable energies. both wind and solar, and now with large offshore wind and green hydrogen projects in the northeast of the country.
But the star, which has leveraged Brazil's trade surplus and is responsible for a substantial part of investment in Brazil, is agribusiness. The sector has been growing uninterruptedly for 40 years, developing technology and a long and complex value chain that impacts throughout the Brazilian territory.
This growth, according to experts, is based on investment in research and national and state public policies to support the countryside, which have led to successive records in agricultural production. According to the National Supply Company (Conab), Brazil should break the barrier of 300 million tons of grains this year, consolidating itself as the third largest producer of cereals in the world, only behind China and the United States.
In 20 years, the cereal harvest increased from 120.2 million tonnes to 310.6 million tonnes, an increase of 258 per cent. The planted area went from 43.7 million to 76.7 million hectares, an increase of 76.5%. The numbers show that production grew three times more than the area occupied by crops thanks to investments in technology that significantly increased productivity.
The GDP of agribusiness, calculated by the University of São Paulo, should be around $500 billion this year, about 25% of Brazil's GDP or equivalent to the GDP of an entire Argentina.
The turning point in Brazilian agriculture began with the arrival of soybeans in the south of the country, since soybeans, with a shorter cycle, made it possible to grow a winter crop such as wheat, oats or sorghum. Soybeans made the second harvest possible.
Over time, this process evolved to other regions of the country, with other climatic characteristics. In states where it doesn't rain in winter, such as much of the southeast, central-west and northeast of the country, a second harvest wasn't possible, but that didn't stop growers. In 2003, the Brazilian government, with the support of Embrapa (Brazil's INTA), launched a program for the integration of the crop with livestock and forestry, allowing two crops to be planted also in regions where it does not rain in winter, basically because of the grass, with corn, soybeans or cotton, which are summer crops. that after harvest provide pasture for the cattle. And the evolution continued with the extension of irrigation and increased use of agrochemicals, which allowed producers to grow up to three agricultural crops, such as soybeans, corn and beans. In this way, we observe how technological evolution, the tropicalization of soybeans and other crops allowed this spectacular advance in productivity.
A unique opportunity for Argentina
Argentina must understand the growth of the Brazilian agribusiness sector as an opportunity for Argentine entrepreneurs. Agribusiness in Argentina is thriving and ultra-competitive, despite national policies and the macroeconomic environment, being able to generate leading companies in different segments of the agro-industrial value chain.
Segments such as agricultural machinery and implements, biotechnology, applied information technology, Fintech services, as well as special crops with less development than in Argentina, such as viticulture or olive groves, represent opportunities for scalability of your business since entering Brazil provides an extraordinary export platform with a greater amount according to third markets, public policies to support agriculture, an internal agro-industrial market equivalent to an entire Argentina, access to an infinitely greater financial market, in a stable macroeconomic environment and, above all, the diversification of Argentine risk in the medium term.
Many industry leaders in Argentina have already taken the step to internationalize by opening operations in Brazil, and many more should join in the future. This process is inexorable since Brazilian agriculture has no limits.
Source: Chronicler