Agribusiness to Brazil

Trends and opportunities

The market

Agribusiness in Brazil is characterised by large-scale operations, abundant natural resources, extensive use of state-of-the-art production technology and modern farm management. Agribusiness gross production value was the only major sector to grow in both 2015 and 2016, while the Brazilian economy went through its worst recession in decades.

Global food security depends on large net exporters like Australia and Brazil, and while they are seen as competitors in many categories, there are many examples of collaboration and cross-investment. Brazil ranks number one or two in global production and/or export for sugar, coffee, orange juice, soybeans, beef, ethanol, poultry and corn. In 2016, Brazil passed Australia as the largest beef exporter to China.

Brazil’s grains harvest 2016/7 is going to be an all-time record of around 220 million tonnes and agricultural machinery production is expanding after two years of crisis.

Precision agriculture

Increasing costs of consumables, scarcity of skilled labour and complex logistics from the main production regions in Brazil, combined with limited new areas available for cropping because of environmental restrictions, continue to squeeze profit margins for farming groups and agri-commodity operators in Brazil. The opportunity for using innovation and new technologies such as robotisation and big data (e.g. satellite monitoring) has the potential to create a market revolution in global agri-food production regions, including in Brazil.

Livestock genetics, nutrition and management

The size of the Brazilian beef herd is over 200 million head, largely Zebu breeds such as Nelore and crosses. Due to the similarities of tropical and sub-tropical climates and the scale of cattle stations, there are many challenges in common with Australia. Australian breeds are potentially suitable for adaptation in Brazil as climatic conditions and resistance to disease and drought become considerations that are more important.

There are significant opportunities for Australian genetics and animal nutrition innovations in sheep, goat, pigs and chicken, and potential in aquaculture.

Farm and herd management technologies and software are potential areas for greater commercial and research collaboration.

Irrigation and water resource management

Australia is one of the world leaders in irrigation technologies in agriculture, rising from the necessity to rationalise water use and creation of a water market during the millennium drought. While irrigation for cropping is at a relatively lower level in Brazil compared with Australia, increasingly unpredictable climate conditions may force Brazil to look for water solutions from abroad.

Intermodal logistics

There remains a major logistical bottleneck in getting Brazil’s grain harvest from the centre of the country to the ports. This requires significant investments in intermodal infrastructure and innovative storage solutions, where Australian companies have world-class technologies. Austrade is supporting Australian companies to research market opportunities and find suitable joint venture partners in market. However, to be effective in a competitive market, companies need to consider participating in consortia with local partners to create the best chance of successfully winning business.

Financial services: Products for agriculture

Brazilian agriculture has benefitted from federal development bank funding, with discounted interest, for many years. With federal finances tight for the near future, the industry’s public bank credit lines have been significantly reduced.

This has resulted in a high demand for capital restructuring of group debt and the launching of new (or little used) financial instruments on the local market, through the BOVESPA stock exchange and large scale foreign investment in agricultural groups, including M&A deals lead by China.

Austrade can assist the private sector to raise the level of knowledge between these capital markets and increase the cross-investment deal flow in the medium to long term, particularly if Brazilian controls of direct foreign land ownership are relaxed in 2017.

Opportunities

While bilateral trade in end-products between Australia and Brazil is limited because local companies are able to meet virtually all of the domestic demand, the scale of the Brazilian agribusiness sector offers opportunities for Australian companies to provide niche goods and services into production or supply chains. New technology applications are emerging in precision agriculture with the use of drones, and irrigation and water management. In agricultural research and development, farm management and vocational training.

Australia has a growing presence in Brazil, with CSIRO and universities highly regarded by Brazilian farmers. Joint visits and technical programs take place regularly.

Australian agritech companies are involved in areas like beef genetics and biological disease control, and imports of Australian beef and sheep genetics are showing renewed potential through 2017.

Competitive environment

Australian companies have been investing in Brazilian agribusiness for many years, including multinationals like Macquarie Bank and NuFarm. Australian sugar cane machinery was introduced to Brazil to modernise its harvesting back in the 1970s and 1980s.

All the major international agribusiness players are active in Brazil and most have local manufacturing and/or R&D facilities. It is a competitive but profitable market due to its sheer size and dynamism.

Brazil has seen recent acquisitions of cropping, agri-technology and animal nutrition groups by Chinese corporations, of both local and multinational entities. This has been part of China’s strategy to guarantee food supply chains as domestic demands continues to grow.

Tariffs and regulation

Brazilian legislation mandates that all animal and plant derived product need to have export protocols in place with the Department of Agriculture and Water Resources (DAWR). These are negotiated between DAWR and the Brazilian ministry of Agriculture (MAPA).

Tariffs and duty rates are constantly revised and are subject to change without notice.

Austrade strongly recommends you reconfirm these prior to making a decision to enter the market in Brazil.

Market entry

Austrade strongly recommends that exporters obtain professional legal and accounting advice before conducting any business in Brazil. Austrade can provide referrals to service professionals.

In order to succeed in Brazil a sound business plan, a longer-term strategy and some degree of local presence is usually required. Important points to address include:

  • Local business presence through an agent, representative office or joint venture partner.
  • For most exporters it is necessary to establish a local presence through an agent/distributor, representative office or joint venture partnership. To maintain business contacts or where regular sales or service follow-up is required, it is critical to be on the ground.
  • A smaller number of exporters establish representative offices, due to the high costs involved, these companies usually have needs that cannot be met by agents or distributors. Such as businesses that need a high degree of control over their products and after-sales service or have commercially sensitive intellectual property.
  • One option that is increasingly popular is the establishment of a joint-venture partnership with a local company. One attraction of this method is that costs and risk are shared by the partners, with the Brazilian partner bringing to the venture local market knowledge, know-how and business experience.

Key agribusiness events in Brazil

Expodireto Cotrigal, Não Me Toque, Rio Grande do Sul(southern Brazil) - March 2018
Agrishow (largest trade show for agricultural sector in Latin America), Ribeirão Preto, São Paulo - 1-5 May 2017
13th TecnoCarne (international technology trade show for the animal protein industry), São Paulo Expo, São Paulo - 8-10 August 2017
Global Agribusiness Forum  (bi-annual General Sector trends Seminar, São Paulo – July 2018

Links and resources

Embrapa (Brazilian Federal Agricultural Research company)
Federal Ministry of Agriculture, Livestock and Supply

Please note: This list of websites and resources is not definitive. Inclusion in this list does not imply endorsement by Austrade. The information provided is a guide only. The content is for information and carries no warranty; as such, the addressee must exercise their own discretion in its use. Australia’s anti-bribery laws apply overseas and Austrade will not provide business related services to any party who breaches the law and will report credible evidence of any breach. For further information, please see foreign bribery information and awareness pack.

Contact details

The Australian Trade and Investment Commission – Austrade – contributes to Australia's economic prosperity by helping Australian businesses, education institutions, tourism operators, governments and citizens as they:

  • develop international markets
  • win productive foreign direct investment
  • promote international education
  • strengthen Australia's tourism industry
  • seek consular and passport services.

Working in partnership with Australian state and territory governments, Austrade provides information and advice that can help Australian companies reduce the time, cost and risk of exporting. We also administer the Export Market Development Grant Scheme and offer a range of services to Australian exporters in growth and emerging markets.

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