How did Brazil become a major exporting power in agribusiness?

O agribusiness Brazilian today represents about 1/4 of the Brazilian gross domestic product (GDP), more than half of exports and 1/5 of jobs in the Brazilian labor market. Today, we occupy the third position among the largest global exporters in the sector, distributing food to more than 200 countries.

A general reading of these macro data indicates that the Brazilian economy today has a vocation for agriculture, something that has been developing since the beginning of Brazil's economic and social formation. Brazil's first link with the global economy was based on sugarcane production, and subsequent economic cycles - which formed the basis of Brazil's economic development - have always maintained a strong direct or indirect relationship with agribusiness.

However, it is misleading to think that Brazil has always been a global power in the sector or a “great breadbasket of the world”. Until the mid-1980s, Brazil was a net importer of food, even receiving foreign aid and frequently facing situations of insufficient food supply.

Between the 1960s and 1980s, the population grew and became urbanized, making it necessary to modernize national agriculture, which until then had been uncompetitive, making it productive enough to guarantee the food supply.

The revolution that occurred was based on factors such as the availability of natural resources, migratory flows and the great development of technology in important agricultural research centers, such as universities (Esalq, UFV, UFRRJ, among others) and research centers. It was in the 1970s that Embrapa, linked to the Ministry of Agriculture, became a world reference by enabling, with the development of new seeds and technological packages for the “tropicalization” of crop production, the advancement of grains such as soybeans and corn, currently the “flagships” of the Brazilian field in Gross Production Value (VBP).

In the heart of the Cerrado, which until then had soil and natural conditions that were difficult for large agricultural chains to tame, the advance of grain production initiated fundamental structural changes whose consequences are palpable today, including a better distribution of the country's economic strength.

That was a time when farmers from the South, who no longer had much space to expand their production areas and accommodate their new generations, were encouraged by the government to head north to expand their activities there.

But technology has shown that in a Cerrado that was previously sparsely populated and had few thriving economic sectors – mining was one of them – it was indeed possible to create conditions for highly profitable soybean production. Used in human food, but mainly for the production of feed for poultry, pigs and cattle, soybeans did not yet have the current relevance in the global market, which was more accustomed to other grains produced on a large scale in the USA, Europe and China, among many other countries.

This was the most emblematic case of soybeans, but the country has developed strongly in the production of several cultivars, growing strongly in agricultural productivity - a global record in recent decades -, becoming a major global supplier of low-cost food. Also noteworthy are the direct planting systems and crop adaptation technologies that have made it possible to carry out multiple harvests and, more recently, the development of integrated crop, livestock and forestry (ILPF) systems.

And this expansion occurred without putting the same amount of pressure on land use. Several studies indicate that the great leap in productivity was the main driver of the growth of Brazilian agriculture. This meant that Brazilian agricultural expansion was marked by significant “land-saving” effects, or, in other words: to achieve the agricultural production observed in 2015, without the productivity gains obtained from 1990 onwards, 366,0 million hectares more would have been needed (43% of the national territory) (VIEIRA-FILHO, 2018).

The graph indicates the great revolution that Brazil has presented in terms of productivity of production factors in agriculture, compared to other selected countries and the global average.

The revolution in productivity, then, allowed Brazilian agribusiness products to become globally competitive, encouraging the great growth of Brazilian exports that occurred mainly from the 90s onwards. In this way, Brazil was able to become a major global exporter.

Recommended readings:

Chaddad, F. (2017). Economy and organization of Brazilian agriculture. Elsevier Brazil.

Vieira-Filho, JE (2018). Land-saving effect and production gains in the Brazilian agricultural sector. Discussion paper IPEA.

BARROS, GSC et al. (2019). Have production gains been reflected in higher income generation for Brazilian agribusiness in recent decades?. Journal of Economics and Agribusiness, v. 17, p. 319-338.

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