The Brazilian Agribusiness
Brazil is growing in the agribusiness industry, this article will provide an overview of the current status of this market, its promising areas for foreign investors and the current obstacles.
With a diverse climate, regular rainfall, abundant solar energy and almost 13% of all drinking water available in the planet, Brazil still has 90 million hectares of fertile land and in 10 years, will be the most agricultural country in the world .
Brazil has always been known for its important role concerning the export of commodities, being the main exporter of coffee, soy, meat and orange juice. The recent progress concerning the development of new technologies in the country has given it the title of strongest economy in Latin America.
Currently, Brazil has also extended its exports to more sophisticated items such as airplanes and cars. This change in the economic framework has characterized a moment that could represent a transition from a more colonial world into a more technological one. However, what is happening in Brazil is a merger between these two sectors: new technologies have been improving agribusiness in the country.
Agribusiness has been the most growing sector in Brazil in the last decade. The sector, which includes biofuel, is responsible for 27% of the country's GDP and corresponds to at least 37% of the Brazilian export. Among the emergent countries, Brazil is the one with the most significant agro-economic potential. The predictions are that this segment is going to grow 40% in the next 10 years.
Such promising scenario has called the attention of foreign entrepreneurs, who have become more and more interested in investing or even establishing their businesses in the country.
As agribusiness grows stronger, new demands arise as it is necessary to keep up with and even surpass the high level of production. Facing that, during the last four years people who work in the industry, logistics and the financial market started to see the agribusiness as a profitable and promising one.
The following areas are the ones that will benefit from the agribusiness' growth:
- Machinery Industry: Its main challenge is to provide new technologies that would benefit the harvest and the soil management. It is an open door to IT professionals, agricultural engineers and agronomists.
- Seeds Industry: It aims to improve the quality of the seeds. Its main challenge is to be able to produce more occupying less land. It has a high demand for researches.
- Fertilizer Industry: The challenge here is to restore the soil damaged by monocultures and to adapt it to new crops during the off season. It demands Marketing and Sales professionals.
- Pesticides Industry: Its main challenge is to conceal the use of pesticides with a growing demand for organic food.
- Ethanol Industry: Focused on the development of biofuel, this sector has been facing a transformation moment due to foreign investments and the merge of already existing groups.
The main obstacle for the current growth of the agribusiness in Brazil relies on the poor logistic infrastructure.
Recent studies point out that only 31% of the highway network is in good conditions. Such problems constitute the main obstacle to the development of potential agricultural areas, such as the Northeast of the country.
The problems are not restricted to highways. It also includes railways, waterways and air transportation.
Some of the locomotives used in the railways are still from the 1920's and can not surpass the speed limit of 25 km/h. When it comes to waterways, the ports are so crowded that trucks have to face traffic jams that can be of 150 km. This logistic inefficiency causes a loss of 16% of the country's GDP.
Aware that it will not solve the problem by itself, the federal government has already looked for support from private companies. In 2007, the government planned to invest more than BRL 13 million in 23 projects that would reform highways, railways and waterways.
Another problem is the lack of qualified professionals. Highly qualified professionals have turned to the countryside and made successful careers, but they are still not enough to supply the increasing demand.
As it often happens in Brazil, the economic growth is not followed by an educational one. Brazil has already started to import professionals from China and India to supply the demand generated by the agribusiness.
As there are more job opportunities than professionals, the average salary paid to these professionals is one of the highest in the country, achieving monthly BRL 35.000,00 for a farm manager, for example. The most required professionals are:
- Agricultural engineers;
- Sales and Marketing professionals;
- IT professionals;
Another obstacle is the tax system. As the countries who compete with Brazil have lower taxes, it is hard to the local producer to compete in the foreign market. There had been times in which Brazil has lost its own internal market due to cheaper imported products.