Get to know the main laws, economic opportunities and data surrounding one of the largest agribusiness industries in the world
Over the last 50 years, the agribusiness industry in Brazil has come on in leaps and bounds, doubling the area of land made available for agriculture, and increasing grain production almost sixfold – according to projections from Conab, the 21/22 harvest should reach 269 million tons. The business makes up roughly one quarter of Brazil’s GDP and is the sector with the second highest revenue, behind government taxes.
Brazilian agribusiness does not disappoint on the world stage either. The country ranks among the top five grain producers in the world, behind China and the US, tying with India, and consistently surpassing Russia’s output.
Brazil stands out in its main areas of production: according to Embrapa, the country is the largest producer of sugarcane, coffee, and corn – accounting for 50% of the world’s consumption. As for other exports, the country is responsible for major plantations of soybeans, cotton, beef and corn.
Over the last decade, Brazil has surpassed estimates for its agribusiness production and growth. This growth slowed in 2022, however, in line with global trends. According to a study by Cepea, the first quarter of 2022 saw a retraction of 0.8% – a small drop, but the first one in three years nonetheless.
The decrease is due to a hike in import prices, highly influenced by the Pandemic, the war involving Ukraine and Russia (another major agricultural producer), and the extended drought affecting the country.
However, with careful planning, the outlook is positive for the 22/23 crop. Fertilizers and pesticides are expensive, and Estadão predicts that farmers will wait before purchasing them – which could result in mass demand and scarcity as planting season approaches.
Even so, a rainy period is expected for most of the country this year, due to La Niña, which will help in the planting of grain. Changes in the usual patterns of rain will force farmers to reassess the best times to harvest and plant. But Cepea and CNA expect this climatic event to prompt an increase in Brazil’s GDP in 2022, and lead to a record grain harvest.
The agribusiness industry in Brazil has a constant love/hate relationship with foreigners. About 50 years ago, the first law prohibiting foreign ownership and leasing in Brazilian agriculture was introduced. Several bills have since tried to change this law – the latest effort, allowing people born in other countries to participate in agribusiness, is currently under consideration by the government.
Legislation aside, it is not uncommon for non-Brazilians to take part in the country’s agribusiness sector. The Brazilian government encourages international partnerships through a number of initiatives. One of them, launched in 2021, is Fiagro. The project works as an investment fund, linking investors with rural producers through three separate modalities:
- Fiagro-FIDC (credit rights) is the investment in the rural producer’s cash fund;
- Fiagro-FII (real estate) allows leasing on the valuation of the land, and provides society over the land, without ownership;
- Fiagro-FIP (participation) gives investors the opportunity to invest in an existing company.
In addition to Fiagro, the federal government encourages foreign investment in several ways. The Agro+ Investimentos program works to involve people from the governance of all states in a search for investment opportunities in agribusiness. A database is created to compile information from all regions, and these figures and opportunities are disseminated at world agribusiness fairs and events.
Another opportunity for foreign investors is the Investor Road Show, organised by the Ministry of Agriculture, Livestock and Supply (MAPA), which visits all 26 states to present investment opportunities for the agribusiness industry in Brazil. The agenda can be scheduled to fit in with local fairs, among others.
