Wednesday, 4 April 2012

Thoughts on my Brazil experience

I found Brazil fascinating. I was captivated by its small rural townships and the idyllic small farm models which easily support 3 or 4 happy families. Brazil's population is 191 million which matches the 5th largest population with the 5th largest country. Make no mistake, Brazil has a high rate of poverty. My observations were that the low class housing was more obvious on the fringes of the super cities and very large towns. I was informed there is no government funded unemployment program so its a work or starve culture. The average income per capita is $8000US. This creates a workforce which is willing to undertake any task. In an agricultural context this simply means cheap labour is always available even for the most mundane duties - resulting in a relatively low cost production system. Machinery and mechanization are being readily adopted and this, plus foreign investment, seems to be upsizing the farming scale.

I can only be in awe of Brazil's natural resources and scope for increasing their agricultural capabilities. They are already giants in terms of their contribution to world agricultural production. To reflect on this, Brazil is the largest exporter of beef cattle, sugar, coffee and orange juice. They are 2nd with soya bean, ethanol, tobacco. 3rd with chicken meat and the 4th largest global corn exporter. Brazil has just surpassed the UK to be the 6th largest economy and looks like rising further. This is of course due in part to other competing countries backsliding as a result of the global financial crisis.

Thanks to my Nuffield Global Focus Program (GFP), I have had the opportunity to travel to many countries to review their economic, social and cultural dynamics surrounding agricultural production. I discovered there has been a recurring theme throughout these countries that keeps being raised - that world population will increase to 9 billion people by 2050! how will we feed these people?
I'm pleased I fluked finishing my GFP in Brazil for now I know where the solution to this challenge is going to come from. The solution is Brazil, Brazil, Brazil!!! While I am convinced there is still room to increase productivity from existing traditional global farming countries, the future capacity to increase agricultural production within Brazil is enormous.
To reflect on some of the quotes we learned from our Brazilian visit: they are only utilizing about 9% of the land mass that is being well managed. The remainder is largely unimproved, cleared pastures with low cattle stocking rates. Enormous change is now underway in Brazil - largely driven in partnership with foreign companies (dairy & sugar cane are really moving). Unimproved land is being converted to high production systems. The climate and rainfall allows for double cropping and a cheap workforce ensures world competitive pricing. An example of this is when I moved to the Riverland in 1988 there was a large citrus juice industry. Since the Free Trade Agreement allowed Brazilian orange juice concentrate into Australia, the local citrus juicing industry has largely disappeared. Now I have a clearer understanding of why!! I thought it was because of the cheap labour inputs of Brazil that made us non-competitive. This is of course true but now I have discovered that Brazil also has a huge advantage in being able to grow juicing citrus on rainfall without needing to irrigate. To emphasize this advantage, the Riverland needs to own/lease large water entitlements and pay an additional significant charge for pumping costs to deliver this irrigation water. The wide, wild rivers in Brazil deliver enormous volumes of water. Irrigation is now becoming more and more popular particularly amongst dairy/beef producers but also cropping and vegetable growing. Only last year another 160,000 ha of unimproved grazing land was converted to high production irrigated land. In total Brazil has 4.5 million irrigated hectares. A water/river sustainability report we heard, targets a possible 30 million hectares of irrigation. This represents an increase in irrigation development of 130,000ha per year for the next 200 years - HUGE!!
We also heard that Brazil is capable of tripling its beef exports very quickly if necessary but is happy to maintain current levels so as not to create over supply and lower prices. Brazil is also having mass expansion in sugar cane. With 455 ethanol producing plants and already being the 2nd largest exporter of ethanol, I suspect Brazil will also deliver renewable energy for global consumption. So from now on whenever I hear the question "how are we going to feed 9 billion people by 2050" I will answer by directing that person to study what is happening in Brazil and their capability.

For more information on this, you may like to look at the following 5 minute youtube clip:
BRAZIL: A Hungry Plant and Brazilian Agriculture - BASFAGRO

In general the Brazilian people were very friendly to us. Communication was mostly difficult. My Portugese is non-existent and not many Brazilian's speak English. The majority of the population are Catholic. Prices for hotels are reasonable - possibly 2/3 of what we would pay for good quality. Food and beverages are cheap. We ate mostly at restaurants and food was really good. I will take away some fantastic memories of Brazil. Although I have little interest in Soccer, I will be an interested onlooker when Brazil host the World Cup in 2014!

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