Brazil's booming agriculture sector eyes global markets

Brazil\'s booming agriculture sector eyes global markets

By Paulo Cabral BBC News, Ponta Grossa, Parana

The plantation isn't looking so good this time of the year, the weather has been quite rough. Most of the corn has already been harvested and the remaining plants are quite small.

A big modern-looking harvester moves slowly past the workers' houses to start the day's work. But it has to stop after a few minutes because the stems, broken by strong rain and wind, jam the blades.

But appearances can be deceptive. This is a highly productive plantation in the southern state of Parana - the heart of Brazil's traditional grain-growing region.

"In this region it's all about agriculture, and modern agriculture," says farmer Luciano Agottani proudly.

"In terms of quality of grain and level of productivity we are nothing short of the best there is in the world."

Brazil is the world's biggest producer of coffee, oranges and sugar cane.

It is the second largest grower of soy, and the third for corn. And it is growing faster than its competitors.

"We have the fourth largest agricultural system in the world, after China, the United States and Europe," says Dr Guilherme Dias, professor of rural economy in the University of Sao Paulo.

"But their production is stalled while Brazil's is growing fast, so I think we will be ahead of United States and Europe in about 20 years."

Research facilities

Brazilian farmers have always had the advantages of a vast territory and a favourable climate.

Cheap labour also plays its part - but it was investment in technology that brought the country to its position among the top agricultural producers in the world.

Agricultural research is not new in Brazil.

It began to take shape in the mid-1970s, when government launched Embrapa, a research institute that now exports its expertise in tropical agriculture to countries in Africa and Asia.

Over the last 10 years the arrival of the genetically modified grains and growing investment in farm mechanisation laid the groundwork for the current boom.

Brazil's agriculture fulfils the country's needs in almost all sectors - with wheat being the only significant import.

Brazil also exports 25% of its produce.

But with domestic markets growing at a slower pace than the output, the only way for producers is to look abroad.

"The research in tropical agriculture in Brazil is really impressive. Productivity has been increasing a lot and the country is diversifying its output," says Dr Dias.

"That's what gives people the impression that Brazil is getting ready to feed the world."

Milk may be next in line for export. Producers are nearly reaching the ceiling of the internal market and are starting to look for opportunities abroad.

But dairy farmers complain that subsidies in Europe and the US create barriers for their business.

"It is sometimes cheaper to import milk than to buy it here in Brazil," says Manfred Rosenfeld, who was an engineer in the car industry before he decided some 10 years ago to switch to dairy farming.

To bypass subsidies and increase profits, Mr Rosenfeld has a strategy: tap into the market of processed food.

"We make yogurt, milk caramel, cheese spread and we are now in a project to build a much bigger plant.

"Exporting milk pays very low margins but I think there is a big market and more profits to be made in dairy products," says Mr Rosenfeld.

His drive to add value to products is shared by a growing number of farms in Brazil and has created many investment opportunities in agribusiness.

Skill shortage

"We've grown 400% over the last 10 years because we have diversified our production and added value to it," says Marco Bomm, projects manager of Castrolanda, a rural co-operative created by families of Dutch immigrants in Parana.

The cooperative has a plant to produce crisps from the potatoes.

"Four kilos of crisps fetch the same price as a bag of 50kg of potatoes. I think adding value to our production is the way to go," says Mr Bomm.

However, Brazil has many overcome several obstacles if it is to realise its full potential.

One key issue is education.

Cheap labour has played a great part in the development of Brazilian agriculture, but on the other side, a lack of qualified workers is hindering further growth.

"The machinery we sell has quite a lot of technology on board. Sometimes it's hard to find people with qualification to operate them," says Walter van Halst, a reseller of farm machines in the town Ponta Grossa.

Despite these limitations, a growing number of farms in Brazil are becoming mechanised.

According to industry data, sales of farm machines in Brazil increased 52% in the first four months this year compared with the same period of 2009.

"The government has some programmes to boost the sales of tractors to small farmers and it seems to be going well", says Mr van Halst, who moved to Brazil in 1985 after taking a degree in tropical agriculture in his homeland, the Netherlands.

"When you study tropical agriculture in the Netherlands you already know you will have to live elsewhere.

"When I came in 1980s this was already a well-established grain-producing region," he explains.

Today, the main market for machines is in central and northern Brazil.

"Many of the settlers went there from Parana and other states from the South. They took the same culture of deforestation that guided the growth of agriculture here," says environmentalist Jose Alvaro Carneiro.

The state of Parana used to be covered by a dense jungle combining tropical and temperate vegetation.

The araucaria pine - with its long straight stem and branches coming out only from the very top - is its best-known feature.

But 90% to 95% of the forest have been razed to make way for cities and farms.

"We need to increase productivity and to recover degraded land instead of cutting down more trees to make space for agriculture," says Mr Carneiro.

"We have to learn what has happened here to protect what we have left in Parana and to preserve other areas of the country, specially the Amazon," he adds.