How Brazil became a tough export rival but faces limits

By Agri-Pulse staff

© Copyright Agri-Pulse Communications, Inc.



WASHINGTON, July 3, 2012 -Brazil's emergence over the last two decades as a robust competitor in exports of a wide range of agricultural economies in addition to its traditional sugar and coffee - notably meat and poultry products, cotton, orange juice, grain and soybeans - is traced in exhaustive detail in a new report by the U.S. International Trade Commission, “Brazil: Competitive Factors in Brazil Affecting U.S. and Brazilian Agricultural Sales in Selected Third Country Markets.”

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The USITC staff prepared the 422-page publication for the Senate Finance Committee, which not by coincidence is led by two outspoken promoters of U.S. agricultural exports, Chairman Max Baucus, D-Mont., and Ranking Minority Member Charles Grassley, R-Iowa.

Brazil has not only has increased its planted acreage and crop yields significantly to meet rising domestic food needs, but also created substantial exportable surpluses. USITC credits its “low-cost resource base, including ample land and water resources and weather patterns conducive to intensive land use” for enabling high-yielding crops and government-funded agricultural research to adapt crop varieties to flourish in previously untapped regions.

“Low on-farm production costs have helped to make Brazil a competitive exporter,” the report says. However, “despite tremendous potential, several important factors may serve to slow Brazil's expansion of agricultural production,” USITC warns. “Much of the available farmland is in areas that lack easy access to transportation infrastructure.” It also notes that transportation, storage and port capacity “will likely outpace supply for quite some time” and that relatively high-cost credit, labor laws and tax structures could discourage expansion and increase production costs.

Brazil's poultry industry primarily serves customers with exacting product specifications while U.S. poultry exports tend to be undifferentiated broiler cuts, such as leg quarters, the report says. Beef export competition also is limited because each country serves a different market segment - U.S. grain-fed beef for Canada, Mexico, Japan and Korea; Brazil's grass-fed beef for processed products and other markets such as Russia. Brazil's foot-and-mouth disease limits market access for its beef and pork in many of the largest markets.


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