Minister plans to diversify exports to Arab countries

Brazil’s Agriculture minister Tereza Cristina will travel to three or four Arab countries next September. She intends to discuss sales of new agribusiness products, as well as the import of Arab goods to Brazil.

Isaura Daniel
isaura.daniel@anba.com.br

Brasília – Brazil’s Agriculture, Livestock and Supply minister Tereza Cristina is getting ready to travel to Arab countries next September. Her schedule is not completely defined yet, but she might visit Saudi Arabia, the UAE, Egypt and Kuwait. In an exclusive interview with ANBA, she discussed her expectations regarding the trip. Cristina intends to look into introducing new products in Arab markets, like dairy and fruits, as well as discuss poultry sales to Saudi Arabia. Early this year, some Brazilian manufacturers had to stop shipping halal poultry items to that country.

The minister believes that Arab countries are a good target for livestock from Brazil, and that Brazil must also step up its imports from Arab countries. Having ships loaded up on their way back from Arab countries to Brazil – carrying fertilizers on the return trip – could mean cheaper freight costs. “If we manage this, we’ll surely have cheaper freights,” she said.

Cristina met with UAE delegates recently. They discussed several topics, including the possibility of growing hay in Brazil to supply the Gulf country, and of having non-Brazilians buy land. The minister said she’s not against foreigners owning land in Brazil, with limitations, but stressed that this is just her own opinion. “Brazil’s opening up its markets, towards a liberal economy, and I think that’s part of it,” said Tereza Cristina.

Check out the interview highlights below:

ANBA – In your view as minister of Agriculture, what do the Arab countries mean for Brazilian agribusiness?

Tereza Cristina – We have a relationship of friendship with the Arab countries. The Arab community in Brazil is very numerous and varied, more so from some countries than others, but we sustain long-standing ties of tradition and friendship with the Arab world. Moreover, the agricultural Brazil, the Brazilian agricultural world has been exporting to Arab countries for many years now, so much so that we have many Halal-certified companies here. We have made progress and improvements in order to be able to supply the goods the way each Arab country wants them. We have evolved a lot. The last industry (to have Halal items) was poultry. We used to not have Halal slaughter (in poultry farming) because it’s more complicated, but many companies have it now, and others are trying – because you have an adaptation and transition phase that’s expensive – due to the importance of our exports, especially so with animal protein, with poultry. These companies have developed Halal slaughter processes, and it has become a normal thing at a plant. You’ll often travel to a small town and see people doing Halal slaughter to sell to Arab countries.

And are the Arab countries an important market for the broader agribusiness industry?

For sure, and I believe we can make progress in this market. We currently export sugar, poultry, beef, maize, refined sugar, soybeans, raw coffee beans, tobacco, livestock. Livestock exports are trending up. It was formerly not usual in Brazil. That began to change, if I’m not mistaken, with sales from Pará to Lebanon, and now other countries are importing via São Paulo. It’s a market that didn’t exist until a short while ago, and now it’s getting bigger and bigger.

Do you see Brazil selling livestock as a good thing?

‘We must move forward’

I don’t think this is Brazil’s business. I think Brazil’s business is exporting beef, special beef cuts. We must move forward, export boneless meat, meat cuts, gourmet beef, but this is a niche nonetheless, and what does it do? It’s an alternative for Brazilian producers. Not for the industry, but for the producers. Why so? When you sell, it’s usually calves or weaners, and that even brings some balance [to the market]. But it’s a market that cannot get much bigger than it is now. It’s currently around 700,000 head of cattle, some say a million head (per year of livestock sold). I believe we can grow [in livestock exports], but in order for that to happen we must have a seaport, we must have EPZs (Export Processing Zones), which are where these animals are kept in quarantine to get vaccines, to undergo sanitary preparations before shipping off. We have a problem right now in Brazil, and in other countries as well, which is animal wellbeing. Part of society believes cattle should not be kept in ships for so long. But I think it’s a market which needs to exist, considering the amount of animals you have in Brazil. Australia sells to all of Asia. It’s a major livestock exporter, and I think Brazil has a niche in the Arab countries.

Minister, how was your contact with the Arabs up until now? I’m aware that you have been with Arab ambassadors. What have you done so far when it comes to Arab countries, and what do you plan to do?

When it took office, I had some ambassadors come over. We had some controversy regarding exports. I met with several ambassadors over dinner at the CNA (the Brazilian Confederation of Agriculture and Livestock) at the request of the Ministry of [Agriculture]. I called on [CNA chairman] Mr. João Martins [da Silva Junior] to help us out with that. The dinner was great, we got to talk, the president [Jair Bolsonaro] ended up going as well, it was great. Now we’re in the second phase. I wish I had been able to make a visit to some Arab countries. I didn’t because there was Ramadan in May, and we’re aware that during Ramadan things are more complicated, so I left it for the second half. I should go in September. I’m visiting three or four countries. That’s not decided yet, it’s being worked on by the [Ministry’s] Secretariat for International Relations. The president is also visiting a few countries. I should go to other countries than he, I’m not sure whether I’ll go to all countries. I have pledged to go to the UAE, Saudi Arabia and Egypt. (Kuwait should also be visited according to the Agriculture Ministry’s Secretariat for Foreign Trade and International Relations.)

What is the criterion in choosing countries to visit? Is it market size?

‘Make hay in Brazil and export to them’

Market size, some requests we got from those countries for other goods from Brazil. We’re taking into consideration the whole of international relations, both theirs towards us and ours towards them. There are some requests for entry of some products. Agricultural trade with Arab countries always runs a surplus on Brazil’s side, but there are products Brazil imports from those countries that help balance things out. We have been getting requests to get sanitary certificates for olive oil, olives, dates, apricots. There are some items that they have, because they’re in the desert, that it’s harder to produce, but there are products that they are traditional producers of and which we import. And then you have new products, like dairy, which Brazil is interested [in exporting]. We are working on a list of new products to discuss with those countries, and this will be very interesting for Brazil. Last week we got visited by a group from the UAE (Supreme Council for National Security and delegates) – and by one from Saudi Arabia before that – and we discussed investment in Brazil by those countries’ funds. We had a meeting with president (Bolsonaro) which included me, minister Bento (Costa Lima Leite de Albuquerque Júnior, of Mines and Energy), minister Tarcísio (Gomes de Freitas, of Infrastructure). We discussed several issues, many business owners from across the country were there. In agriculture, they expressed interest in planting many things; even something that caught me by surprise – hay, to feed their animals. To make hay here in Brazil and export to them.

How do you view this question of investment? Would it be a good thing to have Arabs investing in Brazilian agribusiness?

I think it’d be great, because we need it. Brazil is an agricultural powerhouse, but Brazil needs longer-term investment. It’s important for us to have partners abroad. It facilitates trade between countries, exports to those countries, and I believe it’s great to get investments into improving our structures, into increasing innovation and technology. I think that’s great.

There are restrictions to land ownership by foreigners in Brazil, aren’t there?

Yes. Right now, any foreigner can buy a very small fraction of land. That’s one of the things that these (UAE) delegates inquired about at the meeting that I joined, but it’s really up to National Congress whether we can sell land to foreign people.

Would you like to change that around? Will you work on this agenda?

It’s not a unanimous agenda in Congress, but I think it’s an interesting one. Brazil is opening up its markets, liberalizing its economy, I believe that’s part of that. No one’s leaving the country with the land on their back. They’ll manufacture here with Brazilian labor, like other companies do… Volkswagen is from Germany, then you have Volkswagen do Brasil, Volvo is Swedish… Anyway, we have several foreign companies that come to Brazil with their capital, but they’ll employ people here, they’ll build their factories here. So I think that provided that you have some – we have border land, we have the Amazon – I’m not against it.

Would there be percentage limits as well (for land ownership)?

Percentage limits as well. To bring that capital in, to allocate it here and to manufacture here, to add value and to be able to export. I don’t see any problem in that, but I’d like to make it clear that this is just my opinion.

Early this year relations with Arab countries went to a bit of a rough patch. Some meat packing facilities that used to export halal poultry to Saudi Arabia lost their accreditation. Is the Ministry keeping track of that? Will that change? Are Saudis going to accept halal slaughter as Brazilian companies perform it, or will these companies need to adapt before getting the green light again?

‘I hope to see it soon’

That’s not exactly so. What happened is Saudi Arabia had been putting out warnings… Brazil’s poultry industry is very big and strong in Saudi Arabia. I don’t have the exact figure by heart, but about 70% of the chicken consumed in Saudi Arabia is Brazilian chicken, and Saudi Arabia had been in talks with Brazilian exporting companies. They were telling them “Look, we’ll limit that to 400,000 tons.” At one point, Brazil exported close to 700,000 tons of poultry to Saudi Arabia. “We’ll limit that to 400,000 tons because we’re looking to produce some domestically,” and I’m not sure if they’d buy it from other countries, but the goal was not to depend on Brazil so much. That must have been it, and that’s my own conclusion. These talks had been ongoing, it wasn’t a surprise move. So much so that the industry didn’t cry out much, because the country had an ongoing discussion with our business owners, our exporters. That’s why some facilities got… They didn’t really disaccredit, they just reduced their imports – Europe did disaccredit some Brazilian companies, but that was another issue. That was about the Carne Fraca and Trapaça [Federal Police] operations back then. It wasn’t about the Arab countries. So, it’s only natural… And they (the Saudis) made an offer for Brazilian entrepreneurs to set up factories in Saudi Arabia to make halal poultry. That’s what I heard, [that they would like to do] everything from breeding to halal production to slaughter domestically.

Breeding chicken in Saudi Arabia?

Breeding chicken in Saudi Arabia. I’m not sure they’ll succeed, I’m not familiar with the technology. I hope to see it soon, but I don’t know how difficult it is, if and how much more expensive it will be. But that’s what I heard here from business owners, from importers and from some Saudi authorities.

So the list of those that can export and those that cannot will remain as it is?

That’s what it is right now. What we can do is look at how things are going, whether they are importing from other countries, and put in a word so we can sell a bit more. The international market works in a very dynamic way, tomorrow we might be back to 600,000 tons. It’s all a matter of timing, of what’s going on in a country at a given moment. If I go to Saudi Arabia, that’s one of the things I’ll bring up with their government.

Minister, the Mercosur now has an agreement with the European Union, and one with the United States is a possibility. Should that somehow bring about changes in our role as a supplier to other countries, including Arab ones? Will we be able to supply all of them? It will be more favorable to export to the EU and USA.

First off, it’s too early. We have an agreement with the European Union, but it takes a while to happen. It takes two years before it’s effective. It must go through congress in every country, both in the Mercosur and the European Union. Thirty-two countries total, if I’m not mistaken. It takes a while. And then you have the time it takes for each product. But I think it (the agreement with the EU) was great for Brazil. It affords more opportunities for Brazil, it’s a very high-quality market that we’ll get access to. Brazil can supply animal and plant-based protein both to Arab countries and Europe. It’s more complicated when it comes to the United States, because they’re our direct competition, but I don’t see any kind of problem there. The only problem is that Brazil needs plans. I believe these two years will be very important for Brazil to make plans with its production chains, to find out which market and which consumer it would like to reach in Europe. And I don’t just mean the products we have today. I mean maybe doing better work on those products, adding value to them so we can provide a more finished product to those countries, which are more demanding countries.

You have touched on it earlier: ore, meats, sugar make up the vast majority of our exports to Arab countries. Are you satisfied with that or would you like to add other agribusiness products to that list? What products from Brazil do you think could sell on the Arab market?

‘That’s too little compared to our entire production’

I think we need to be a bit bolder. Out of those USD 11 billion that Brazil exports [to Arab countries each year], agricultural exports make up USD 8 billion, but that’s just ten different products; that’s too little compared to our entire production. Those are commodities; now we need to add value. We don’t have dairy here [on the export list], I don’t see fresh fruit here. I wonder if we could export those. Dubai, in the UAE, is a huge air travel hub. Why not ship fruit and other goods by plane? I believe that this opening up of Brazil will allows us to find other opportunities, other products to supply to those countries. I believe we must take more chances; we must bring Arab business owners to Brazil and take Brazilian business owners to the Arab countries. As a matter of fact, it is the Ministry’s role to regulate these sanitary certificates, but I believe we could prompt our businesspersons to be bolder, to try and supply items other than the ones that are currently being sold.  These ten or eleven items, which are too few.

The Arabs insist that Brazil needs to buy more from them, since it exports so much product to them. Even though Brazil imports fertilizers from Arab countries, these imports fluctuate. During previous administrations Brazil began to invest in manufacturing fertilizers domestically. What will the country do regarding fertilizers?

We need to structure out these imports better. What’s going on? We don’t have a very structured out chain. We had a problem in the past; we used to import more fertilizer, but I think we can plan out our growth, because we have deposits here. We need to get this exploration in order, and we are falling short in this industry right now. We could import more, but we must do so while doing our homework to balance things out. We need to manufacture locally as well. Ninety percent of the potassium utilized in Brazil is imported; we import 40% to 50% of our urea. Right now, we also import MAP, which is a phosphate. We need to sort out this chain better. We have this new government policy of lowering gas prices, of making cheaper urea in Brazil. I believe more plants can crop up to make urea here, avoiding the freight costs that imports entail. Right now we get a lot of urea [from abroad] because the gas is too expensive, and we don’t have enough plants to cater to the size of our agriculture.

Do you believe that local fertilizer production needs investments, but not from Petrobras – which is making divestments in this industry?

Exactly. This divestment has created an even bigger imbalance here [in Brazil’s fertilizer market].

Exporters who supply the Arab market say shipping by sea is costly. Some say ships leave loaded up with commodities and have nothing to bring back on the return trip, so they will go to Europe to load up, and this drives up freight costs. What could be done to address this?

I’ve been speaking with minister Tarcísio, of Infrastructure, about sea transportation, cabotage. Brazil needs to make progress. I believe it’s really important to look at how you could have this flow of goods on the way back as well, because that will surely mean cheaper freight, which would be good for Brazilian farmers who need fertilizers and making sea transportation from Brazil to Arab countries cheaper.

Could fertilizers be that solution?

Maybe.

Changes are underway at Embrapa (the Brazilian Agricultural Research Corporation). Embrapa has always had some agricultural exchange with Arabs countries in North Africa. Will it keep playing this role of sharing technology during this new phase? Will Africa still be able to count on Embrapa?

I think so. The problem with Embrapa is momentary. We’ll empower Embrapa, we’ll modernize Embrapa, its administration, so it can really have more technology to trade, to sell. Africa is going to be very important in a few years. We cannot think about innovation, in technology for right now; we must think ahead, 20 years ahead, 30 years ahead. I believe this is Embrapa’s role, that Embrapa can bring technology to those countries whose climate is very similar to ours, improving and adapting our products to those areas. The way I see it, this needs to increase rather than decrease.

Mercosur has an agreement with an Arab country – Egypt – but many Arab countries have expressed a desire to enter into an agreement with the Mercosur: Palestine, Lebanon, Jordan, Morocco, Tunisia… What’s your view on that? Would agreements with these countries be beneficial to Brazilian agribusiness?

‘É fundamental abertura de mercados’

I think so. The more markets you make your way into, the better. In the Mercosur, there are some products we need to export as a bloc. As far as Brazil is concerned, I see it in a good light. Now, of course, you must discuss each case separately. But I don’t see any obstacles. Within this wave, this liberal outlook that the government is preaching for the economy, entering new markets is key, and not only for agriculture, but also for our industry, which needs to get growing again. Brazil needs to get growing again. There’s a lot of unemployed people who need jobs, so I think it’s great that other markets are looking to sit down to talk with the Mercosur.

Arabs are very concerned with food security, because they’re unable to produce much locally. Is there a way we could further cement our partnership as their suppliers? The Arab Brazilian Chamber is making a study on food security in the Arab countries.

I think this is really important: credibility and trust between two countries. Anyone who has that problem – which is not the case of Brazil – needs to know who they can trust. This integration, this commercial interaction could lead to great progress.

I recently wrote a story on wheat. I spoke with researchers who were very enthusiastic about the possibility that we might grow wheat in the Cerrado and Northeast areas. Do you believe Brazil could become self-sufficient and even a wheat exporter? Egypt is the leading consumer of wheat in the world.

I’m not sure we can become self-sufficient, but there really is enthusiasm. What happened to wheat? In the past, Embrapa and the IAC (the Campinas Agronomy Institute) did lots of research on wheat as a second crop, like maize is right now in the Cerrado. It used to be soy and wheat. That research was since put aside. Don’t ask me why, I don’t know, but the interest went away. Maybe maize came in strong as a winter culture, but wheat was kind of cast aside. Now, we have a few varieties that have been developed, that are being developed by Embrapa, and there really is great enthusiasm about reintroducing these new cultivars, not only as a winter culture, but also as a primary crop too. That would mean an increase in output for Brazil. I’m not sure it would mean self-sufficiency. I don’t know how long that would take. Who’d have thought, 40 or 50 years ago, that Brazil would become this agricultural powerhouse on Cerrado lands, which are acid, old lands? Through technology we have made Brazil into what we have today, this agricultural powerhouse.

Translated by Gabriel Pomerancblum

Myke Sena/ANBA
Myke Sena/ANBA
Myke Sena/ANBA
Myke Sena/ANBA
Myke Sena/ANBA
Myke Sena/ANBA

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