{"id":274253,"date":"2020-06-05T09:09:17","date_gmt":"2020-06-05T12:09:17","guid":{"rendered":"https:\/\/anba.com.br\/?p=274253"},"modified":"2020-06-05T15:59:10","modified_gmt":"2020-06-05T18:59:10","slug":"agribusiness-grows-in-pandemic-becomes-more-attractive","status":"publish","type":"post","link":"https:\/\/anba.com.br\/en\/agribusiness-grows-in-pandemic-becomes-more-attractive\/","title":{"rendered":"Agribusiness grows in pandemic, becomes more attractive"},"content":{"rendered":"

S\u00e3o Paulo \u2013 The only sector in Brazil to post continuous growth even amid the latest crisis, the agribusiness is expected to become the focus of mergers and acquisitions and foreign investment in the country over the next years. Sovereign founds as those from Saudi Arabia have invested in Brazil, and Brazilian companies have established plants and offices in the Middle East and North Africa, which is the case of BRF, which opened a plant in Abu Dhabi and announced investments in the Saudi market.<\/p>\n

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Brazil has a large livestock to produce meats<\/figcaption><\/figure>\n

This trend may have new chapters soon: Besides guaranteeing food supply even amid the pandemic, Brazil expects to post growth in arabica coffee, soybean, sugar, cotton and maize production as well as the highest Agricultural Gross Production Value in the last 30 years, estimated at BRL 697 billion (USD 136 billion).<\/p>\n

According to Animal Protein Brazilian Association (ABPA) chairman Francisco Turra, foreign investors have studied companies of the sector but haven\u2019t closed any deals \u2013 yet. Turra believes that it won\u2019t take long, though.<\/p>\n

\u201cI think that the time for these investments is now, because agribusiness will emerge from this crisis stronger than ever. Now it is time to contribute with resources, as the valued exchange for exports promises a much quicker return (on investment). The Asians are keeping a close eye on the opportunities \u2013 China will make investments here, and the Islamic world must seize the opportunities, too,\u201d Turra said in an interview with ANBA. \u201cI\u2019m sure that Brazil will emerge from this crisis (caused by COVID-19) stronger and seen as large food production reserve. Our economy\u2019s strongest sectors are related to the agribusiness,\u201d he says.<\/p>\n

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Tereza Cristina and entourage at BRF Abu Dhabi<\/figcaption><\/figure>\n

Turra believes that this opportunity must be seized because Brazil is a guarantor of food security for countries that don\u2019t have the same agricultural infrastructure conditions or that have a demand that is much larger than their production capacity. For these nations, it\u2019s more effective to invest in Brazil than in their own food production. \u201cSaudi Arabia has tried to produce poultry for some years, but it isn\u2019t easy. They could maintain and increase their knowledge and expertise in industries where they are a powerhouse, such as energy, and invest in partnerships with Brazil in the food production industry. In strong partnerships that guarantee their food security,\u201d he says.<\/p>\n

Brazilian Confederation of Agriculture (CNA) commercial intelligence coordinator Sueme Mori Andrade also believes that Brazil could attract investments from other countries in its agriculture and animal protein production, but not in the short term.<\/p>\n

\u201cThe world economic activity slowdown has a direct impact on the companies\u2019 ability to invest. Caution and concern with liquidity must be the priorities now. While this scenario of uncertainty remains, companies should avoid long-term investments, as in production. And it won\u2019t happen only in Brazil but around the world,\u201d she says, mentioning the forecasts of contractions in Gross Domestic Product (GDP) of countries made public by the International Monetary Fund (IMF).<\/p>\n

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Brazil is a major global poultry supplier<\/figcaption><\/figure>\n

Just as Turra, Andrade points out that Arabs have considered investments in Brazil even before the pandemic. \u201cBefore the pandemic, Saudi Arabia and other countries had expressed interest in investing in our food production. Knowing that, the Ministry of Agriculture organized a mission to the Middle East last September. CNA was part of the entourage that went with minister Tereza Cristina and discussed ways to increase both trade and investment from those countries in Brazil. Surely, exporters that haven\u2019t discontinued the supply in this moment, such as Brazil, will be recognized as reliable partners,\u201d Andrade says.<\/p>\n

Being regarded as guarantor of the world food security is a great credibility factor and source of income for Brazil, Andrade points out. \u201cTo guarantee the domestic supply, some countries have restricted foreign sales of foodstuffs, which caused great concern in countries that rely on imports to feed their population. The strength of Brazilian agri-food chain has guaranteed not only the domestic supply but maintaining and even growing exports. Year-to-date through April, agribusiness foreign sales grew by 5.9% year-on-year. They fetched USD 31.4 billion, up USD 1.75 billion from a year ago,\u201d she says.<\/p>\n

Professor at the Economy department at the Luiz de Queiroz College of Agriculture of University of S\u00e3o Paulo (USP) Andr\u00e9ia Adami believes that investments in one sector of the economy occur for a number of reasons, such as: a country\u2019s or region\u2019s population growth, greater purchasing power, and introduction of new technologies. This happened in China and Brazil. The Asian country has seen a higher purchasing power of its population, which leads to the demand of higher value-added products, such as meat.<\/p>\n

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Drying coffee beans: Brazil is the world’s largest producer<\/figcaption><\/figure>\n

\u201cIf this consumption grows, it leads to an increase in consumption of cereals (which are animal feed). Then, we have investment not just\u00a0 in protein producers but in cereal producers too,\u201d she argues.<\/p>\n

Another factor that can lead to a massive investment in one sector is the introduction of new technologies. Adami mentions one Brazilian case as an example: flexible-fuel vehicles, which can be fueled whether by ethanol, a fuel derived from sugarcane, or gasoline, derived from oil. \u201cIt was an innovation for the sugarcane industry due to the introduction of a new technology, which led to a much larger and more promising domestic market,\u201d she says. As a result of the advent of this technology, sugarcane industries invested in crops and plants. Some went bankrupt years later, others were acquired; some companies left the industry, while others strengthened their presence through investment or joint ventures.<\/p>\n

Adami points out, too, that sugarcane, cereal and protein industries are not the only ones that can be benefited from domestic or foreign investment. The entire agribusiness production chain can partner up with foreign companies and investors, as it is already seen in the agricultural machinery and input supply. She mentions the Arabs as an example of what has happened.<\/p>\n

\u201cThe Arabs are an example of how a partnership is established. At first, they imported poultry. Then, in the 2000s, Brazilian companies found it necessary to open offices in the Arab countries to get closer to them. Then, they strengthened their internationalization process and even opened industrial plants in the region. This shows commitment, a greater partnership, as we don\u2019t just export anymore but work in partnership and create jobs in the Arab countries,\u201d Adami says.<\/p>\n

*Report by Marcos Carrieri, specially for ANBA<\/em><\/p>\n

Translated by Guilherme Miranda<\/strong><\/p>\n

Press Release\/ABPA<\/div>\n","protected":false},"excerpt":{"rendered":"

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