To Sell Organics Abroad Brazil Needs Rules and Organization

    OrganicsBrasil

    OrganicsBrasil

    Turned to farmers, producers and processors of organic products with
    International Certification, the OrganicsBrasil project currently includes 42
    companies. The project participates in the main international fairs in the
    organic sector and forecasts revenues of US$ 36 million in 2007. It works in
    partnership with the Brazilian Export and Investment Promotion Agency (Apex) and
    with the Institute for Promotion of Development (IPD),

    In the following interview Ming Liu, the project’s manager, speaks about the first results of the project, whose objective is to promote products free of pesticides on the foreign market. Liu also comments on the difficulties of dimensioning a sector that has no regulation, nor a national representative organization.


    Officially Brazil has a certified area of 870,000 hectares. “This is a figure for 2003 provided by the Ministry of Agriculture. Informally, through certification agencies, we know that the area already exceeds two million hectares,” says Liu.


    It is estimated that 15,000 families work in organic production. The number of organic product processing industries is between 200 and 300, mostly small. According to figures supplied by the Apex, the organic product business should have a turnover of US$ 250 million in 2007.


    Exports, in turn, should be around US$ 120 million. This is, however, a small share of the global market, whose annual turnover is US$ 40 billion.


    How did OrganicsBrazil arise?


    The project was idealized by the president of the Federation of Industries of the State of Paraná (Fiep), Rodrigo Rocha Loures, who had the idea of transforming the state into a reference in the organic product sector. Organics are a movement that is growing very much in all markets and he thought of generating riches through the training of agroindustries in the state and establishing an export program. This way, the industries became interested and, as Paraná has a full productive base formed, the whole chain was stimulated.


    We developed a project that was going to be called OrganicsParaná, and the idea was the following: when organic products were discussed in Brazil, the reference should be the state of Paraná, as is the case with coffee, which brings to mind the states of São Paulo and Minas Gerais.


    We worked on projects turned to the domestic market, from producers, processors and traders, and the tip was export. When we presented the project to the Apex, the organization liked it so much that they suggested it should be national, as the sector is not yet regulated, and we do not have an association representing it.


    They said: “Do it on a national level and we will support you.” This was at the end of 2004. In 2005 we modified the project so that it could have national coverage and, in May 2005, OrganicsBrazil was released.


    What have the main actions of the program been to date?


    In the first year we only worked on sensitization within the state. As the Fiep could not cover the cost of actions in other states, we sought partners. In São Paulo, for example, the Federation of Industries of the State of São Paulo (Fiesp) and the Brazilian Micro and Small Business Support Service (Sebrae) support us in the promotion of the project.


    We then sought organizations in other states to do the same. In Rio de Janeiro, we spoke to the Federation of Industries of the State of Rio de Janeiro (Firjan), and in the Amazon region to the Manaus Free Zone Superintendence (Suframa). We also went to the North. There are five states there: Roraima, Acre, Amapá, Amazonas and Rondônia.


    Now, the objective of the project is, in each state, to find an organization to cover the cost of national sensitization and training actions. Then companies in those states will be able to participate in the project. To participate, producers must have a product with national certification. The Apex forecasts participation in foreign fairs.


    What foreign markets have already been prospected?


    We are currently in the three main global markets for organics: in Asia, Japan, in Europe, Germany and France, and also in the United States. Contact is always made through participation in fairs.


    In what fairs has OrganicsBrazil already participated?


    We have already participated in the three main organic product fairs in the United States: Biofach America, in Baltimore, Expo East, which is a fair in the East Coast of the United States, and the official fair of the Association of Organics in the United States.


    We also participated in Biofach Japan and in Biofach Nürenberg, in Germany, which is the most traditional. All of this was participating in a sector project. Then we also had the multisector fairs that Apex promotes. These fairs do not include only organic products, but also meats, dairy products, coffee and all other of the agency’s sector projects. Those include Sial, in France, and Anuga, in Cologne. These are the two largest food fairs in Europe. Those interested in participating in the project may go, but they participate in the Apex stand.


    Over the last two years, how many new companies have joined the project?


    The project started with 12 companies, all from the state of Paraná. At the end of 2006, we already included 27 companies and now we have 42. Our forecast is to have reached 100 companies in the project by 2009.


    Have Brazilian exports of organic products been rising?


    There is no trustworthy source regarding organic product exports. This is mainly because they are not regulated. Therefore the products that leave the country are not traceable as the NCM (the export code) for organic coffee, for example, is simply the code for coffee. It may be Arabica or Robusta.


    How about the system created by the Secex (Foreign Trade Secretariat) in June 2006 to control the exports of organics?


    Apart from being recent, it is optional. That is, the company may declare that the product is organic, but that is an option, not compulsory. Therefore it makes no difference. What we have is an estimate based on what the companies participating in the project inform. At the end of each year they send us their results. But that is also informal, as I have no way of checking their balance sheets to confirm this information.


    What is the current estimate for the Brazilian market?


    Considering projects that have national certification (there are six certifiers) and the historic value of these certified products, we have an estimate of around US$ 120 million. Now, the global market has a turnover of around US$ 250 million. This is all based on talks with certifiers, with retail and wholesale chains. This is the only figure that we may have without regulation of the sector. Once regulation is approved, the Ministry of Agriculture will be able to create norms for the certification process using official figures.


    What is it like negotiating with the foreign market using just estimates?


    The foreign market inquires about the turnover of the Brazilian organic product market. We are embarrassed to say that we do not know, that it is only an estimate, that we do not have certification. The lack of official figures is very bad for the country and for the companies, as people do not know its size. And there may even be companies doing business that, fearing competition, do not advertise it.


    What is the current situation of the process for regulation of organics?


    For the last two years they have been saying that it is about to be signed. The position I recently received from the Ministry of Agriculture is that there are five ministries involved in the approval of the law. I believe they are the Ministry of National Integration, the Ministry of Agrarian Development, the Environment Ministry, the Ministry of Agriculture and the other I do not know which is.


    The Ministry of Agriculture has already Okayed the project, but the other four ministries have to approve it for the law to be passed. There are no points of divergence in the propositions made, neither in the first, second nor third sector, for any player in the market. All that is lacking is goodwill from the ministries to analyze whether it is all in accordance with the objectives of the program before they sign it. That is the only problem there is.


    What is the area currently used for the cultivation of organics in Brazil?


    There is officially a certified area of 870,000 hectares. This is a figure for 2003. Informally we know through the certifiers that this area already exceeds 2 million hectares. However, it is not necessary to pass this figure to the Ministry of Agriculture, while there is no regulation, and no certifier is obliged to update the information. The total includes the entire extraction area, which was previously not considered. Therefore, for the time being, you have certified açaí from the Amazon that enters the extraction area list and was not considered by the Ministry of Agriculture.


    How many producers and how many processors are there?


    We should have around 15,000 families producing organic products. Regarding the number of processors, I would say that, based on certification, between 200 and 300 companies are working on industrialization processes of organic products. Of these 200, there are over 10 medium and large companies. Most are small.


    Has OrganicsBrazil already defined the strategies for the coming years? Will new fairs be included in the project calendar?


    Yes, but we have already had several inquiries regarding participation in the organic product fair in the United Kingdom, the fair in Dubai and fairs in Italy. It all depends on company demand. Dubai is a market that is growing very much, mainly due to the development of that region. Dubai is being transformed into a ten times more sophisticated Cancun, more organized, and is becoming a gateway into several continents.


    Apex has very well defined actions there. They already have a distribution center that is more or less a customs warehouse. Several Apex sector projects have already been promoted in Dubai. There is a very great opportunity regarding foreigners there. Europeans buying properties, a very strong market, but we do not know it yet.


    Last year, unfortunately, we did not manage to participate in this organic fair due to our agenda, as it takes place in December, close to Christmas, and the organic fair calendar normally goes from March to October. It is complicated as it is in December, but we have already had two inquiries about the fair in Dubai. I think that it would be ideal to go there first of all, for reconnaissance, like I did with Biofach China, whose first edition took place in May this year, in Shanghai.


    Now, in 2007, I should participate in the Fair in the United Kingdom. Europe has a turnover of US$ 17 billion in the organic product sector. The United Kingdom has a turnover of around US$ 4 billion. After the UK, Germany is the second main market, 30% of what they trade is imported. It is therefore an important market that we could explore.


    I do not have figures about the market in Dubai. My perception is that the consumers who would buy most products there would be foreign, only a share being local. It is a market that we are greatly interested in learning about. The Apex has already told us to visit the fair. I only need to find time, but the gateway into the market in the region would be this organic product fair that takes place in December.


    Since the project was created, is there any way of knowing how much the exports of companies participating have increased?


    I have noticed that some of the companies that started in the project in 2005 did not export before, but they went with the flow and now export. One very practical example is company Chá Matte Triunfo, from Paraná, which supplied mate tea leaves to companies like Mate Leão, but which now exports around US$ 300,000 in tea leaves. It may be a small volume, but it is representative for them.


    There are even clients in the United States who started creating a product based on mate. Sparkling drinks made from mate, and even cosmetics with mate essence. And mate tea is a typically regional product, which we did not think could have market abroad. Only Uruguay, Argentina, Rio Grande do Sul and Paraná produce mate tea.


    What is the importance of Biofach Latin America to the project?


    One of the actions that the Apex is promoting within the sponsorship is the Buyer Project, with business roundtables between Brazilian producers and buyers on the foreign market. We could do it just for the companies that are part of the project, but we decided to spread it out to other companies, at no cost, as who wins by having more foreign importers is the sector.


    This action took place in the Biofach Latin America 2006 and was repeated this year, as the fair is the event that adds the greatest value to organic product export companies in Brazil. In this year’s edition (which took place from October 16 to 18) the meetings included six foreign companies, from the United States and countries in Europe. (Whole Foods, Clarkson Grain, Sun Opta, Pacific Organics, BrandStorm Inc and Cascadian Farm).


    If we had to promote a separate event, we would have to promote it in Paraná or São Paulo, and even that way, we would not have this diversity with products from Amazonas, Pará, Minas Gerais, Rio Grande do Sul and Pernambuco participating.


    Biofach brings together the main organic product makers in the country and it is there that we started propagating this possibility of doing business. The potential estimated from the fair this year is US$ 5 million.


    Anba – www.anba.com.br

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