And he goes on to say: "We are the leading producer and exporter of oranges in the world. However, no one knows a Brazilian brand of orange juice in foreign countries. The same applies to coffee, to sugar. And what is the problem with having a commodity-based economy? When prices go up, we win, but if they fall, then we lose a lot. It is great to be Brazil, the farm. But we can and should be much more than just that."

Safe and Volatile

To economist Julio Almeida, when it comes to foreign investment in Brazil, "we are doing fine. Finer than ever before." In 2007, foreign direct investment totaled to US$ 33.7 billion, a record high. And it should be no different in 2008. Prior to 2007, the sum was lower than US$ 25 billion.

"This is the type of scenario that will only change if we go back to recession, high inflation and low growth rates. But this is not what is taking place. The GDP should grow approximately 5% this year, maintaining roughly the same growth rate as last year. Should we go back to growth rates of 2% to 3%, then direct investment might decrease," he says.

With regard to withdrawals of capital from the stock market (US$ 4.5 billion in June), Almeida claims: "such capital is volatile by nature, and is always difficult to foretell. Anyway, with the maturing of the São Paulo Stock Exchange (Bovespa) and of the Brazilian stock market as a whole, the trend will be for more investment to be attracted in the long run."

Minas Gerais, Chinese Style

Despite high interest rates, a heightened tax burden and depreciated exchange rates, the economy of the state of Minas Gerais is growing at a China-like pace.

A survey conducted by the Federation of Industries of the State of Minas Gerais (Fiemg) reveals that, for 11 consecutive quarters, the state's industry has grown at an average rate of 9.2%. The Fiemg calculates that revenues by the industry of Minas should end this year with 15% expansion over last year.

Compared with the accumulated result for the first six months of 2007, revenues in the first half of 2008 were 19.81% higher. This is the best first-half result in the history of the industry of Minas ever since the Real Plan (a set of measures for stabilizing the Brazilian economy) was implemented, in 1994.

The state's industrial park performed above the national average in every aspect in the first half this year. In terms of revenues, the industry of Minas posted a result 2.4% higher than the average. Using the same basis for comparison, employment level improved 10.7% in Minas, as against 5.9% in the whole of Brazil. Wage mass in the state increased 7.44%, as against a 5.6% expansion in the national average.

Inside Out

Global warming should prompt a significant change in the map of Brazilian agriculture, leading to a reduction in farming lands and losses of approximately 7.4 billion reais (US$ 4.5 billion) as of 2020, and of 14 billion reais (US$ 8.6 billion) as of 2070. The figures were taken from the survey "Global Warming and Future Scenarios for Brazilian Agriculture," which assesses the impact of rising temperatures on agriculture in 2020, 2050 and 2070.

The survey evaluated the following products: cotton, rice, bean, coffee, sugarcane, sunflower, cassava, corn and soy. It was coordinated by Hilton Silveira Pinto, of the center of Meteorological and Climatic Research Applied to Agriculture (Cepagri) of the University of Campinas (Unicamp), and Eduardo Delgado Assad, of Embrapa Agricultural Computing. The survey also counted on the collaboration of 19 researchers and was supported by the Embassy of the United Kingdom in Brazil.

The survey was conducted using climate risk zoning technology, a public policy on which the entire Brazilian agricultural credit structure is based, as it informs the risk level in more than 5,000 municipalities across Brazil for the most common agricultural products in the country.

Rural Credit

Funds applied using rural credit during the 2007/2008 crop exceeded the 58 billion reais (US$ 35.9 billion) allocated to business farming by the Brazilian government. Contracts totaled 65 billion reais (US$ 40.2 billion), 12.2% more than forecasted. The outlook for Brazilian and global agribusiness led financial agents to offer more credit and farmers to seek more financing.

Anba

Of this total, 65 billion reais (US$ 40.5 billion) should be turned to business farming and 13 billion reais (US$ 8.1 billion) to family farming. "The time has come, the country cannot miss this opportunity to take a quantity and quality leap in the production of foods," said the president of Brazil.

The measures announced have two objectives: to stimulate agricultural production at a time of rising international prices, bringing benefits and revenues to Brazilian farmers, and to reduce inflationary pressure caused by food price hikes on the domestic market, by expanding offer. Expectations are for grain and oleaginous plant production to grow 5% in the 2008/09 crop, reaching 150 million tons.

"The world is eating more and we do not know what may happen. We have more Chinese, Indians, Latin Americans and Africans eating, and many more Brazilians," stated president Lula. "We Brazilians, with no arrogance and without any presumption, must face this as an extraordinary opportunity to really become the global breadbasket."

This is the first time that the PAP is released outside Brazilian capital city Brasí­lia. The choice of Paraná was made as the state is the main food producer in the country.

According to the IBGE (Brazilian Institute of Geography and Statistics), Paraná is responsible for 22% of the national grain and oleaginous plant production. In the 2008 crop, the IBGE forecasts that the state of Paraná should harvest 32.2 million tons. Total Brazilian production should reach 144.3 million tons.

The plan announced in Curitiba expands the credit offered to the agricultural sector by 10%. Interest rates should remain at 6.75% a year, which, at a time of rising inflation, means reduction of real interest rates.

The Federal Government is also going to reduce interest rates on credit for those who recover degraded areas and plant grain. With this, the government plans to provide incentives to the recovery of between 60 million and 70 million hectares.

Within the PAP, scheduled to run up to the end of June 2009, the federal government also plans to provide incentives to the acquisition and modernization of machinery and implements. The secretary of Agricultural Policy at the Ministry of Agriculture and Food Supply, Edí­lson Guimarães, stated that a program should be launched with this objective this week, in Brasí­lia.

The project forecasts the elimination of 4% fees on the liberation of funds for the purchase of tractors. Apart from that, there should be a line of credit of up to 500 million reais (US$ 312.6 million), with interest rates of 7.5% a year, and another 2.5 billion reais (US$ 1.6 billion), at rates of 9.5% a year, for the purchase of machinery.

Rural insurance is another mechanism to support producers that should be intensified in the 2008/09 crop. The volume of funds turned to the payment of awards should rise to 160 million (US$ 100 million). When the federal government implemented the rural insurance for family farming, in 2005, the value was R$ 10 million (US$ 6.3 million).

Omar Nasser works for the Fiep (Federation of Industries of the State of Paraná).

The report found out that the average price for a hectare of farmland in Brazil rose 16.4% in the two-month period of March-April from the same period in 2007 to 4,135 reais (US$ 2,506). Compared with January-February this year, prices have risen 3.42%.

Prime farmland in the southern producing states of Rio Grande do Sul, Santa Catarina and Paraná for the first time since early 2007 surpassed the cost of land in the sugarcane rich southeast states, pointed out AgraFNP.

"The southern region prices have roughly pulled even with the southeast in the past two months," said AgraFNP analyst Jacqueline Bierhals. "Most of the shift in position is due to the search for farmland for grains in Paraná, which appreciated a lot."

The average price of a hectare of productive land in the south rose to 7,737 reais (US$ 4,689) in March-April from 7,288 reais in the previous two month period.

"Prices rose in Brazil generally, but the South had a very strong rise. They are lands that were already expensive and had found space to rise further," she said.

The average price of land in the southeast rose to 7,450 reais over the period from 7,317 reais in the first two months of the year.

In São Paulo, Brazil's main sugarcane producing state, located in the southeast region, the average price of a hectare rose to 11,824 reais from 11,604 reais in January-February.

Bierhals said this recent rise in the southeast had probably more to do with the expansion of pasture land, grain planting and reforestation in the state than demand for land to grow sugar cane as sugar and ethanol prices have not been that attractive lately.

In the center-west region, where much of Brazil's future grain and sugarcane expansion will occur, average land prices rose 3.5% in March-April from the previous two months but were up 40% on the same period in 2007, at 3,246 reais a hectare.

Bierhals said the strong rise in the center-west was due to the strong demand for new land from big productive projects seeking large areas of farmland, many of which are being funded by international groups.

Mercopress

"A new game is now being played. Sustainability is the correct means of production, socially and ecologically speaking, and furthermore it is economically viable," said the president at Abag, Carlo Lovatelli.

According to Lovatelli, sustainability is a vital subject nowadays. So much so that next month will see the establishment of the Institute for Sustainable Agribusiness (Instituto para o Agronegócio Responsável – Ares), and the Abag will promote a special mission to the European Union countries, along with the Brazilian Foreign Office (Itamaraty) and the Brazilian embassies to those countries.

"We need to show how our agribusiness works. To show that sugar cane is not planted in the Amazon, as some international media vehicles have already reported," he said.

The theme of the congress was "Brazil: one single agribusiness". According to Lovatelli, currently the country has four ministries directly concerned with agribusiness: the Ministry of Agriculture, Livestock and Supply, the Ministry of Agricultural Development, the Ministry of Environment, and the Secretariat of Fishery, which has the status of a ministry.

"The federal government should have a central organization to take care of agribusiness. This crazy quilt creates a structure in which the different fields fight amongst themselves, and this has been damaging the sector a lot," stated the president.

Within this framework, according to him, the Brazilian agribusiness is harmed by dichotomies between food- and energy-producing agriculture, or between family and business farmers.

"There is only one single agribusiness, and one single farmer. No dichotomy. What we need to do is provide the conditions for small farmers too to become competitive and grow," he stated.

"We sense that there is a need for strategically linking the different production chains. It takes unity to ensure better conditions for all," he said.

In the assessment of José Serra, governor of the state of São Paulo, there is a myth according to which family agriculture and business agriculture are two different issues.

"It is a single production chain, the problems are the same: precarious infrastructure, lack of logistics, insufficient credit, and unfavorable exchange rates," said Serra.

"The agricultural policy cannot concentrate on exports, or in providing assistance. A wide-ranging agricultural policy must be implemented for a sector as important as agribusiness," claimed the governor in his inaugural speech during the opening of the Brazilian Agricultural Congress.

The appreciation of the real (Brazilian currency) against the dollar is another problem facing the sector. "The Brazilian productivity is greater than those of the United States and Argentina, but farmers harmed by unfavorable exchange rates," Lovatelli explains. To the president of Abag, "luckily, our product is now highly valued in the international market, thus making up for some of the exchange rate disparity."

The secretary of Agricultural Policy at the Ministry of Agriculture, Livestock and Supply, Edí­lson Guimarães, said that the ministry's guidelines include key points for the Brazilian agribusiness to develop all its potential.

"It is important to provide support to cooperatives, rural insurance, and a disaster fund. Infrastructure and logistics are also priorities, as is the problem of indebtment in the agricultural sector, which is being negotiated with the farmers," said Guimarães.

According to him, other priorities are cost reduction for agricultural financing, tax reduction and tax simplification.

More information at the Website www.abag.com.br

Anba – www.anba.com.br

For Renato Baumann, director at the Economic Commission for Latin America and the Caribbean (Eclac), this is the most probable scenery for the Doha Rounds. The Eclac is connected to the United Nations (UN) and Baumann discussed the matter during the 2nd Brazilian Congress of Innovation in Industry, being held in São Paulo, Brazil.

Baumann believes that the other two possible sceneries for the negotiations, the return to talks in 2007 and the suspension of talks, are less probable. What is barring the Rounds is concessions that the negotiators are not prepared to make.

The United States and European Union are resisting eliminating agricultural subsidies and developing countries resist opening their government purchases and service sectors.

Meanwhile, Brazilian and Chinese are strengthening their ties. The Brazilian Machinery Manufacturers Association (Abimaq) established a partnership with the China Machine Tools Builder's Association (CMTB), its Chinese counterpart in the industry, based in Beijing, China.

The idea is to promote technological exchange and possible joint ventures between the Brazilian and Chinese manufacturers. Thirteen Brazilian businessmen participated in the signing of a protocol of intentions during a trip to China. The Brazilian delegation also visited the China International Machine Tool Show, held from April 9 to 15, in which Abimaq had a stand.

The protocol of intentions – signed in Portuguese, English, and Mandarin – will provide the basis for information exchange among the 130 companies linked to Abimaq, which account for a production of US$ 956 million, and the 700 companies linked to the Chinese organization, responsible for a production of US$ 7 billion.

During the fair, the Brazilian organization also promoted the International Machine Tools and Integrated Manufacturing Systems Trade Fair (Feimafe), to be held from May 21 to 25 at Anhembi, in the southeastern Brazilian city of São Paulo.

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The data were released Friday, January 5, by the Brazilian Ministry of Agriculture. The sector's exports accounted for 36% of the overall Brazilian exports in 2006, which yielded US$ 137.4 billion.

According to the ministry, exports to major economic blocs have increased, the Middle East being the one that grew the most (35.7%), followed by Africa (20.9%). These two regions have increased their participation as buyers in the agricultural sector from 7% to 8.4% and from 6.5% to 6.9%, respectively.

Nevertheless, the European Union is still the main destination for Brazilian agricultural products, absorbing 31.4% of total exports, followed by Asia and the Nafta countries.

First on the list of 20 main buying countries in 2006 were the United States. As for Arab countries, Saudi Arabia ranked 15th, Egypt ranked 16th and the United Arab Emirates ranked 17th.

According to the Ministry of Agriculture, the sector that had the most influence in increasing agribusiness exports in 2006 was that of sugar and alcohol.

Foreign sales of sugar and alcohol amounted to US$ 7.8 billion, a 65.9% increase in comparison with 2005. Sugar answered to US$ 6,2 billion, and alcohol answered to US$ 1.6 billion.

Other sectors with strong export performances in 2006, according to the ministry, were forestry products, meat, coffee, cereals, flours and preparations, leather and leather products, and fruit juices. The soy complex sector saw a 1.8% reduction, and exported US$ 9.3 billion worth of products.

The sector's imports, on the other hand, amounted to US$ 6.695 billion, resulting in a record-high trade balance surplus of US$ 42.726 billion in Brazil. Foreign purchases increased 31%, and the products that most influenced performance were wheat, natural rubber, rice, cotton and maize.

In December alone, agribusiness exports yielded US$ 4.137 billion, 12.9% more than in the same month in 2005. Imports increased 27.3% to reach US$ 664 million, resulting in a US$ 3.473 billion surplus.

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Brazil’s farm exports reached a historical high of US$ 20.2 billion in the first half of this year, an increase of 10.2% over the same period in 2004, reports the Ministry of Agriculture.

Soy continues to lead the farm export sector, with revenue of US$ 4.36 billion, even though international soy prices have fallen 20.03%.

In second place are Brazilian meats (beef, pork and poultry) with US$ 3.63 billion in export revenue, an increase of 31.56% over the same period last year.

Sugar and Brazil’s sugarcane-based ethanol fuel (which is also used as a gasoline additive) are in third place with exports of US$ 2.07 billion, an increase of 73.2%.

Other export highlights were lumber and items made of wood, paper and cellulose, and leather, skins and footwear – all segments exporting over US$ 1.5 billion each.

Also strong was coffee, US$ 1.32 billion in export revenue, up 64% over the same period in 2004.

“In spite of problems with the weather and the exchange rate, we have done well because of the diversity of our exports,” explained minister of Agriculture, Roberto Rodrigues.

Cumulatively, over the last 12 months, farm export revenue has reached US$ 40.7 billion, an increase of 14.7% over the prior 12-month period.

India

Wednesday, July 6, the ministers of Agriculture of Brazil, Roberto Rodrigues, and India, Sharad Pawar, met in Brasí­lia to discuss their experience in agriculture and sign specific agreements on the importation of zebu embryos from India (which will increase genetic diversity in Brazil) and the export of Brazilian sugar and sugarcane-based fuel and fuel additive to India.

The two ministers discussed a future trip to India by Rodrigues, which should take place in December when they will create an agriculture consultative committee.

ABr – www.radiobras.gov.br

The Brazilian Constitution determines that unproductive properties may be condemned for the purposes of Agrarian Reform. From this arises the question: What exactly are unproductive properties?

The law surrounding the subject considers property unproductive if it does not profitably utilize its land. This classification must be made by a professional by means of an inspection.

In the inspections the inspector first verifies the extent to which the land is being effectively developed in the property; after that he compares the production obtained by the various sources of cultivation and of cattle production on the inspected property, taking into consideration data of the median income of Brazilian plantations in relation to the same products.

A property that utilizes a very small part of its lands or whose income is below the median is classified as unproductive and, therefore, can be condemned for the constitution of registration of Agrarian Reform.

The table containing the indicators of income and cattle productivity was made in the 1970s. Since then Brazilian agriculture has been modernized and become much more productive.

However, the table of indicators has not been modified, and this allows plantations which have already overexploited their properties’ productivity to escape being classified as unproductive.

In Paraná only 8 of 148 property inspections resulted in the property being classified as unproductive. With new indices the result would obviously be much higher.

The outdated indicators lead to delays in the condemnation process and cause owners who fail inspections to dispute the condemnation laws with the government. This raises the stakes for the process of Agrarian Reform and does what it can to render the process slower overall.

In 1999 the Minister of Agrarian Reform carried out studies in order to update the indicators of income (or, “indices of productivity,” as they call them).

Two institutes known for their competency and aptitude undertook the survey: Unicamp and Embrapa. The two acted separately and arrived at practically the same conclusions.

In keeping with the law, the Ministers of Agrarian Development and Agriculture should have issued, as reviewed by the National Council of Agricultural Development, the instruction by INCRA (National Institute of Agrarian Colonization and Reform) to establish the new indicators.

But large plantation owners came together to prevent this from happening.

In the proposal to the Second National Plan of Agricultural Reform, brought to President Lula in December 2003, the need to issue this instruction (p. 38) was demonstrated, with the goal of making possible the implementation of the established record.

But, until now, April 2005, it still hasn’t managed to be issued, clearly due to resistance from the large plantation owners.

When the massacre occurred at Felisburgo, in Minas Gerais, a commission of civil service representatives requested that President Lula establish the indices, as a necessary provision to accelerate the process of Agrarian Reform, which is currently running behind the set goals of the government – goals that are at the median of the goals proposed by the same specialists who improved the Plan.

On the occasion of Sister Dorothy’s assassination, the same commission renewed their request.

The decision they chose to take, however, was not to immediately issue the new indicators based on the studies from 1999, which were already ready, but rather to do a new study. It is reported that this was already done and discussed in the highest spheres of government.

It is hoped that the Lula government will face this veto and issue the new indices, in order not to stay in the same position of past governments, which always cited lack of information to do something other than that which was already being done”

Plí­nio Arruda Sampaio is the president of ABRA (Brazilian Association of Agrarian Reform) and member of the team that developed the National Plan of Agrarian Reform, which was presented to the government in 2003.

The Our First Land project, part of Brazil’s Ministry of Agrarian Development’s National Rural Credit program, should benefit 5 thousand young people between the ages of 18 and 24 this year, in the universe of 45 thousand families that will be assisted.

According to the Ministry’s secretary of Agrarian Reorganization, Eugênio Peixoto, US$ 237 million (600 million reais) have been allocated to the program this year for land acquisition and productive investments.

Peixoto observes that Our First Land is a concrete alternative offered by the federal government to family farm youths.

“With this we are enabling these young people to transform their capacity for entrepreneurship into reality and contribute to the country’s rural development effort,” he says.

The secretary also recalled that the greatest incidence of rural exodus occurs among youth.

“It is is in the 18-24 age bracket that the rural exodus occurs. With the Our First Land program, we are providing an instrument of government policy for these youths to become rural entrepreneurs, individuals who will help change the reality of their regions, thus contributing to the country’s development,” the secretary concludes.

ABr

Brazil has 6 million young people, 18-24 years old, working in the countryside. 1.8 million of them are illiterate, and 30% earn less than a fourth of a minimum wage (US$ 24) each month.

These data come from the Institute of Applied Economic Research (Ipea). For lack of opportunity, these young people have no alternative except to migrate from the countryside to the cities.

According to the coordinator of the Ministry of Agrarian Development’s Policies for Youth, Fabiano Kempfer, the federal government created two programs aimed specifically at young people, to combat rural exodus.

The first is called Social Consortia for Rural Youth, which prepares young people to enter the job market. They receive training for four months in production techniques for beans, rice, corn, manioc flour, and wheat.

In return, they receive a monthly stipend of US$ 59 (R$ 150) and devote six hours a week to community service in unions or cooperatives, passing along to the local community a little of what they have learned.

Finally, each must formulate his (her) own production project, in the area in which he (she) wants to work.

Training, however, is not enough. Investment is also necessary. That is why the second program was created.

Our First Land is a credit line at lower interest rates. Young people can borrow up to US$ 14,600 (40,000 reais) to buy land and US$ 3.200 (9,000 reais) to prepare the soil.

“These are programs for country people to establish roots; they are tools and guarantees the government gives farmers who want to remain farmers. They can acquire their own land,” Kempfer explained.

The Our First Land program is already benefitting 800 young agricultural producers.

The federal government has earmarked US$ 3.6 million (10 million reais) for the Social Consortia for Rural Youth in 2005.

Translation: David Silberstein
Agência Brasil