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Brazil’s Agricultural Success Teaches South How to Grow

By David SouthDevelopment Challenges, South-South Solutions

SOUTH-SOUTH CASE STUDY

Inflation, environmental stresses and population and economic growth are testing the world’s food supply systems. There is a strong need to boost yields and improve the quality of food.

Between now and 2050 the world’s population will rise from 7 billion to 9 billion. Urban populations will probably double and incomes will rise. City dwellers tend to eat more meat and this will boost demand.

The UN’s Food and Agriculture Organization (FAO) reckons grain output will have to rise by around half but meat output will have to double by 2050 to meet demand.

Two pioneering approaches to growing food in Brazil offer valuable lessons to countries looking to increase their food production.

One is taking place in Bahia state in north-eastern Brazil. On Brazil’s cerrado (savannah) (http://en.wikipedia.org/wiki/Cerrado), enormous farms grow cotton, soybeans and maize. One of them, Jatoba farm, has 24,000 hectares of land: vastly larger than comparable farms in the United States.

On the Cremaq farm in the north of the country in Piaui state, a transformation has taken place. Once a failed cashew farm, it is now a highly modern operation. Owned by BrasilAgro, it is benefiting from clever agricultural innovation that gets results.

BrasilAgro’s approach is to buy derelict or neglected farms and give them a high-tech makeover. The ‘makeover’ includes radio transmitters tracking the weather, SAP software (http://en.wikipedia.org/wiki/SAP_AG), a well-organized work force under a gaucho (http://en.wikipedia.org/wiki/Gaucho), new roads criss-crossing the fields, and a transport network of trucks to quickly get the food to ports for export. Piaui is an isolated place with few services: it can take half a day to get to a health clinic. Dependence on state welfare payments for survival is the norm for many residents.

Brazil, over 30 years, transformed itself from a food importer to one of the world’s major food exporters. It is now considered alongside the ‘Big Five’ top grain exporters of America, Canada, Australia, Argentina and the European Union. Importantly, it is the first tropical nation to do this.

The value of Brazil’s crops rose from US $23 billion in 1996, to US $62 bn in 2006. It is the world’s largest exporter of poultry, sugar cane and ethanol, and there has been a tenfold increase in beef exports in a decade.

Brazil made these impressive achievements with few government subsidies. According to the Organization for Economic Co-operation and Development (OECD), state support accounted for just 5.7 percent of total farm income in Brazil from 2005-07. In the US it was 12 percent, while the OECD average is 26 percent and the level in the European Union is 29 percent.

And despite frequent alarming reports, much of the farming expansion has not happened at the expense of the Amazon forests.

The agricultural success is down to Embrapa (http://www.embrapa.br/english) – short for Empresa Brasileira de Pesquisa Agropecuária, or the Brazilian Agricultural Research Corporation. A public company set up in 1973, it has turned itself into the world’s leading tropical research institution. It breeds new seeds and cattle and has developed innovations from ultra-thin edible wrapping paper for foodstuffs that turns colour when the food goes off to a nano-tech lab creating biodegradable ultra-strong fabrics and wound dressings.

Its biggest achievement has been turning the vast expanses of the cerrado green for agriculture. Norman Borlaug, an American plant scientist often called the father of the Green Revolution, told the New York Times that “nobody thought these soils were ever going to be productive.” They seemed too acidic and too poor in nutrients.

Embrapa uses what its scientists call a “system approach”: all the interventions work together. Improving the soil and developing new tropical soybeans were both needed for farming the cerrado. The two together also made possible the changes in farm techniques which have boosted yields further.

Many believe this approach can be applied to Africa as well. There are several reasons to think it can. Brazilian land is like Africa’s: tropical and nutrient-poor. The big difference is that the cerrado gets a decent amount of rain and most of Africa’s savannah does not (the exception is the swathe of southern Africa between Angola and Mozambique).

Another approach that Brazil has been pioneering is making small, family farms sustainable and productive for the 21st century.

There has long been a tension between those who believe in very large farms, agribusiness and mono-crops (http://en.wikipedia.org/wiki/Mono-cropping), and those who believe in having a large number of smaller farms with a wide variety of crops and animals.

But small farms have endured. The livelihoods of more than 2 billion people depend on the 450 million smallholder farms across the world. With their families, they account for a third of the world’s population.

Family farms are critical to weathering economic crises and ensuring a steady and secure food supply. The International Fund for Agricultural Development (IFAD) (www.ifad.org)called in 2008 for small family farms to be put at the heart of the global response to high food prices and uncertain food security.

In Brazil, this call is being answered by a bold initiative to create what is termed a “social technology”, combining a house building programme with diverse family farms.

The Brazilian farmers’ cooperative Cooperhaf: Cooperativa de Habitacao dos Agricultores Familiares (http://www.cooperhaf.org.br) – a World Habitat Awards winner – combines housing and farm diversification to support family farmers.

“Family farming is very important for the country – 70 percent of food for Brazilians comes from family farming,” said Adriana Paola Paredes Penafiel, a projects adviser with the Cooperhaf. “The government wants to keep people in rural areas.”

“We see the house as the core issue,” she continued.  “The farmers can improve their productivity but the starting point is the house.”

Started in 2001 by a federation of farmers unions, the Cooperhaf works in 14 Brazilian states with family farmers. In Brazil farmers have a right to a house in the law and the cooperative was formed to make sure this happened.

“We promote diversification to make farmers less vulnerable: if they lose a crop in macro farming, they lose everything. We encourage diversification and self-consumption to guarantee the family has food everyday. We help to set up a garden.”

The concept is simple: a good quality home acts as an anchor to the family farm, making them more productive as farmers. The farmers receive up to 6,000 reais (US $2,290) for a house, and can choose designs from a portfolio of options from the Cooperhaf.

As in other countries, the Cooperhaf and other co-ops encourage markets and certification programmes to promote family farmed food and raise awareness. Penafiel says promoting the fact that the food is family farmed is critical: to the consumer it is healthier, fresher and contains fewer chemicals than imported produce.

“Most agri business is for export,” said Penafiel. “If we don’t have food in the country, food for poor communities would not be available. This enables farmers to be more autonomous, not having to buy fertilizers and equipment and take on too much debt. That approach is not sustainable as we saw with the so-called Green Revolution.”

Published: September 2010

Resources

  • Africa Project Access: A South African company specializing in projects in sub-Saharan Africa and getting them finance. Website:http://www.africaprojectaccess.co.za/
  • Silk Invest: A specialist investment fund targeting the fast-growing markets of Africa and the Middle East. Website:http://www.silkinvest.com/
  • Olam: A global food supply company in ‘agri-products’ that got its start in Nigeria  and shows how a Southern brand can grow and go global and overcome the difficulties of cross-border trade. Website: www.olamonline.com

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP’s South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South’s innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator. 

Creative Commons License

This work is licensed under a
Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 License.

ORCID iD: https://orcid.org/0000-0001-5311-1052.

© David South Consulting 2022

Categories
Archive Development Challenges, South-South Solutions Newsletters

Global South’s Rising Economies Gain Investor Spotlight

By David SouthDevelopment Challenges, South-South Solutions

SOUTH-SOUTH CASE STUDY

A new book is arguing that the world’s attention should switch away from BRICS countries – Brazil, Russia, India, China and South Africa – and take another look at nations and regions elsewhere across the global South. It argues many are lodestones of future growth and prosperity in the making and will see dramatic changes over the next decade.

The story of the BRIC and BRICS countries is an impressive one. In just eight years from 2000 to 2008, the BRIC countries’ combined share of total world economic output rose from 16 to 22 per cent. This led to a 30 per cent increase in global output during the period, showing how key these countries were to global prosperity in the 2000s. BRIC countries make up nearly half the world’s population and are regional leaders. Taken together, their gross domestic products (GDPs) are not far behind the United States.

Ruchir Sharma’s Breakout Nations: In Pursuit of the Next Economic Miracles (http://www.amazon.com/Breakout-Nations-Pursuit-Economic-Miracles/dp/0393080269) argues that the BRICS are now entering a more stable growth path and thus will not see the rapid-fire expansion and quick profits investors have become used to in the past decade.

“The BRICs,” Sharma told Forbes magazine, “were last decade’s team.”

The BRIC acronym (http://en.wikipedia.org/wiki/BRIC) was coined in 2001 by Goldman Sachs managing director Jim O’Neill, in a 2001 paper titled “Building Better Global Economic BRICs” (http://www.goldmansachs.com/ourthinking/brics/building-better.html). O’Neill predicted that this handful of countries would dominate the growth and economic development story for the years 2000 to 2010. This was because they all shared a similar stage of advanced economic development.

The BRIC states first began meeting together in 2006. South Africa was added in 2010 to form the BRICS acronym.

The buzz surrounding the BRICS countries over the past decade has been justified by their impressive growth rates, declining poverty levels,modernizing economies and societies and growing middle class populations.

China alone had seen its gross domestic product grow by US $5 trillion between 2001 and 2011.

Now, Sharma argues, it is someone else’s turn.

Sharma is head of emerging markets with Morgan Stanley Investment Management in New York, and Breakout Nations looks at where the next economic surprise stories will take place.

“A breakout nation is a nation that will grow above expectations, and will grow more than nations with similar per capita income,” Sharma told Forbes. “You can’t bunch all of the emerging markets together anymore. The last decade saw these countries behaving the same economically, but I think that is behind us now. Investors today will really have to pick their spots.”

He points out that Indonesia was the best performing emerging market in 2011 and has an economy that will surpass a trillion dollars in the coming years.

He also believes Sri Lanka and Nigeria are economies to watch.

Sharma says funds flowing into emerging market stocks grew by 478 per cent from 2005 to 2010, a massive jump compared to 2000 to 2005, when they grew by 92 per cent.

As he sees it, China has now reached middle-income status and its growth rates will not be as high as they have been for the past two decades. In his research, he found that countries like Japan, South Korea and Taiwan all slowed down once their per capita income went past US $5,000.

Investors who watch the emerging markets predict the hot growth areas for the next decade will be around energy, technology, and agricultural resources.

Sharma picks out Indonesia, Turkey, the Philippines, Poland and the Czech Republic for future investment interest, but urges caution with thinking all emerging economies are on course to boom.

“You’ve got to pick your spots, rather than just assume that because you put a tag of emerging on a particular nation, it’s going to boom,” Sharma told The Globe and Mail newspaper.

To make sense of the complexity of fast-emerging economies, a flurry of new investor acronyms has popped up. One of the country clusters is called the CIVETS: Colombia, Indonesia, Vietnam, Egypt, Turkey, South Africa (http://en.wikipedia.org/wiki/CIVETS).

The MINTS (Mexico, Indonesia, Nigeria and Turkey) are also set for great growth in the next decade, many investors believe.

Then there is the N-11 or Next 11. This is the MINTS plus Bangladesh, Egypt,Iran, Pakistan, the Philippines, South Korea and Vietnam.

And after that there is VISTA (Vietnam, Indonesia, South Africa, Turkey and Argentina). While clearly the creative juices are flowing at investment houses as they come up with ever-catchier acronyms, a more serious point is being made: many countries in the global South, for the first time in history, are no longer solely dependent on the Western economic system for demand.

These countries, investors note, now have an unprecedented range of options uncoupled from the political, financial and economic legacy of Western developed nations. They say that many nations in the global South are set for a runaway investment boom because they are making changes and modernizing their economies faster than many expect.

As the BRICS economies mature and slow down and take on different priorities based around improving the quality of life of their citizens, those seeking faster profits will look elsewhere. This trend is even happening within the BRICS, as Chinese and Brazilian companies offshore work to Vietnam and Colombia.

There are many new centres of economic activity and rising prosperity across the emerging markets that often fail to gain wider attention. Few would probably know that the Northeast Asian nation of Mongolia – mired in the 1990s in the worst peacetime economic collapse in half a century (http://www.scribd.com/doc/20864541/Mongolia-Update-1998-Book) – is now the world’s fastest-growing economy (http://www.worldbank.org/en/news/2012/02/28/what-behind-mongoliaeconomic-boom) and one of the top places for mobile phone usage and penetration (http://www.businessmongolia.com/mongolia/2012/03/19/mongolia-ringing-the-changes/).

Then there is Myanmar (formerly Burma), where many are hoping recent moves toward democracy and improvements in diplomatic relations will lead to an economic boon for the region. Investors are also targeting Kazakhstan in Central Asia.

Reflecting these changing realities, Standard Bank, Africa’s largest bank, has been documenting the rising role played by the Chinese currency in international trade. A recent report forecast US $100 billion (R768 billion) in Sino-African trade would be settled in the Chinese currency, the renminbi, by 2015. This would be double the trade between China and Africa in 2010. It also found 70,000 Chinese companies are using the renminbi in international trade transactions.

Published: April 2012

Resources 

1) Beyondbrics blog: A blog by the Financial Times calling itself “The Ft’s emerging markets hub”. Website: http://blogs.ft.com/beyond-brics/

2) BRICS Summit: The Fourth BRICS Summit was hosted in New Delhi on 29 March 2012 under the overarching theme of “BRICS Partnership for Global Stability, Security and Prosperity.” The Summit has imparted further momentum to the BRICS process. Website: bricsindia.in

3) Market Oracle: A good source for updates on investor sentiment about the emerging market economies. Website: marketoracle.co.uk

4) Monocle magazine: “A briefing on global affairs, business, culture and design” often featuring trends in the emerging market countries. Website: monocle.com

5) BRICS Information Centre, University of Toronto. Website: brics.utoronto.ca

https://davidsouthconsulting.org/2022/04/15/african-youth-want-to-do-business-in-fast-growing-economy/

https://davidsouthconsulting.org/2022/03/20/global-south-eco-cities-show-how-the-future-can-be/

https://davidsouthconsulting.org/2021/07/19/global-south-trade-boosted-with-increasing-china-africa-trade-in-2013/

https://davidsouthconsulting.org/2022/10/20/global-souths-middle-class-is-increasing-prosperity/

https://davidsouthconsulting.org/2022/10/20/global-souths-rising-economies-gain-investor-spotlight-2/

https://davidsouthconsulting.org/2021/11/12/global-souths-rising-megacities-challenge-idea-of-urban-living/

https://davidsouthconsulting.org/2022/11/15/indonesian-middle-class-recycle-wealth-back-into-domestic-economy/

https://davidsouthconsulting.org/2022/10/20/trade-to-benefit-the-poor-up-in-2006-and-to-grow-in-2007/

https://davidsouthconsulting.org/2022/11/20/venezuelas-currencies-promote-cooperation-not-competition/

https://davidsouthconsulting.org/2022/10/10/wireless-internet-culture-helping-zimbabwe-economy-recover/

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP’s South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South’s innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator. 

https://davidsouthconsulting.org/2021/03/05/southern-innovator-issue-2/

Creative Commons License

This work is licensed under a
Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 License.

ORCID iD: https://orcid.org/0000-0001-5311-1052.

© David South Consulting 2022