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quinta-feira, junho 23, 2005

Brazil is to agriculture what India is to business offshoring and China to manufacturing

The European Union this week proposed deep cuts in the price it guarantees its own sugar farmers. The US is due by the end of next week to announce reduced support for cotton growers. Both retreats follow actions initiated by Brazil at the World Trade Organisation.

While farm products are a small part of the picture – 10 per cent of global merchandise trade – the vast numbers of farmers among the WTO’s largely developing-country membership, combined with the highly contentious issue of rich nations’ agricultural subsidies, make Brazil a pivotal nation in the future of world trade.

Brazil is to agriculture what India is to business offshoring and China to manufacturing: a powerhouse whose size and efficiency few competitors can match. Despite facing one of the highest agricultural tariffs in the western hemisphere – an average 30 per cent is levied by the nations that import its produce – the country is the world’s largest or second largest exporter of sugar, soyabeans, orange juice, coffee, tobacco and beef and is rapidly building a strong position in products such as cotton, chicken and pork.

Brazil has the largest agricultural trade surplus in the world – $34bn or 5 per cent of national income last year, an amount that was singlehandedly responsible for putting the country’s overall net trade in surplus. For a country struggling to pay down its large debt burden, agricultural export earnings have been a godsend. Carlo Lovatelli, head of the Brazil Agribusiness Association, says: “Our aims are to consolidate Brazil as one of the world’s top agricultural exporters, expand further in areas like cotton and continue to demand access.”

There is certainly scope for expansion. On top of its 62m hectares (153m acres) of arable land, Brazil has an estimated 170m hectares more in potential – about the same as the entire US cropland currently under cultivation.

FT.com / Analysis - Brazil is yielding farms that can feed the world


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