Business

Brazil defiant as it diversifies

  • 5 December 2011
  • From the section Business
Collecting soya

It is 10 years since the Goldman Sachs economist Jim O'Neill first coined the term Bric - Brazil, Russia, India, China - when describing a group of emerging market economies that seemed set on a path of high growth. To mark this anniversary, Justin Rowland reports from the edge of the Amazon in Brazil for Business Daily.

On the edge of the Amazon is one of the most efficient farms on the planet, owned by Blairo Maggi, the man they call "The King of Soya".

The farm is 54km (33.6 miles) long and as we drive along the wide road running through it, you can see 32 seed planters run by a satellite system to make them plant seeds in exactly the right place.

Brazil pioneered super-efficient agriculture in the face of competition from fellow Bric China.

Transformation

Technology has improved year after year to enable them to farm in the area just south of the Amazon river.

For maximum production, each hectare requires seven tonnes of limestone, and one tonne of phosphate and potassium.

Once harvested, the soya is loaded and transported by road to a port near Sao Paulo.

It costs $1,200 per hectare to prepare, and with 200,000 hectares in the whole group - with each hectare making an annual profit of $300 - the gains are substantial.

Mr Maggi was the biggest soya farmer in Brazil and indeed the world, but now the billionaire has turned his attention to politics and is now only the fourth biggest soya farmer in Brazil.

Diversification

Mr Maggi is now also a senator with, say insiders, presidential ambitions.

He explains how the growth in agriculture has helped create new cities in the federation.

"Hundreds of cities were born on the success of agriculture, so Brazil owes a lot to the development of soya farms."

Brazil is the "B" in the Bric nations - so would it be a "Bric" nation without the soya industry?

"Brazil does not want to be the world's big farm," says Mr Maggi. "We want to produce food but we also want to produce other things."

When talking about the Brics nations, he sees a rather complicated relationship with China.

"China wants to take away food products and sell industrial products to us - and they do it very efficiently," he says.

"But the Brazilian government needs to protect Brazilian industry. It has to be a two-way trade. We want to sell food, but also equipment and machinery to the world."

Defiant stance

The Bric nations have little in common with each other. The Brics were born in the first place as an economic thing - countries which had a very similar GDP and the same needs regarding international markets.

Mr Maggi does not believe these economies are necessarily similar or complementary.

"If we are not careful, China will swallow us and then India comes along... we want to be more than big food producers," he asserts.

"Therefore I insist the Brazilian government has to sit at the Brics table, has to negotiate, but knowing exactly how far it can go and when to defend Brazilian industry."

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