Brazilian companies can be tapped for technologies and investment in agribusiness in India

R. Viswanathan

Agri-business contributed $239 billion, or 28 per cent, to the total Brazilian GDP in 2005. Brazil is the world's largest producer of alcohol, sugar, coffee and orange juice. It is the second largest producer of soya, beef and tobacco and ranks third in the world in the production of chicken, corn and fruits.

Brazil is the undisputed leader in the export of alcohol, sugar, coffee, orange juice, soya, beef, tobacco and chicken. Agro-exports amounted to $44 billion in 2005, of a total of $118 billion. As and when the EU and the US remove or reduce their subsidies, Brazil the third largest agro-exporter (after the EU and the US) has the potential to increase its exports significantly and become an agricultural power.

Brazil's production of sugarcane in 2005 was about 420 million tonnes. Sugar factories there have the flexibility to produce either alcohol or sugar directly from sugarcane. This is an advantage to the mill-owners who can decide on what to produce depending on the prices and market situation. In 2004, sugar production was 27 million tonnes and alcohol 15 billion litres. There are plans to set up 40 plants for alcohol production in the next three years to cater to the growing domestic and global demand.

Chicken production and export is one of Brazil's success stories. Poultry meat production has exceeded the traditional beef production. It reached 8.95 million tonnes in 2005 from 3.4 million tonnes in 1994. Brazil exports poultry meat to over 140 countries.

LARGE FARM TRACTS

Brazil has a large fertile land area, of which it uses 47 million ha for agricultural purposes. An additional 100 million ha can be brought under cultivation, without cutting the Amazon forest or affecting the eco-system. Brazil has invested considerably in farm research and innovation. Both the government and the private sector have established a large network of laboratories which have contributed to increase in yield, with new crop species and processes. For example, in the last 15 years, productivity growth has risen 175 per cent for raw cotton, 62 per cent for corn, 48 per cent for wheat, 43 per cent for rice, 51 per cent for beans and 39 per cent for soya. The Brazilian soy productivity of 3,000 kg per ha is the highest in the world.

Brazil's success has lessons for India, which has started focussing on agribusiness. Brazilian companies can be tapped for technologies and investment and joint-ventures in food processing and agribusiness in India. Indian companies can consider investment in large farms for captive production of crops such as soy and sugarcane. But they need to watch out for changes in the production of sugar and alcohol, as this will affect global prices.

EXPORT TARGET

Indian companies should target Brazil for exports of wheat and rice since the latter is a large importer of these items. There is also tremendous scope for export of inputs which go into the large Brazilian farm sector such as pesticides, chemicals and agro machinery and equipment.

The Indian Council for Agricultural Research can benefit by collaborating with its Brazilian counterpart, EMBRAPA, and undertaking joint projects.

The flexifuel technology is a crying need for India, given the enormous oil import bill and the excessive dependence on external sources of oil. Another advantage of using ethanol from sugarcane is that it would contribute to rural development and generation of employment within India, while crude oil means contribution to the wealth of the oil-supplying countries. The Brazilian Government and the private sector are willing to extend cooperation as part of the evolving bilateral strategic partnership and provide a roadmap on ethanol use.

(The author is with the Ministry of External Affairs. The views are personal.)

(This article was published in the Business Line print edition dated May 9, 2006)
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