brasil-canada agriculture forum

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BRASIL-CANADA AGRICULTURE FORUMBrazil-Canada Trade in the Agri-Food Sector (Session 2)

GLOBAL CHALLENGES FOR BILATERAL TRADE(KEYNOTE SPEECH)

Marcos Sawaya JankProfessor of Global Agribusiness

May 25th, 2021

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✓ Senior Professor of Global Agribusiness and coordinator of Insper Agro Global.

✓ Chair Professor of the Luiz de Queiroz Chair on Integrated Agri-Food Systems at ESALQ-USP (2019/2020)

✓ President of the Asia-Brazil Agro Alliance (ABAA), an initiative to represent the Brazilian trade associations in Asia, located in Singapore (2017-19)

✓ Vice-President of Corporate Affairs and Business Development of BRF Asia-Pacific (2013-16)

✓ CEO of the Brazilian Sugarcane Industry Association (UNICA) – (2007-12)

✓ President of the Brazilian Institute for International Trade Negotiations (ICONE) - 2002-07

✓ Associate Professor at the University of São Paulo’s (USP) Colleges of Economics (FEA), Agricultural Sciences (ESALQ) and International Relations (IRI) – 1989-2007

✓ Board Member of RUMO Logistics, COMERC Energy, Agrotools and at Minerva and Cargill Global Committees on Sustainability and Forest Protection.

✓ Education: Tenure in Agricultural Economics at ESALQ-USP, Doctorate in Business Economics at USP Scholl of Economics and Business (FEA), M.Sc. in Ag Policy in Montpellier-France, and a B.Sc. degree in Agronomy at ESALQ

BIO

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Canada & BrazilCompetitive Advantages in the Agri-Food Sector

CANADA BRAZIL• 5th ag exporter and 9th in total ag area.

• Trade agreements covering most ag exports: market access, lower tariffs.

• Reputation and differentiation: quality, food safety, traceability.

• Long-term international presence →

government and private sector.

• Commodity based exports, value-added products and branding.

• Food Chain organization.

• Regulatory system: simple, focused.

• 3rd ag exporter and 5th in total ag area.

• Availability of natural resources: land, water, climate conditions.

• “Tropicalization”: genetic improvement (soy, grasses, zebu), double cropping, crop-livestock integration, no-till, large scale farming systems, integrated supply chains

• Benchmark in biofuels (ethanol biodiesel).

• Commodity based exports: volumes and low costs, value-added still a challenge.

• Farmers: young entrepreneurs, motivated, risk takers, intense internal migrations.

• New agricultural frontiers, especially pasture conversions and MAPITOBA).

More complementarities than competition!

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Agricultural trade balances by regionFood surpluses and deficits (contant value 1990–2025)

Source: OECD and FAO agricultural outlook 2016–2025

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-100-90-80-70-60-50-40-30-20-10

0102030405060708090

100

US

D b

illio

n

Trade balance

USD 51 bi

Others sectors

USD -37 bi

Agri-foodUSD 88 bi

Source: SECEX (2021), Insper Agro Global (2021).Note: Definition of agri-food as per MAPA

Agribusiness is responsible for the positive results of the Brazilian trade balance throughout the period, avoiding a crisis in the external accounts.

Brazilian Trade Balance

2000-2020

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0

10

20

30

40

50

60

70

80

90

100

110

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

US$

Bill

ion

Fonte: SECEX (2021), Insper Agro Global (2021).Definition of Agribusiness from MAPA, which considers 2949 agri-food products.

2020 (US bi)

2020 (%)

CAGR (10-20)

13.1 12.9% -2.3%

Soybean complex

Meat

Forest products

Sugar and EthanolCorn

Cotton

Others

3.2 3.2% 8.0%

6.0 5.9% 7.0%5.5 5.5% -2.9%

10.1 10.0% -6.7%

11.4 11.3% 3.5%

16.4 16.3% 1.1%

35.2 34.9% 5.6%

Coffee

US$ 101 bi

Brazil: Agri-Food Exports by productsValue, 2010 to 2020 (USD billion)

Top 4 agri-food chains → 73%

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0

10

20

30

40

50

60

70

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

US$

Bill

ion

Canada: Agri-Food Exports by productsValue, 2009 to 2019 (USD billion)

2019 (US bl)

2019 (%)

CAGR (09-19)

11.7 18.5% 3.5%Forest products

Others 18.2 28.7% 4.2%

Source: UN COMTRADE (2021), Insper Agro Global (2021).

Fish products

Wheat

Vegetables

RapeseedPork

Vegetable oilsBeef

PulsesSoy

ChocolateLive animals

5.6 8.9% 5.0%

5.5 8.8% 0.1%3.4 5.3% 4.7%3.2 5.1% 1.2%3.0 4.8% 1.5%2.9 4.6% 2.6%2.4 3.9% 7.2%2.3 3.7% 2.5%1.8 2.8% 5.0%1.6 2.6% 7.9%1.5 2.4% -0.5%

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Brazil: Agri-Food Exports by destinationValue, 2000 to 2020 (USD billion)

European Union (17%)

Asia ex-China (17%)

MENA (9%)

Latin America (8%)USA/Canada (8%)

SSA Africa (6%)

Source: SECEX (2021), Insper Agro Global (2021). Note: Asia ex-China includes East Asia (ex. China), South Asia, ASEAN, Russia and Central Asia. Definition of Agribusiness from MAPA, which considers 2949 agri-food products.MENA is Middle East and North Africa. SSA Africa is Sub-Saharan Africa.

0

5

10

15

20

25

30

35

40

US$

Bill

ion

China & HK

(34%)

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0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

China & HK

European Union

MENA

Latin America

USA/Canada

SSA Africa

4%

41%

11%

6%

14%

19%

2%

34%

18%

16%

12%

8%

8%

3%

Asia (ex-China)

Brazil: Agri-Food Exports by destinationShare, 2000 to 2020 (%)

Source: SECEX (2021), Insper Agro Global (2021). Note: Asia ex-China includes East Asia (ex. China), South Asia, ASEAN, Russia and Central Asia. Definition of Agribusiness from MAPA, which considers 2949 agri-food products.MENA is Middle East and North Africa. SSA Africa is Sub-Saharan Africa.

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0

10

20

30

40

50

60

70

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

US$

Bill

ion

2019 (US bl)

2019 (%)

CAGR (09-19)

37.9 60.0% 4.7%USA

EU-28


China & HK

Others Asia

ex-China

Latin America

Others

9.1 14.4% 0.6%

6.5 10.3% 6.8%

3.5 5.5% 0.5%3.0 4.7% 0.0%

3.2 5.1% -1.3%

Canada: Agri-Food Exports by destinationValue, 2009 to 2019 (USD billion)

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0

5

10

15

20

25

30

35

40

45

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

US$

Bill

ion

2019 (US bl)

2019 (%)

CAGR (09-19)

24.1 55.9% 2.5%

Others


OceaniaChinaASEANMexico

Latin America (ex-MEX)

EU-28

USA

5.2 12.1% 3.9%

3.6 8.4% 1.0%

2.4 5.5% 7.7%2.0 4.7% 2.4%1.9 4.3% 2.7%0.9 2.1% 2.2%3.0 7.1% 7.6%

Canada: Agri-Food Imports by originValue, 2009 to 2019 (USD billion)

WWW.INSPER.EDU.BRSource: SECEX (2021), Insper Agro Global (2021).

Brazil-Canada Agri-Food TradeValue, 2009 to 2019 (USD billion)

-

100

200

300

400

500

600

700

800

900

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

USD

Mill

ion

NET exports Exports Imports

BRASILCAGR Exports: -3.5%

CANADACAGR Imports: -10.1%

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0

100

200

300

400

500

600

700

800

900

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

US$

Mill

ion

Source: SECEX (2021), Insper Agro Global (2021).

2020 (USD mi)

2020 (%)

CAGR (10-20)

282.9 47.2% -7.0%Sugar

118.0 19.7% 0.4%

Coffee

Forest productsPoultryFruitsBeef

Others44.2 7.4% 0.7%26.1 4.4% -4.7%18.0 3.0% 5.5%12.8 2.1% 1.8%97.1 16.2% 0.4%

Brazil: Agri-Food Exports to CanadaValue, 2009 to 2019 (USD billion)

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0

50

100

150

200

250

300

350

400

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

US$

Mill

ion

Source: SECEX (2021), Insper Agro Global (2021).

2020 (USD mi)

2020 (%)

CAGR (10-20)

26.1 21.3% 4.1%Wheat

PulsesFeeds & Fodders

Paper & Cellulose

Others

18.6 15.2% 0.3%16.9 13.8% 13.3%13.3 10.8% -22.3%

47.7 38.9% 1.5%

Brazil: Agri-Food Imports from CanadaValue, 2009 to 2019 (USD billion)

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100

120

140

160

180

200

220

240

260

280

19

80

19

81

19

82

19

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84

19

85

19

86

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87

19

88

19

89

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90

19

91

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92

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93

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95

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96

19

97

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98

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99

20

00

20

01

20

02

20

03

20

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20

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20

11

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20

13

20

14

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15

20

16

Ín

dic

e (

19

80

=1

00

)

Brazil

India

Australia

World Average

Canada

USA

Total Factor Productivity (TFP) growthin Agriculture

TFP → Land, Labor and Capital efficiency

Brazil´s TFP: 2.4% p.a.

Source: USDA/ERS, International Agricultural Productivity data productNote: The TFP (Total Factor Productivity) representes the aggregate efficiency of land, labor and capital resources. Higher TFP means more efficient the production outcomes.

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Land Potential and Water Availability

0

1

2

3

4

5

6

7

8

9

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0

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20

30

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50

60

70

80

90

100

Wat

er

(Tri

llio

n m

3/y

ear

)

Lan

d (

Mill

ion

He

ctar

e)

Arable LAND Available WATER

Note: LAND: available, non-protected and non cultivated, include pastures that could be converted into agriculture. WATER: all sources of renewable water. Sources: Fischer e Shah (2010), mentioned in World Bank, 2010 (Rising Global Interest in Farmland: Can it Yield Sustainable and Equitable Benefits?), ICONE, FAO.

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Native vegetation: 565 M ha (66% of the total area)

Pastures: 175 M ha (20%)

Urbanization: 4 M ha (0,5%)

Agriculture: 85 M ha (10%)

Source: Mapbiomas (2020)

Land Use in Brazil

Current sustainability challenges

Agriculture + livestock + planted forests: 260 M ha (30%)

TOTAL: 850 M ha

Agriculture

Others: 21 M ha (2,5%): mining, waters, dunes, etc.

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0

5

10

15

20

25

30

35

40

45

50

164

166

168

170

172

174

176

178

180

182

184

186

Kg/

ha/

year

Mill

ion

he

ctar

es Productivity

Pasture area

Sustainability governance Productivity gains and the proliferation of integrated systems

Pasture area and productivity Crop-Livestock-Forest Integration and double cropping

Source graph 1:Source graph 2: 2: Athenagro, dados da Kleffmann / Rede Fomento, IBGE (Censo, 2017) e Agroconsult

Incresing beef production doesn´t need new land. It needs inputs, improvements and technology!

23

34

56

78

910

1113

1415

1617

3 35 5

55

68

910 10

11

13 12

1415

0

2

4

6

8

10

12

14

16

18

20

Mill

ion

he

ctar

es

Integratedsystems

Double cropping

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Current Projected

Aratu

Santarém

BR-364 BR-158

BR-163

Itacoatiara

VDC/Bacarena

Itaqui/São Luís

Santana

Vitória (Tubarão)

Aratu

PortoRodoviaHidroviaFerroviaTransbordo

LEGENDA:

Santos

Paranaguá

Rio Grande

São Francisco

Ilhéus

Aratu

Santarém

BR-364 BR-158

BR-163

Itacoatiara

VDC/Bacarena

Itaqui/São Luís

Santana

Vitória (Tubarão)

Aratu

PortoRodoviaHidroviaFerroviaFerrovia ProjetosTransbordo

LEGENDA:

Santos

Paranaguá

Rio Grande

São Francisco

Ilhéus

Ferrogrão

Fico

Rumo Fiol

VLI

Logistics InfrastructureRailways expansion projects

Source: CONAB (2019), Wall Street Research Reports (2019), CNT (2019), RUMO (2019).

WWW.INSPER.EDU.BRSource: UN´s Food & Agriculture Organization Global Perspectives Studies, Bloomberg.

Food DependenceTrade as a share of domestic food supply

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Source: from Derek Headey’s presentation, Senior Research Fellow from the International Food Policy Research Institute (IFPRI). Note: estimated on basis of price data from the ICP reference for a healthy diet EAT-Lancet (2011).

Challenge: access to healthy diets

+1,5 billion people do not have access to

healthy diets in Africaand AsiaCost of a healthy diet

as % of medium family income

CHEAPEST AND MOST DURABLE PRODUCTS:➢ Carbs, snack foods, tubers, sugar, vegetable oils, soft drinks MORE EXPENSIVE AND LESS DURABLE PRODUCTS:➢ Fruits & vegetables, eggs, meats, fresh fish

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Meat ConsumptionAnnual Average (Kg/year)

Source: FAO (2019), Insper Agro Global (2019). Note: Data for meat, pork, poultry and sheep.

Meat consumption(per capita - Kg/year)

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0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Pork Soybeancomplex

Corn Poultry Rice Cotton Milkproducts

Wheat Beef Sugar

Top 5 Exporters

Top 5 Importers

Top 5 exporters and importersShare by commodity (2017-2019)

Top net exporters: US, Brazil, Argentina, Canada, Australia, NZ, Indonesia, Thailand, IndiaTop net importers: China/HK, Japan, Korea, EU, Middle East, Mexico, US, Russia


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How to achieve?

…with import restrictions and self-sufficiency policies?

Food Security Food Safety & Nutrition

AffordabilityLow Inflation

Sustainability

Trade is still very limited in the agri-food sector…

Top priority issues are challengingtrade-offs

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Final RemarksCanada-Brazil Potential Areas of Bilateral Cooperation

1. Fighting global ag protectionism: reinforce the WTO, coalitions on sectoral agendas (grains, animal protein, etc.)

2. WTO Reform and work on bilateral trade negotiations (Canada-Mercosur agreement).

3. Research and innovation: genetics, biotechnology, mechanization, geo-technologies, precision agriculture, big data, drones, blockchains.

4. Value-added products and branding.

5. Food safety, quality, traceability.

6. Sustainability, climate-smart agriculture, bioenergy.

7. Building integrated agri-food value chains to address global food security and food safety challenges: exploring competitive advantages, cross-investments, consolidation.

Note: WTO (World Trade Organization), GSA (Global Sugar Alliance)

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Thank you / Obrigado

Marcos Jank

[email protected]

https://www.insper.edu.br/pesquisa-e-conhecimento/centro-de-agronegocio-global/

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