International Trade and development Report

International Trade and development Report

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Executive Summary

This report has focused on the Agriculture Trade of Brazil, which seems to be positioning itself in the markets of sugarcane, soybeans, beef, fish, and many other agricultural products. This report has been carried out to focus the strategies, which the respective government has been applying to promote its agricultural marketing world-wide. The outcomes of this report seem to be in favour of Brazilian market, since there seems to be positive effects of trading on Brazilian economic condition.

 

 

Introduction

This report is about discussing the concept of Agriculture Trade, then incorporating the same concept specifically to the country-context, and then identifying the strategies helping the respective nation for effective outcomes. Thus, this report aims at covering the different aspects of agriculture trade with respect to a selected country, Brazil, including strategies used by the same nation.

Overview of concept, Agricultural Trade

Trade offers the potential to improve consumers welfare with producers incomes, boosting the overall economic growth, and finally reducing the poverty-level (1). Trade plays an important role in delivering clothing and food to consumers across the word, since the last few decades, international food and agricultural markets have witnessed a number of changes that have brought international and domestic markets closer to each other. The current era has been characterized by an intensive trade of agricultural products such as fuel, fibre, food, and feed that has dramatically accelerated during the past few decades (2). At the global level, the World Trade Agreement (WTO) has an AOA (Agreement on Agriculture), whose major objective is for establishing a fair along with a market-oriented trading system of agriculture (3).

A short reflection on Agricultural Trade of Brazil

The most significant agricultural regions of Brazil are Centre West, Southeast, and South. As per 1995-1996 Agricultural Census, cultivated area is of order of 50mn hectares however pasture takes-up around 178 mn hectares. Brazil has become the largest producer of coffee, tropical fruits, sugarcane, and frozen concentrated orange juices worldwide; this country further supports the largest commercial cattle-herd of this world at 210mn head. The major agricultural products of Brazil are soybeans, sugar, coffee, rice, wheat, edible beans, maize, cotton, and manioc. For instance, sugarcanes export value is 10.4bn dollar, coffee 4.84bn dollar, soybeans 19bn dollar, beef 3.59bn dollar, and orange juice 2.1bn dollar. Furthermore, 21.1bn dollar is the total imports of Brazilian industrial machinery and agricultural trades.

Figure 1: Export Growth of Brazil

(Source: 4)

Since the pandemic continues for influencing Brazil and its respective economy, however, its markets present niche opportunities in the high-end beef market. Currently, the Brazilian premium beef imports have grown by around 26.3% as compared to 2019. The leading exporters of beef to Brazil are Australia, the US, Paraguay, Uruguay, and Argentina.

Figure 2: Brazilian agricultural trade surplus

(Source: 4)

Since, operating on the agricultural trade surplus, the respective nation faces various infrastructural issues, which hinder their agricultural exports and production. The economic growth of Brazil relies heavily over consumption. Currently, Brazil invests less than 20% of their GDP in Brazilian infrastructure, even 3% less than the BRIC average. Thus, without sufficient allocation of GDP in infrastructure, both agricultural imports and exports across Brazil could suffer because of a higher production and transportation cost.

Figure 3: Agricultural exports of the US to Brazil

(Source: 4)

Products related to agriculture such as forest products, ethanol, fish and distilled spirits have boosted the overall export growth of the US to Brazil. Furthermore, in 2016, the US had exported around 502mn dollar of agricultural-based products to Brazil, among which, 93% was ethanol. However, the current tariff is being expected for affecting the ethanol exports of the US to Brazil in upcoming years, whenever Brazil experiences any drought or whenever the prices of sugar are higher, resulting in causing more Brazilian sugarcane for going into sugar rather than ethanol.

Strategies regarding Agricultural Trade

Agricultural policies across Brazil that already involve environmental considerations, could be made in a more flexible manner for responding to the emerging trends (5). Current strategy of agricultural trade in Brazil reflects a fact that since the agricultural sector is vital to the social and economic development of Brazil, thus it is supported by two separate ministries such as MAPA (the Ministry of Agriculture, Livestock, and Food Supply), and MDA (The Ministry of Agrarian Development). The Brazilian Government pursues an integrated strategy of growth with social inclusion, indulging the Ministries of Social Development, Education, and Health among others. As a result, key improvements in reducing inequality and poverty have already been achieved. The motive of this strategy was to develop the Brazilian agribusiness in a socially, environmentally, and economically sustainable manner.

Another strategy was based on the Family Farming Harvesting Plan, which has been brought to support the respective sector with an aim of increasing its pace in innovation, research, and technology. As a result, food production could be stimulated and income could be protected as well. This strategy considers family farming as a key pillar towards Brazilian economic development by providing them continued technical extension and assistance. In order to enhance the plan of family harvesting, the Brazilian government followed by the MDA sets public policies that could attract various families to be a part of this development plan. Technology and Science have played a key role in the impressive development of the Brazilian respective sector. Thus, investment in its R&D sector results in a higher growth in the scientific knowledge of Brazil, specifically within its tropical agriculture. For instance, Embrapa has also actively been collaborating on transfer of technology along with adaptive research with the developing economies, with an objective on tropical areas in Africa, Latin America, and the Caribbean. With this strategic move, the respective government stimulates public R&D firms along with the private sector for expanding their international actions.

Strategic partnership with Africa has come-up as an effective strategy of Brazil to its own economic development. Thus, with the help of Trade concept, the Brazilian Government has tied cultural and political partnerships with Africa that deepened its tie with Africa, as a result increasing the exchange of contacts and knowledge is a considerable benefit for both these nations. These partnerships seem to be significant enough for a sustainable trade partnership as their interactions with each others leaders regarding the Atlantic concern affect the policy-decisions made (6). A specific strategy towards a sustainable trade between these two nations is through financial assistance and transfer of technical expertise.

Reflect on the way these strategies helping in delivering effective outcomes

Each of the strategies mentioned above has contributed to Brazilian development in terms of achieving better outcomes. For instance, the first strategy that introduced agricultural policies and plans has contributed in achieving effective outcomes by promoting competitiveness of Brazilian agribusiness and their sustainable development among its different trading partners. Thus, as a result of it, different trading partners of Brazil specifically Africa, the Caribbean, and Latin America started showing their interests towards investment in various agricultural policies and plans of Brazil, which contributes in increasing the GDP rate of Brazil. Furthermore, involvement of the MDA and MAPA encourages SME farmers of Brazil to get involved in these plans, which further increased the GDP per Capita and gross value of Brazilian agricultural production.

Next strategy, the family farming harvesting plan, also helps Brazil in achieving expected results. This plan resulted in contributing around 236.3bn Brazilian reals to the overall Brazilian economic system. The resources obtained from this plan would be invested in improving their infrastructure and these resources would further guarantee the continuity production in the respective field along with food supply in Brazil. Small rural producers will also be benefited with this plan since it is launched only to strengthen the Family Farming with an interest of 2.75% along with 4% annually for financing and marketing the same. For instance, 12bn families of Brazil ascended from the C to the B” economic class (8). In this plan, financing would be available for fostering the R&D sector of Brazil by purchasing the equipment of climate monitoring such as weather software and stations, and for monitoring soil moisture (7).

Analysing the third strategy that is investing in the R & D sector, Embrapa, also results in enhanced foreign cooperation benefitting the financial expectations of Brazil. Brazil is found to be a strong promoter of South-to-South cooperation, since the last few decades, there seems to be a substantial increase in the allocation of Brazilian resources into technical cooperation. Thus, it has been seen that Brazil seems to be a strong contender in trading technically, as technical power and expertise of Brazil is getting enhanced day-by-day. Thus, this strategic move of the Brazilian government strengthens its own capability and strength in the field of technology, innovation, and research. As an outcome, Brazil has gradually switched from its recipient position to a provider position in the field of development assistance. This enhances the current position of Brazil in the list of developing countries and makes Brazil a strong competitor of the US as well.

With the strategic move, Sustainable Trading Partnership with Africa, the effective outcomes lead Brazil to have the most productive relationship with Africa. Based on the economic strength of Brazil, the government could have forgiven the debts of Africa and come up as a new donor for Africa. This has strengthened the partnership of Africa and Brazil, which have forthcoming benefits and facilities for Brazil. Transfer of information gets also enhanced through their joint research with African institutions.

Conclusion

After analysing the overall agricultural trading of Brazil, it can be concluded that Brazil has now been a strong competitor in terms of sugar trading to the US market of the same production. However, the Brazilian government has brought up a strong move towards making its economic stability better even during this pandemic situation.

 

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