May 24, 2019

Brazil's Ag Minister promotes Brazilian Ag Products in Asia

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Brazil's Minister of Agriculture, Tereza Cristina, made a recent trip through Asia promoting Brazilian agricultural products in China, Vietnam, and Indonesia. Topics of the meetings in Beijing included meat and grain imports and Chinese investments in Brazil.

Meat Imports - During meetings with her Chinese counterpart in Beijing, she requested that China certify a total of 78 meatpacking facilities for export to China. In 2018, a delegation from China visited 11 meatpacking facilities in Brazil and they will be sending another delegation to Brazil during the second half of 2019 to resolve any outstanding sanitary and quarantine issues.

The Minister worked with members of the Brazilian meat sector to fill out the forms and documents needed for certification of the facilities ahead of time in the hope that it would facilitate the certification. They also brought along a list of 33 facilities already authorized to export products to the European Union. Additionally, they had a list of producers and processors authorized to export pork, beef, and poultry to the United States, Japan, and other countries. For their part, China was looking to expand export of fish, seafood, and pears to Brazil.

As of this writing, China agreed to certify 20 of the additional 33 facilities for which Brazil requested certification.

Investments - The Minister also had meeting with a group of 40 Chinese investors interested in participating various infrastructure projects in Brazil. The most immediate project is the Ferrograo Railroad linking northern Mato Grosso with the Amazon River. This 1,200 kilometer project is budgeted at USD 3.37 billion, but it was unclear the level of participation between the Chinese investors and the multinational grain companies who want to build the railroad.

Other investments discussed included the construction of the Fiol Railroad, which would transport grain and iron ore from the state of Tocantins to the Port of Ilheus in Bahia and the North-South Railroad that transports grain to northern ports in Brazil. In addition to railroads and infrastructure projects, the Chinese expressed interest in the grain, seed, and hog production in Brazil.

Vietnam - While in Vietnam, the Minister and her delegation participated in celebrations marking 30 years of diplomatic relations between the two countries. Diplomatic relations between Vietnam and Brazil were established in 1989 and Brazil was the first Latin American country to establish an embassy in Vietnam in 1994.

The two countries have established accords in science and technology, cultural events, sports, health, and the production and use of ethanol. Recently the two countries cooperated on air services, maritime transportation, and think tanks. In 2018, bilateral trade between the two countries exceeded US$ 4.2 billion and Vietnam is Brazil's fifth largest trading partner in Asia.

The Vice-Premier of Vietnam, Vuong Dinh Hue, declared that his country was open to all the economies of the world and he expressed interest in importing soybeans, corn, and cotton from Brazil. In exchange, Vietnam is interested in exporting shrimp and fish to Brazil.

Indonesia - The Brazilian Minister met with her Indonesian counterpart in Jakarta to discuss the opening of the Indonesian market to Brazilian beef imports. Most of Indonesia's beef imports currently come from Australia, but the Minister indicated that Brazil could be a cheaper alternative to Australia. In a meeting with the Brazil-Indonesia Chanber of Commerce and Industry, representatives of the Brazilian meat sector indicated that they could also supply halal beef to the Islamic country.

For his part, the Indonesian Minister requested lower Brazilian tariffs on imported palm oil from Indonesia. Currently, Brazil imposes a 20% tariff on palm oil and Indonesia is requesting that it be lowered to 2.5%, which is the same tariff that Indonesia imposes on Brazilian soybean imports. Indonesia is a big importer of Brazilian soybeans and they are the only exporter of palm oil to Brazil and the adjustment in tariffs would benefit small palm oil producers. Indonesia would also like to increase the export of specialty fruits to Brazil

Indonesia's Royal Golden Eagle group already has a forestry operation in the state of Bahia for the production of cellulose and they announced they will install a second forestry operation in the state of Sao Paulo, also for cellulose production.