Oct 29, 2019

Brazil and China Expand Commercial Ties in Agricultural Products

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

The Brazilian president, Jair Bolsonaro, was in Beijing last week to meet with Chinese president Xi Jinping to celebrate 45 years of diplomatic relations between the two countries. As part of the meetings, the two presidents signed eight new commercial accords with most of the accords centering on agricultural products including processed meat, cottonseed meal, and renewable energy.

The two countries are set to continue expanding their commercial relationship. According to the Brazilian Minister of Agriculture, Tereza Cristina, in 2018 China purchased US$ 31 billion worth of agricultural products from Brazil, which was a 70% increase compared to 2015. Of the total Brazilian exports to China in 2018, 88% was soybeans with beef coming in second at 4.7%. Soybeans and meat (beef, poultry, and pork) account for 96% of Brazil's agricultural exports to China. The total amount of commerce between Brazil and China in 2018 was US$ 113 billion with commodities being the principal components.

In 2018, China imported US$ 140 billion worth of agricultural products from around the world, so the Brazilian Minister of Agriculture feels there is ample room for growth in agricultural exports to China and for Chinese investments in Brazil.

In September, Brazil received authorization for 25 more meat processing facilities to export their products to China beginning the total to 89 with more facilities in the process of being approved.

According to the Minister, Brazil is the third largest food producer in the world, while at the same time maintaining 66.3% of the country in its native vegetation. In her words, Brazil "produces and preserves" at the same time. She feels there are a lot of investment opportunities in Brazil for China especially in the agricultural sector as well as in the transportation sector where there is a big push for privatization of the nation's highways, railroads, ports, and airports.

President Xi Jinping will visit Brazil in November after participating in the Asia-Pacific Economic Cooperation meeting in Chile. In his remarks in Beijing last week, President Xi indicated that the relationship between China and Brazil is a "win-win" with mutual benefits and a brighter future for both countries. It is expected that the two countries will probably sign more accords when Xi visits Brazil.

The two countries also announced a joint agreement between Embrapa and the Chinese Academy of Sciences to set up laborites dedicated to the betterment of soybean production and sustainable agriculture.