Agribusiness and Sustainability in Brazil JSPS Symposium March 15-16, 2013 at Rikkyo University Yoichi Koike Ritsumeikan University
Brazil : An Agriculture Superpower? The world faces many problems: Poverty, hunger, deforestation, aridification and desertification, and climate change Brazil is in a privileged position in the world debate on food and environmental crisis Brazil is blessed with fertile farmland and water Brazil: an Agriculture Superpower? Necessary conditions for sustainable development: Innovation, Social Inclusion and Environmental Sustainability
1.Agribusiness Agriculture Agribusiness
Structural Change of Agriculture Land utilization Rapid increase of temporary and permanent crop land Drastic drop of pasture land Rapid increase of cattle raising Increase of cattle per ha(0.86 in 1986 to 1.08 in2006) Increase of planted pasture Slightly decrease of employed people in agriculture Advance of mechanization Unequal distribution of farmlands remains unchanged Gini coefficient: 0.857(1985), 0.858(1995), 0.872(2006) Relocation of farmland: Advance of agriculture frontier (Cerrado and the Amazon )
Agricultural Policy Two objectives: Agribusiness and Family agriculture Two ministries: Ministry of Agriculture, Livestock and Supply: Promotion of agribusiness Ministry of Agricultural Development: Democratization of the agrarian structure, basic food production, generation of occupation and income, combat to the hunger and the misery, promotion of the citizenship and social justice Complementary or contradictory? Run after two hares?
Key Indicators of Brazilian Agriculture 1970 1975 1980 1985 1995-96 2006 Eatablishments(1,000) 4,924 4,993 5,159 5,802 4,860 5,175 Total Area(1,000ha) 294,145 323,896 364,854 374,925 353,611 329,941 Land Utilization(1,000ha) Permanent Crops 7,984 8,385 10,472 9,903 7,542 11,612 Temorary Crops 26,000 31,616 38,632 42,244 34,253 48,234 Natural Pasture 124,406 125,951 113,897 105,094 78,048 57,316 Planted Pasture 29,732 39,701 60,602 74,094 99,652 101,437 Natural Forest* 56,223 67,858 83,152 83,017 88,898 93,982 Planted Forest 1,658 2,864 5,016 5,967 5,396 4,497 Employed People(1,000) 17,582 20,346 21,164 23,395 17,931 16,568 Tractors Used 165,870 323,113 545,205 665,280 803,742 820,673 Livestock(1,000) Cattle 78,562 101,674 118,086 128,041 153,058 171,613 Fowl 213,623 286,810 413,180 436,809 718,538 1,401,341 (Note) *Legally reserved forest etc. (Source) IBGE, Agriculture Census 2006, Rio de Janeiro, 2009.
Family agriculture holds majority of establishments but minority of farmlands Region Establish -ments Family Agriculture (Law No.11326) Area(ha) ha/est. Establish -ments Non Family Agriculture Area(ha) ha/est. Brazil 4,367,902 80,250,453 18.4 807,587 249,690,940 309.2 North 413,101 16,647,328 40.3 62,674 38,139,968 608.5 Noertheast 2,187,295 28,422,599 13 266,711 47,261,842 177.2 Southeast 699,978 12,789,019 18.3 222,071 41,447,150 186.6 South 849,997 13,066,591 15.4 156,184 28,459,596 182.2 Centralwest 217,531 9,414,915 43.3 99,947 94,382,413 944.3 (Note) Definition of family agriculture: the farmer who holds land less than 4 rural modules etc. (Source) IBGE, Agriculture Census Family Agriculture 2006 Preliminary Results, Rio de Janeiro, 2009
Agribusiness: its Importance Steep decline of Agriculture s share in GDP 12.4%(1970),10.9%( 80),8.1%( 90),5.6%(2000),5.5%(2011) Agribusiness: a driving force of economic growth Definition of agribusiness: Agriculture and related activity Importance of agribusiness in GDP(2011): Input sector 2.62%, agriculture and livestock 6.38%, processing 6.32%, distribution6.84% Agribusiness earns major part of Brazilian foreign exchange. Brazil is a main producer and exporter of sugar, soybean, beef and other agricultural and livestock products.
Agribusiness GDP Distribution Processing Agriculture and Livestock Inputs (Source) Cepea-USP/CAN.
Agribusiness Earns Major Part of Brazilian Foreign Exchange 300.000 250.000 200.000 Total Export Agribusiness Export Total Import Agribusiness Import Total Trade Balance Agribusiness Trade Balance Million US Dollar 150.000 100.000 50.000 0.000 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011-50.000 (Source) MAPA, AgroSat Brasil.
Brazilian Agribusiness in the World Prodution(1,000t) Farm Area (1,000ha) 2011/12 2021/22 2011/12 2021/22 2011/12 2021/22 2010/11 2021/22 Corn 56,651 70,421 13,782 14,381 10,717 14,208 9.6 10.4 Soybean grain 71,100 88,913 24,266 28,590 34,139 44,919 30.8 43.1 Soybean Cake 28,731 34,385 14,441 16,096 23.3 Soybean Oil 7,426 9,007 1,556 1,685 15.2 Wheat 5,680 6,937 2,256 2.017 Coffee 50* 71* 1,955 1,442 33* 38* 36.1 36.1 Sugarcane 607,852 793,206 9,060 10,911 Sugar 38,653 48,603 27,385 39,755 54.8 54.8** Orange Juice 19,332 23,593 795 881 Export(1,000t) Share in World Trade(%) Chichen 13,028 20,332 4,191 5,658 44 43.5 (Note) *million bags(60kg), **2010/11. (Source) MAPA, Brasil Projeções do Agronegócio 2010/2011 a 2020/2021, Brasília, 2011 : Brasil Projeções do Agronegócio 2011/2012 a 2021/2022, Brasília, 2012.
Soybean Goes to China Production and Trade of Soybean Grain 2008/09 2009/2010 2010/11 2011/12 2012/13 Production(1,000t) Brazil 57,800 69,000 75,300 66,500 81,000 USA 80,749 91,417 90,605 84,192 80,858 Argentine 32,000 54,500 49,000 41,000 55,000 China 15,540 14,980 15,100 14,480 12,600 India 9,100 9,700 9,800 11,000 11,500 Total 211,636 260,245 263,589 239,625 267,717 Import(1,000t) China 41,098 50,338 52,339 59,231 63,000 EU-27 13,213 12,674 12,482 11,812 11,300 Mexico 3,327 3,523 3,498 3,400 3,350 Japan 3,396 3,401 2,917 2,759 2,600 Taiwan 2,216 2,469 2,454 2,285 2,300 Total 77,391 86,838 88,804 93,055 96,309 Export(1,000t) Brazil 29,987 28,578 29,951 36,315 37,400 USA 34,817 40,798 40,849 37,063 36,605 Argentine 5,590 13,088 9,205 7,368 12,000 Paraguay 2,283 4,654 5,138 3,200 5,100 Total 76,894 91,862 91,116 90,425 98,850 (Source) USDA, Oilseeds: World Markets and Trade, http://www.fas.usda.gov/oilseeds/current/
Multinational major grain companies organize and control the soybean global supply chain (Note) Crushing capacity by company (%) in 2012: Bunge 20%, Cargill 14%, ADM 12%, Andre Drayfus 10%, Amaggi 8%, cooperatives 5%. source: a Japanese trading company.
Innovation in Agriculture Development of new seeds Precision agriculture (farming management based on observing and responding to intra-field variations) Cerrado (Brazilian Savanna) : New frontier of farmland GMO Crops Bio-energy Development of medicine, cosmetics and other chemical products
Cerrado : Brazil s New Farmland Total area: 204 million ha Land capable for agriculture: 139 million ha Land already developed: Pasture: 54 million ha, arable land: 21.6 million ha (permanent crop :85%, annual crop; 15%), e afforestation area: 3.4 million ha Responsible for total harvest(2009/2010): Soybean: 54%, cotton: 95%, coffee : 23%, cattle:41%, beef production:55%, milk production:41% Innovation: Soybean seed appropriate for tropical climate, irrigation, no-tillage farming, contour cropping, granary and transportation system
Restrictions on Agriculture Fragile transportation and other physical infrastructure Low value added of products (commodity) Weak brand power Unreliable food safety: advanced but not enough in quality labeling, transparency, GMO free, consumer protection Exclusion of small farmers and landless workers Environmental deterioration
2. Bio-energy (Agro-energy) Importance of renewal energy Hydraulic power, wind power, ethanol and bio-diesel Agro-energy Objective: Alternative energy development and social inclusion though employment and income generation Ethanol Bio-diesel
Increasing Importance of Agro-energy Renewal energy accounts for 46% and ethanol for 11% 1000 petroleum equivalent ton 300000 250000 200000 150000 100000 50000 Other Renewable Energy Sugarcane Derivative Firewood Hydraulic Power Uranium Coal Natural Gas Petroleum 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 (Note) Domestic energy supply. (Source) MME, Energy Balance 2011 (Base year 2010), Brasília, 2011
Amazing Progress of Ethanol National Alcohol Plan in 1975 Political and diplomatic use of ethanol by Lula s Government Employment and income generation Kyoto Protocol and carbon free energy Putting flex fuel cars onto the market Efficient and low cost supply
Upsurge of Ethanol Production 30000 25000 20000 1,000 m3 15000 10000 Anhydrous 5000 Hydrous 0 1974/75 1976/77 1978/79 1980/81 1982/83 1984/85 1986/87 1988/89 1990/91 1992/93 1994/95 1996/97 1998/99 2000/01 2002/03 2004/05 2006/07 2008/09 2010/11 (Source) 1974/75~2009/10: MAPA, Anuário Estatístico de Agroenergia 2010 ; 2010/11~12: UNICA, UNICA Data.
Vehicle Registration(passenger and light commercial cars) by fuel type- locally manufactured and imported 3,500,000 3,000,000 2,500,000 2,000,000 Gasoline Ethanol Flex fuel Diesel 1,500,000 1,000,000 500,000 0 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 (Source) ANFAVEA.
Problematic Results of Ethanol Energy Reduction of gasoline use and CO2 emission Employment generation Formally employed worker (1,000) in 2008: 482(sugarcane cultivation), 585(sugar production), 227(ethanol production). 3.85 million(grand total including indirect employment) Stagnant employment creation because of the mechanization in sugarcane harvest aiming at decreasing CO2 emission Relocation of farmland and domino effect triggered by competition for land among the crops: Land for sugarcane cultivation was partially supplied by the conversion of pasture into cropland. But the shortage of cropland in Sao Paulo, the main sugarcane area, thrusts out other crops production into Cerrado. Subsequently the competition for land among the crops in Cerrrado has displaced the growing area of soybean and other crops to Amazon area.
Sugarcane and Relocation of Farmland Land use change, 2002-2006 (1,000ha) Sugarcane Other crops Pasture Sao Paulo 622-224 -882 Minas Gerais 153 389-625 Parana 74 850-1 Mato Grosso 25 1,634-1,437 Mato Grosso do Sul 41 1-985 Goias 34 576-2,041 Baia 26 492 143 Maranhao 16 298-463 Piaui 3 206-112 Acre 1 13 109 Para 3 115 2,502 Rondonia 1 124-363 Tocantins 1 0-595 (Source) Harfuch, Leia, Modeling Land Use and Land Use Change in Brazil, slides presented to US Department of Energy's Biomass 2009 Conference, at the Gaylord National Harbor in National Harbor, Maryland., March 17-18.2009.
Bio-diesel Program and Unsatisfactory Results Bio-diesel Program in 2004 Objectives: Social inclusion of small farmer in Northeast through creation of employment and income Development alternative energy Measures: preferential fiscal and financial treatment to procurement of oil crops from family agriculture Unsatisfactory results : Stagnant production of oil crop production because of their small and unstable supply. The soybean produced by big farmers has become a main source of bio fuel.
Emerging Bio-diesel 300,000 6 B100 Production (1,000 m3 ) 250,000 200,000 150,000 100,000 50,000 Production Mix Ratio - 01/2005 07/2005 01/2006 07/2006 01/2007 07/2007 01/2008 07/2008 01/2009 07/2009 01/2010 07/2010 01/2011 07/2011 01/2012 07/2012 5 4 3 2 1 Legal Mix Rate (%) 0 (Source)ANP, Dados Estatístico Mensais.
Soybean oil is a major source of bio-diesel 3,000,000 2,500,000 2,000,000 other materials animal oil and fats cottonseed oil soybean oil m3 1,500,000 1,000,000 500,000-2005 2006 2007 2008 2009 2010 2011 (Source)ANP, Anuário Estatístico 2012.
3. Environmental Deterioration Environmental deterioration Deforestation and forest degradation Decreased and unstable rainfall Droughts Farm land degradation Environmental deterioration restricts the agriculture
51% of the world net deforestation took place in Brazil -5,211 World -2,642 Brazil -3,997 South America Central America Caribbean North America Europe 676 Asia 2,235-3,414 Africa -6,000-5,000-4,000-3,000-2,000-1,000 0 1,000 2,000 3,000 Annual decrease in 2000-2010 (1,000ha) (Source) FAO, The State of World Forests 2011
Deforestation of the Amazon Curbed? 35000 30000 25000 Other States Rondonia Para Mato Grosso 20000 Km2 15000 10000 5000 0 1988* 1990 1992 1994** 1996 1998 2000 2002 2004 2006 2008 2010 2012*** (Note) *1977-88 average, **1993-94 average, ***estimate. (Source)INPE-PRODES: Monitoramento da Floresta Amazônica Brasileira por Satélite.
Forest Degradation in the Amazon Continues State Deforestation( km2) Forest Degradation(km2) 2007 2008 2009 2010 2007 2008 2009 2010 Acre 184 254 167 259 122 121 31 76 Amazonas 610 604 405 595 257 412 181 459 Amapa 39 100 70 53 50 63 61 20 Maranhao 631 1,271 828 712 1,976 4,230 2,423 383 Mato Grosso 2,678 3,258 1,049 871 8,951 12,987 8,486 2,502 Para 5,526 5,607 4,281 3,770 3,899 8,264 1,559 3,499 Rondonia 1,611 1,136 482 435 412 643 232 315 Roraima 309 574 121 256 137 171 99 61 Tocantins 63 107 61 49 179 522 229 194 Legal Amazon 11,651 12,911 7,464 7,000 15,983 27,413 13,301 7,508 (Source) INPE. http://www.obt.inpe.br/prodes/index.php; http://www.obt.inpe.br/degrad/.
Invasion of Soybean Cultivation into the Amazon Unit:1,000ha 1990 1995 2000 2005 2010 Brazil 11,585 11,703 13,694 23,427 23 339 North 35 25 73 514 563 Amazonas 0 0 1 2 0 Tocantins 30 20 58 335 353 Para 0 0 2 68 85 Rondonia 5 5 12 76 123 Northeast 377 571 847 1,441 1,857 Southeast 1,120 1,134 1,135 1,990 1,517 South 6,159 5,419 6,101 8,689 8,942 Centralwest 3,895 4,554 5,537 10,883 10,461 Mato Grosso 1,559 2,238 2,907 6,122 6,227 (Source)IBGE, Produção Agrícola Municipal.
Brazilian Agriculture is Responsible for Global Warming Structure of Greenhouse Gas Emission* 2005 100% 90% 80% 3.3 1.5 12.4 14.1 Garbage 70% 60% 4.4 64.4 Change of Land Use/ Deforestation 50% Agricurture 40% Industry 30% 20% 65.8 20.8 Energy 10% 1.1 12.2 0% The World Brazil (Note) *CO2 換算 (Source)CAIT: Climate Analysis Indicators Tool(www.wri.org/cait)
Environmental Degradation Limits Agriculture Cerrado Drying up caused by irrigation, land degradation caused by intensive use of fertilizer The Amazon Rainfall decrease and droughts at a short interval Temperature rise The Amazon s climate is related to the rest of Brazil and South America Decrease and unstable rainfall Environmental deterioration and climate change gives limits on agriculture
Conclusion Agribusiness should be: Innovative development of new products, seeds, growing etc. Socially inclusive and governed supports to small farmers food safety though transparency etc. Environmentally sustainable Economic activities should be limited to the extent in which the ecosystem could regenerate (Herman E. Daly) Alternative agriculture Agro-forestry, organic agriculture etc. Change of consumer behavior