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Brazil's agribusiness industry is one of the country's largest economic drivers, and it's no secret that China has become an increasingly important trading partner for Brazilian agricultural goods. Now, as Brazil faces a challenging economic climate and seeks to rebound from the COVID-19 pandemic, agribusiness leaders are pushing the government to strengthen ties with China even further. In this blog post, we'll explore why this relationship matters so much to Brazil's farmers and exporters - and what it could mean for the future of both countries' economies.
Brazil's Agribusiness Industry Pushes for Tougher Ties with China
Brazil's agribusiness sector is pushing for tougher ties with China in the face of mounting competition from China’s rising agricultural superpower. Producers association Abimaq said that Brazilian exports to China were down by 16% last year and that the country needs to do more to increase trade with Beijing. The group has also called for an end to Brazil’s import tariffs on Chinese goods and a reduction in bureaucracy in order to speed up business transactions. “We need to work much more closely with our Chinese partners, not just for economic integration but also for joint research and innovation projects,” Abimaq president Jorge Leite told Reuters. Brazil is one of the world’s top ten agricultural exporters, with exports totaling around $28 billion last year. While Brazil has seen some success expanding its trade ties with other countries, such as India, increasing trade with China represents a major opportunity due to the large population and growing middle class in that country. In addition, Brazil is looking to diversify its export markets away from traditional U.S. and European customers, as well as reduce its reliance on commodities such as oil and minerals.
Brazil's Agricultural Sector Struggles to Keep Up With Rapid Growth in China
Brazil's agricultural sector has been struggling to keep up with rapid growth in China. The Brazilian National Association of Agricultural Producers (ANP) reports that exports to China have increased by more than 50% since 2007. This has put pressure on the government to deepen ties with China in order to sustain Brazil's agricultural industry. One way that the Brazilian government is trying to increase its trade relationship with China is through a series of bilateral agreements. In March, Brazil and China signed an agreement on cooperation in agriculture and agribusiness. The agreement calls for joint research and development, training, and technical assistance. The Brazilian agricultural industry has been hit hard by decreased demand from developed countries due to the global recession. China has been a large market for Brazilian crops, but this growth has not been enough to offset the decline in demand from other countries. In order for Brazil's agricultural industry to survive, the country needs to find new markets for its products.
Brazilian Farmers Fear a Loss of Competitive Edge
Brazil's agribusiness industry is putting pressure on the government to deepen ties with China, fearing a loss of its competitive edge. The Brazilian Association of Industry, Commerce and Tourism (Abimaq) released a report in September warning that Brazil's trade deficit with China could reach $50 billion by 2025 if Beijing doesn't improve its investment climate. The report said that Brazil must make strides in sectors such as agriculture, mining and renewable energy if it wants to keep up with China. The Brazilian agricultural sector makes up about one-seventh of the country's GDP, and exports goods worth $32.5 billion annually to China. However, the share of Chinese products in Brazilian exports has been on the rise recently, from 29 percent in 2016 to 38 percent last year. In addition, Brazil is losing market share to other South American countries, such as Chile and Argentina, which are expanding their economic ties with China. The Agribusiness Association says that the current trade deficit between Brazil and China is due to Beijing's preferential treatment of Brazilian firms doing business there. The association is calling for a new program called "Brasil-China: A New Era for Growth," which would grant Chinese companies more access to Brazilian markets and increase bilateral investments.
Brazil's Government Looks to China for Help to Boost Agriculture
Brazil's agribusiness industry is putting pressure on the government to deepen ties with China in order to benefit from Beijing's massive investment and development opportunities. The Brazilian business community sees great potential for cooperation with China in agriculture, food processing, and other sectors. In 2015, Chinese companies announced plans to invest $30 billion in Brazil over the next five years. This includes investments in agricultural production, food processing, and retail sales. Brazil is also China's second-largest trade partner after the United States. In 2016 alone, bilateral trade reached $115 billion. However, not all Brazils are enthusiastic about closer ties with China. Some fear that Beijing will take advantage of Brazil's resources and reduce worker protections and environmental regulations. Nevertheless, the Brazilian government is determined to explore all possible economic partnerships to create jobs and boost growth.
Conclusion
The Brazilian agribusiness industry is putting pressure on the government to deepen ties with China, in order to expand exports and capitalise on growing Chinese demand for agricultural products. While Brazil has been closely aligned with the United States throughout much of its history, recent political changes have opened up room for closer cooperation with China, which is now Brazils third-largest trade partner. The push to widen ties with China comes as Brazil's agriculture sector faces mounting competition from other countries, such as Argentina and Uruguay, who are investing more in their agricultural sectors.
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