Brazil (the fifth largest country in area and population) is also among the few countries worldwide that have the potential to significantly increase agricultural area, as well as yields. Brazil has made a remarkable transformation from being an exporter of tropical agricultural products (such as coffee, sugar, and cacao in the 1960s and 1970s) to becoming a major global supplier of: soybeans, soybean products, corn, cotton, sugar, coffee, orange juice, meat, and ethanol since the early 21st century. Brazil is now an important agricultural competitor of the United States in international markets for many of these commodities. Brazil exports agricultural and food products to most countries of the world, including the European Union and the United States.
Soybeans stand out as a crucial crop in the expansion of Brazil’s farm sector and the country’s ascent as a top global supplier of agricultural products. While commercial exploitation of the crop began in the 1940s, the more extensive cultivation and consolidation of soybeans in the country’s southern region was achieved in the 1960s and 1970s. This achievement was supported by Embrapa, the Brazilian agricultural research system—as well as extensive domestic rural agricultural support policies, market and institutional reforms implemented during the 1980s, and policies to promote agricultural production in the savanna region (Cerrado). Brazil’s economic and political reforms contributed to a more stable macroeconomic situation, and the mid-1990s surge in commodity prices further encouraged soybean production. USDA long-term agricultural projections indicate that the Brazilian share of global soybean trade could increase from 51.3 to 60.6 percent between marketing years 2021/22 and 2032/33. Soaring soybean import demand from China has been at the root of Brazil’s export growth, China being the most important destination market for the global soybean trade.
Some of the factors driving Brazil’s transformation of its agricultural sector include: agricultural research that increased yields, expansion of its arable land base, government and private sector’s investments in production technologies to develop new crop and forage varieties, and increased global demand for food and animal feed (particularly over the last decade). Export-oriented macroeconomic policies, crop-specific agricultural policy incentives, and the growing multinational presence and foreign investment in the country also contributed to the generation of increased agricultural output. With continuing productivity increases and additional land available for farming, further growth in agricultural production and exports is anticipated. At the same time, growing per capita income and population growth will continue to fuel demand in Brazil for agricultural products, including higher value commodity imports from the United States.
ERS provides research, analysis, and information on Brazil’s economy, agricultural sector, outlook, policies, and trade. ERS reports provide in-depth analysis of Brazil’s changing macroeconomic conditions, exchange rate fluctuations, agricultural policies and structure, responsiveness to oil prices, transportation infrastructure developments, and factors behind expanding agricultural production and trade.
Some of the issues covered by ERS reports with relation to Brazil’s agricultural economy are:
Brazil has been consolidating its position as a major producer of agricultural commodities and related food products, as well as a supplier to international markets. Continuing trade expansion and diversification of markets and products remain at the core of Brazil’s agricultural growth strategy. However, challenges to the long-term growth of the Brazilian agricultural sector include increases in fuel and fertilizer costs, credit and storage limitations, an overburdened port and transport system, and pressure to preserve Brazil’s environment (see Brazil’s Momentum as a Global Agricultural Supplier Faces Headwinds, September 2022).
Brazil’s emergence as one of the world’s most competitive agricultural exporters has been supported by macroeconomic policies. The country has been able to rapidly expand its agricultural exports in recent years, despite experiencing one of its worst recessions during 2014-16, falling international commodity prices, and the detrimental economic impacts from the COVID-19 pandemic. To understand the forces behind Brazil’s increased agricultural exports, ERS research examines the effects of changing macroeconomic conditions on Brazil’s agricultural production and trade (see Brazil’s Agricultural Competitiveness: Recent Growth and Future Impacts Under Currency Depreciation and Changing Macroeconomic Conditions, September 2020).
- Soybeans are the largest and most concentrated segment of global agricultural trade. Two land-abundant countries—Brazil and the United States—supply most of the world’s soybean exports, and China accounts for more than 60 percent of global soybean imports. The factors behind Brazil’s emergence as the world’s top soybean exporter (and its competition with the United States for China’s soybean import market), include Brazil’s long-term strategy of cultivating the large tracks of land in savannah areas (known as the Cerrados) extending the frontier of soybean production into the country’s vast inland regions (see Interdependence of China, United States, and Brazil in Soybean Trade, June 2019).
- Brazil’s conversion of range, pasture, and other land into cropland is driven not only by rising domestic and international food demand, but also by expanding ethanol production and the policies that have increased the demand for sugarcane—the primary feedstock for Brazilian ethanol production. Since the supply and demand for ethanol are linked to those for petroleum, oil prices affect land-use decisions for growers of sugarcane and related agricultural commodities (see Brazil’s Agricultural Land Use and Trade: Effects of Changes in Oil Prices and Ethanol Demand, June 2016).
- Brazil has emerged as the largest U.S. competitor in the global corn market—with second-crop corn—harvested late in the local marketing year, boosting exports from September to January. A change in export seasonality could alter the seasonality of U.S. corn prices, further weakening corn prices at harvest and eroding U.S. export market share (see Brazil's Corn Industry and the Effect on the Seasonal Pattern of U.S. Corn Exports, June 2016).
- Brazil’s agricultural sector and its export competitiveness can be studied by comparing (across countries) farm prices that include farm-level production costs, the cost of internal transportation and handling, and the cost of shipping to a common export destination (see Corn and Soybean Production Costs and Export Competitiveness in Argentina, Brazil, and the United States, June 2016).
- The Brazilian agricultural sector has been transformed from a traditional system of production (with low use of modern technologies) to a world agricultural leader. Brazil’s science and technology investments (and other public policies) have been crucial in enabling the country to discover its agricultural potential and increase farm production (see Policy, Technology, and Efficiency of Brazilian Agriculture, July 2012).