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Presentation of the brazilian agribusiness senadora Kátia Abreu - english 05.08.2013

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  • 1. Brazilian Confederation of Agriculture and Livestock Brazilian Agribusiness: Investment Policies and Opportunities 5 August, 2013 Eduardo Riedel Vice-President of CNA
  • 2. CNA in Brazil – an institutional overview • The Brazilian Confederation of Agriculture and Livestock CNA was founded in 1951. • In recent years CNA has consolidated its position as the main forum for debate and decision making for Brazilian agribusiness. • The CNA System comprises twenty-seven state-level agriculture and livestock federations and over two thousand rural unions, through which direct support measures are provided for farmers at the local level. • CNA speaks on behalf of 5 million Brazilian rural producers.
  • 3. CNA institutional mission • Represent, organize and strengthen Brazilian farmers, defend their rights and interests, while promoting economic, social and environmental development in the farm sector. CNA system • CNA System comprises the National Rural Learning Service SENAR which provides capacity building for farmers and farm workers, and Instituto CNA, a research institute which conducts rural development studies and promotes social responsibility.
  • 4. Brazilian Rural Employers System FARMERS UNIONS FEDERATIONS SOCIETY
  • 5. Capacity building of technicians and farmers In 2012, the CNA and SENAR trained 553 technicians to disseminate low carbon technologies among producers.
  • 6. CNA presence in China Strategies for the Chinese market Image & positioning of Brazilian agribusiness Trade Promotion and Market Access FDI Attraction Trade Intelligence Main objectives Promotion of Brazilian agribusiness in China and in other regional markets, including Taiwan, Hong Kong and Macau Identification of opportunities for direct investments in infrastructure and logistics for warehousing and distribution of Brazilian agricultural and livestock production
  • 7. Opening of Beijing office - 14 November, 2012
  • 8. CNA presence in Europe Strategies in the European market Image & positioning of Brazilian agribusiness Policy advocacy, trade intelligence and market access Policies and negotiations monitoring Main objectives Advocacy of interests of Brazilian agribusiness within European institutions Reduction of sanitary and phytosanitary barriers for Brazilian products
  • 9. Innauguration of Brussels office 19 June, 2013
  • 10. CNA International Relations Department (SRI) 1 . Analysis of market trends and elaboration of differentiated strategies 2. Identification of business opportunities 1. Trade promotion strategies 2. Actions to attract investments in infrastructure and logistics 3. Expansion of the institutional network and alliances Competitive Inteligence Trade and investment promotion SRI SRI 1. Identification of opportunities and barriers 2. Monitoring of public policies in the target markets Market access negotiations 3. Policy advocacy regarding trade negotiations
  • 11. CNA International Strategy Identification of market opportunities and barriers • Work with trade promotion institutions and government agencies Proposition of a domestic and foreign policy agenda • Different strategies for primary and processed products • Market intelligence strategies: scale products and market niches
  • 12. Agronegócio Brazilian Agribusiness Brazilian GDP 2012 US$ 2.251 trillion Agribusiness GDP 2012 US$ 412.0 billion (19.8%) Other sectors GDP (80.2%) US$ 1.839 trillion Agribusiness Agriculture US$290.4 billion (70.5%) Agribusiness Livestock US$121.8 billion (29.5%) Total Exports 2012 US$ 242.6 billion Agribusiness US$ 95.81 billion (39.5%) Employment Agribusiness 37% Other Sectors US$ 146.77 billion (60.5%) Sources: CEPEA-USP,SUT/CNA, MAPA and IPEA. US$ 1 = R$ 1,84, Brazilian Central Bank average. 2004 Employment data
  • 13. Agribusiness Projections 99.2 Source: MAPA *Million 60kg bags + 20.0% 2022/23 +20.7% 222.3 184.2 93.6 77.9 1.3 2012/13 2012/13 Maize Cotton 2022/23 + 30.7% 1.7 51 46 81.5 2012/13 + 10.9% Grains + 21.8% Coffee* Soybean Grains and Fibers – 2012/13 to 2022/23 (million tons) 2022/23 2012/13 2022/23 2012/13 2022/23
  • 14. Agribusiness Projections +20.6% +34.9% 4.3 Meats Pork Meats – 2012/13 to 2022/23 (million tons) 3.6 +22,5% 10.9 Source: MAPA +44% 26.5 20.6 14.1 8.9 2012/13 2022/23 Poultry Cattle 2012/13 35.8 2022/23 2012/13 2022/23 2012/13 2022/23
  • 15. Agribusiness Projections + 22.6% + 17.8% Orange Juice 44.5 36.3 20.2 2022/23 Cellulose 2012/13 23.8 + 28.2% 18.2 14.2 2012/13 2022/23 Paper Sugar Strategic Products – 2012/13 to 2022/23 (million tons) Source: MAPA 2022/23 13.0 10.4 2012/13 2012/13 + 24.3% 2022/23
  • 16. Agribusiness Production and Domestic Consumption Exports 43.6% Domestic consumption 56.4% Sources: MDIC, MAPA and IBGE
  • 17. The importance of foreign market to Brazil Ethanol 80.8% Sugar 19.2% 39.3% Coffee 60.7% 43.9% 56.1% Cattle meat 81.5% Poultry meat 18.5% 66.9% Soybean 33.1% 56.6% Corn 43.4% 84.1% Cotton 15.9% 66.7% 0% 10% Source: MAPA, Conab and UNICA 20% 30% 33.3% 40% Domestic Consumption 50% 60% 70% Exports 80% 90% 100%
  • 18. Main Markets for Brazilian Agribusiness 2012 Russia European Union 23.4% 3.0% China 18.8% United States 7.3% Source: MAPA Japan 3.7%
  • 19. Brazil: World production and exports ranking Production Exports World Trade participation (%) Sugar 1º 1º 44% Coffee 1º 1º 26% Orange juice 1º 1º 81% Soybeans 1º 1º 17% Cattle meat 2º 1º 39% Poultry 3º 1º 35% Maize 3º 2º 25% Pork meat 4º 4º 22% Soybean oil 4º 2º 19% Soybean meal 4º 2º 8% Cotton 5º 2º 11% World Ranking Main Products Source: USDA Observation: 2012’s data
  • 20. Brazilian agricultural exports Main destinations in 2012 Products Main destinations Total imports volume* (thousand tons) Imports from Brazil ** (thousand tons) Imports from Brazil participation (%) Coffee United States 1,429 301 21% Meat Hong Kong 1,010 698 69% Maize Iran 3,500 2,966 85% Soybean China 64,550 23,689 37% Cotton South Africa 34 0.94 3% Source: *USDA; **AgroStat/MAPA
  • 21. United State: Consumption and Imports (2012) Products Consumption* (thousand tons) Imports from Brazil** Imports from Brazil (thousand tons) participation Imports* (thousand tons) Coffee 1,405 1,430 301.4 21% Rice 3,810 683 7.4 1% Cattle 11,744 1,007 18.7 2% Poultry 13,342 51 0.37 1% 8,438 363 0.17 0% 15,938 22,965 2.8 0% 265,441 3,810 726.9 19% 47,756 680 N/A 0% 3,294 3,810 266.98 7% Pork Cotton Corn Soybeans Sugar Fonte: * USDA / ** AgroStat/MAPA
  • 22. It is necessary to increase the production Over 280 million ton. by 2020. Over 450 million ton. by 2030 Source: FAO
  • 23. Low Carbon Agriculture (ABC) World supply The World shall increase its production by 60% to serve a world population of 9.1 billion people by 2050 Countries Yield Increase (%) Australia 7 Brazil 40 Canada + United States 15 China and Russia 26 European Union 4 Source: FAO + 2.8 billion ton. 280 million ton.
  • 24. Agricultural and Livestock Production Areas in Brazil Brazil has 851 million hectares 95.8 million hectares with cities, infrastructure and others (11.3%) 236 million hectares with food production, forest production and biofuels (27.7%) 93.9 million hectares with native vegetation inside rural properties (11%) 61% of the Brazilian territory is preserved 519.7 million hectares 329.9 million hectares (38.7% of the country) ocupied by rural properties
  • 25. Land Use in Brazil Total Area: 851.5 million hectares 94 million ha (11%) 314.8 million ha (37%) Preserved public areas Áreas públicas preservadas Terras Indígenas Indigenous territories 236 million ha (28%) Outros usos Other uses Agricultural produção Áreas de production agropecuária Área preservada farms das Preserved area inside dentro propriedades rurais Sources: IBGE, Censo Agropecuário 2006 95.8 million ha (11%) 110 million ha Indigenous territories (13%)
  • 26. Deforestation (mile2) Amazon deforastation in comparison to the Governmental Goals 7577 mile2 Goal for deforastation reduction Observed deforastation 1478 mile2 1797 mile2 (72% of the goal) The goal established in the National Plan for Climate Changes is to reduce the deforastation in 80% by 2020 in comparison to the average observed between 1996-2005 8 years before the deadline, we’ve achieved 72% of our goal.
  • 27. Low Carbon Agriculture Program – ABC Targets for adoption of technologies that reduce GHG emissions in the Brazilian agriculture Technological Process (in Portuguese) 70 million ha to be available Increase of Area/ Use - 2020 Recovery of Degraded Pastures 15 million ha Crop-Livestock-Forest Integration 4 million ha No-Till System 8 million ha Biological Nitrogen Fixation Planted Forests Treatment of Animal Waste Source: Decree nº 7390, of December 9th, 2010 5.5 million ha 3 million ha 4.4 million m3
  • 28. What We Could Produce on 70 million hectares Current Production With + 70 million ha Grains and fibers 160 million tons 379 million tons Bovine Meat 9.1 million tons 15 million tons Note: Considering the same current levels of technology. Sources: CNA, based on IBGE data, CONAB e SIGSIF + 136.88% + 66.67%
  • 29. Production and Exports of Soybeans and Maize Brazilian Production 139.3 million tons Production 80.3 mn t 2012 = 57.6% Domestic Consumption** 15 mn t Exports (2012) Santana Zero Exports 9.7 mn t = 14.6% Surplus 55.6 mn t Itacoatiara 2.3 mn t (3.5%) Santarém 1.3 mn t (2.0%) Belém Zero São Luís/Itaqui 3.1 mn t (4.7%) Porto Velho* 3.6 mn t (5.5%) Salvador/Ilhéus 3.0 mn t (4.5%) Production 59.0 mn t = 42.4% Domestic Consumption** 57.9 mn t Vitória 4.9 mn t (7.4%) Santos 23.1 mn t (34.8%) Paranaguá 16.6 mn t (25.0%) São Fco do Sul 5.9 mn t (8.9%) Rio Grande 6,2 milhões/t (9,3%) Produção de soja e milho > 5 mil toneladas * Porto de Porto Velho (RO) = distribui para os Portos de Itacoatiara (AM) e Santarém (PA) ** Valores estimados do consumo interno Fonte: Produção (CONAB, Safra 2011/2012) e Exportação por Porto (SECEX, 2012) Surplus 1.1 mn t Surplus received (regions N, NE e CO) 55.6 mn t Exports 56.7 mn t = 85.4%
  • 30. Infrastructure Projects – Northern Arc
  • 31. Sea Routes (distances, time and costs) Belém (PA) – Shanghai (China) 20,235 km or 11,087 Nautical Miles 31 days trip COST $ 760 thousand (by route)* Santos (SP) – Rotterdam 10.056 km or 5,430 Nautical Miles 15 days trip COST $ 377.5 thousand (by route)* Santos (SP) – Cape of Good Hope – Shanghai (China) 20,475 km or 11,056 Nautical Miles 31 days trip COST $ 767.5 thousand (by route)* Source: http://e-ships.net/dist.htm (jul, 2012) and Aprosoja / *Average cost for a day: $ 25,000.00
  • 32. Investment Programs Toll Roads R$ 42 billion – estimated investment (R$ 23.5 bi over the first 5 years) 7.5 thousand km of Toll Roads (5 thousand km are being duplicated) Concession term: 30 years Winning bidder: lowest toll rate Tolls to be charged after 10% of duplication Leveraged IRR: 10.8% to 14.6% p.a.
  • 33. Investment Programs Railways R$ 91.1 billion - estimated investment (R$ 56 billion over the first 5 years) 10 thousand km of railways Concession term: 30 years Capacity will be sold through public offers Independent Rail Operators Open access along the whole rail network Leveraged IRR: 13% to 14.6% p.a.
  • 34. Opening of the Brazilian Ports to Private Capital The innovations introduced by Law No. 12.815, of 05/16/2013, which modernized the port sector in Brazil, created:  The possibility to build port terminals with private capital  Investment opportunities of R$ 57.2 billion To make the Brazilian port operations more competitive, the Government will also review the regulatory mark on cabotage, in 2013, with the support of the private sector.
  • 35. Investment Programs Ports Leases and Concessions R$ 20.2 billion to be invested (R$ 3.5 bi in concessions and R$ 16.7 bi in leases) Term: 25 years (one-time renewal) Winning Bidder Highest cargo handling with lowest fees Private Use Terminals – TUPs R$ 30.6 billion to be invested Term: 25 years (renewable continuously) End of cargo differentiation (own cargo and third-party cargo) Access to ports R$ 6.4 billion to be invested (R$ 3.8 bi in waterways and R$ 2.6 bi in roads) Dredge: deepening and maintenance of access channels, turning basins and berths Dredge contracts for 10 years (in blocs) Access roads: 45 interventions in 18 ports
  • 36. Review of Government Procurement Legislation The Brazilian Senate has created a Committee to modernize law 8.666/93 that deals with bid tenders and government procurement. This review process has Senator Kátia Abreu as rapporteur and will mainly focus on: • Burocracy reduction; and • Increased transparency in public procurement.
  • 37. Confederação da Agricultura e Pecuária do Brasil