Embed Size (px)
Citation preview
Milton SuzukiMilton Suzuki
Business Development Business Development –– Latin AmericaLatin AmericaBayer CropScience Bayer CropScience -- BrazilBrazil
Brazilian Perspective on Global Agricultural/Trade Issues
Our Regional Structure
* TAMECIS: Turkey, Africa, Middle East, Commonwealth of Independent States
Europe / TAMECIS*Headquarter: Lyon, France
Asia PacificHeadquarter: Singapore
North AmericaHeadquarter: RTP, USA
Bayer CropScience worldwide Headquarter: Monheim, Germany
Latin AmericaHeadquarter: Sao Paulo, Brazil
Agenda
�Challenges of the New Ag Economy and Consequences for the Crop Science Industry
�Brazilian agriculture
�Logistical issues
�Agricultural Facts and Figures:SoybeanCornSugar cane (sugar and ethanol)Cotton Coffee
increasing demand for renewableenergy and biofuel
Acreage competition between food, feed, bio-energy crops and fiber
Price increase of crop commodities
increasing food & energy demand
decreasing farmland per capita
increasing meat consumption and need for feed
decreasing stocks to use
yield losses through adverse weather conditions
need to reduce greenhouse gas emissions, such as CO2
Growing wealth
Growing world population
Challenges in the New Ag Economy
Climate change
Need for alternative energy feedstocks
Food Supply: A Global Challenge
Source: United Nations
2.52.5
4.14.1
6.16.1
8.08.0
1.31.3
1.41.4
1.51.5
1.51.5
0.520.52
0.340.34
0.250.25
0.190.19
1950
1975
2000
2025
With limited arable land and a continuously growing world population,
the available farmland per capita is expected to further decrease dramatically
Worldpopulation(billion)
Arable land &permanent crops(billion hectares)
Farmlandper person(hectares)
9.29.2 1.51.5 0.160.162050
Year
2600
2800
3000
3200
3400
3600
2000 2030E 2050E
Impact of economic Growth andProsperity on Consumer Behavior
Increase in calorie consumption
Developing countries
Emerging economies
Industrialized countries
Source: United Nations, USDA, Toepfer international, own calculations
Processing losses(feed required in kg to produce 1 kg of meat)
Growing production of animal feed(Example oilmeals/-cakes for feedstuffs
annual production in million tons)3,600
3,400
3,200
3,000
2,800
2,600
(in calories per person and day)
0
2
4
6
8
Poultry Hogs Cattle 0 10 20 30 40 50
Brazil
India
China
EU
US
1982/84
2006/07
1.7
1.6
IncreaseFactor
5.5
2.6
28.8
Avg. worldwide 2.8
540
580
620
660
700
2004/05 2005/06 2006/07 2007/08E 2008/09E
80
100
120
140
160
Declining Stocks of Key Agricultural Commodities
•Supply and demand balance of key Agricultural commodities (in million tons)
620
660
700
740
780
2004/05 2005/06 2006/07 2007/08E 2008/09E
60
80
100
120
140
380
395
410
425
440
2004/05 2005/06 2006/07 2007/08E 2008/09E
60
65
70
75
80
Wheat
Corn
Rice
ProductionConsumptionEnding stocks
Source: The Economist Intelligence Unit, Barclays; USDA, August 2007
� Production of key crops wheat, corn and rice falls significantly short of consumption in the 2006/07 growing period
� As a result, global grain stock levels continue to decline
� Global wheat stocks are down to the lowest level for the past 25 years
� Forecasts indicate that stocks of wheat and rice may reach critical levels in 2007/08
Production / Consumption Stocks
50
100
150
200
250
300
350
400
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Commodity price development of key crops
Commodity Prices expected to further increase by 2009
2006 2007 E 2008 E 2009 E2005
Source: The Economist Intelligence Unit, August 2007
(in US-$/ton)
Corn+89 %
Rice+20 %
Wheat+41 %
Soybean+36 %
(∆ in %*)
* betw. Q1 2005 – Q3 2009 E
Increasing Demand for Biofuel
� 1-2 Folien BioFuel Input MarketBiofuel world market
Bio-diesel
Political targets for biofuel (in % of total fuel consumption)
0 %
5 %
10 %
15 %
20 %
25 %
30 %
USA Brazil China EU Germany
2020
2020
2030
� Actual 2005� Political target
2015
2020*
* Target: Blending mandate for petrol (bioethanol)
Source: REN21, Renewable global status report, Update 2006; Fortschrittsbericht Biokraftstoffe, Jan. 2007;US Dept. of Energy / USDA
� Oilseed Rape� Soybeans� Other
� Sugarcane� Corn�Wheat� Other Bio-
ethanol 37 bn liters
3.6 bn liters
2005
Challenges for the Crop Science Industry
Research and innovation are the key to mastering the challenges ofthe New Ag Economy
�Increase tolerance of plants to climatic variability
�� develop new varieties using state-of-the-art technologies
�� improve plant health and nutrient uptake
Safeguard and increase yields from constant land area
� better resource management (targeted use of cropprotection, irrigation technology and fertilizers)
� increase yields through innovative technologies(hybridization, plant biotechnology)
Expand agricultural production in marginal areas
� new crops with greater tolerance of drought and extremetemperatures
Limited arable land coupledwith risingdemand
Climate change
Brazilian overall situation updated 2006/2007
� Population: 194,000,000
� 27 States and 5,564 cities
� Overall arable area: 249,030,397 ha: • Agriculture 76,697,324 ha and 172,333,073 ha Livestock pasture • Irrigated area: 3,630,000 ha -> 4.7% of agriculture area.
� Arable area (ha) / people: 1.28
� # Farms: 5,204,130 -> average surface: 48 ha/farm
Source: IBGE
Brazilian Economic Development
Gross Domestic Product
4,7%
In 2007, agribusiness GDP had a share of 23,3% of the overall GDP of Brazil
Agribusiness GDP: US$ 282.18 Bi
Brazilian GDP: US$ 1,211.70 Bi
Brazilian imbalanced distribution of GDP per person
Source: IBGE 2007
0
20000000
40000000
60000000
80000000
100000000
120000000
140000000
160000000
180000000
200000000
1970 1975 1980 1985 1995 2006
Agriculture Forest Pasturage
Area (Ha)
Land Utilization – Brazil 1970 - 2006
Soybean& Corn
Cotton
Sugar cane
CoffeeBeef cattle
Citrus
Chicken
Localization
Logistical Issues
Source: Brazilian Infrastructure Yearbook – Exame Magazine (2006/07).
LOGISTICS LOGISTICS 2006 2006 –– by Transportation Genre (%)by Transportation Genre (%)
Roadway Railway Waterway Airway
584
25
13
Road between Campo Novo do Parecis and Sapezal-MT
BR – 163 Between Nova Mutum and Lucas do Rio Verde - Mato Grosso State
State control roadway conditionsState control roadway conditions
Privatized roadway conditionsPrivatized roadway conditionsUnder toll chargingUnder toll charging
Railway Railway –– Density (Brazil Density (Brazil vs.vs. USA)USA)
Railway Density Km / 1,000 Km²
Brazil3.4
USA29.8
Source: Brazilian Infrastructure Yearbook – Exame Magazine (2006/07).
LOGISTICS LOGISTICS Trend to 2025 Trend to 2025 –– by Transportation Genre (%)by Transportation Genre (%)
Roadway Railway Waterway Airway
29
32
633
Soybean
Facts on Brazilian Soybean
�Logistic issues: High transportation costs from farm to harbor due to precarious roads. Part of the production profit is lost by transportation.
�Bio fuel: From Jan. 2008 on, adding 2% of vegetable oil in diesel has become obligatory. This requirement, will raise to 5% by 2012, which consequently, will lead to higher demand for soybean oil.
�Asian countries are demanding more soybean (by 5% / year), due to population growth and purchasing power (cheaper protein source)
�World wide industrial consumption is increasing by 20% / year demanding more production and keeping the commodity price high
�Exchange rate is not favorable for the Brazilian Real (R$) x Dollar (US$), but the commodity price is historically excellent (12.90 US$/bushel)
Source: Agrianual 2007
0
5000
10000
15000
20000
25000
1999
/00
2000
/01
2001
/02
2002
/03
2003
/04
2004
/05
2005
/06
2006
/07
0
10000
20000
30000
40000
50000
60000
Area (Ha) Yield (Ton) Export. (Ton)
Brazilian Soybean area (Ha), yield and exportation (Ton) 1999/00 – 2006/07
’000 Ha ’000 Ton
14,0
16,3
18,5
21,4
23,322,1
20,7
26,826,225,524,7
23,522,038,4
42,2
52,0 50,055,0
58,662,4
67,673,5
78,883,3
87,6
51,5
10
12
14
16
18
20
22
24
26
28
30
32
34
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
milh
ões
ha
0
10
20
30
40
50
60
70
80
90
milh
ões
t.
Área
Produção
Soybean BRAZIL / Area and YieldSoybean BRAZIL / Area and YieldActual 2000 Actual 2000 –– 2007 Forecast 2007 2007 Forecast 2007 -- 20122012
Source: Agroconsult. Organização e Projeções 2007-2012: Agroconsult
Area
Yield
Million ha
Million Ton
BioBio--diesel National Program diesel National Program Regulatory MilestoneRegulatory Milestone
Source: Petrobras
Law nº 11.097/2005–Lays down a minimum percentage of bio-diesel within diesel
2005 to 2007
2% (facultative)
Potential of 840 million L / year
2008 to 2012
2% (obligatory)
5% (facultative)
Market = 840 million L / year
Potential = 2,5 billion L / year
2013 on
5% (obligatory)
Market = 2,5 billion L / year
Corn
Facts on Brazilian Corn
� 13 Million ton or (24%) is designated for animal feed
� In average, Brazilian productivity is 3.500 Kg/ha
� The entire yield grew from 51 to 54 Million Ton within last two years.
�Corn production is designated majority to supply internal market, instead of exportation. However, the exportation has increased on last two years, achieving 7 Million Ton.
� Two harvests are done: Main harvest from September until January and the second harvest from February until May/June
� Input and technology are being adopted in latest seasons.
42,3
35,3
47,4
42,1
38,9
42,1
51,2
54,2
57,6
60,2
63,0
69,5
36,4
57,9
66,0
36,137,3 38,2
40,0 40,6
43,5
46,949,2
51,053,2
55,5
30
35
40
45
50
55
60
65
70
75
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
mil
hõ
es t
Produção Consumo
Corn / Brazil Corn / Brazil –– Yield and ConsumptionYield and ConsumptionActual 2000 to 2007 Forecast 2008 to 2012Actual 2000 to 2007 Forecast 2008 to 2012
Yield - Year growth rate: + 5,2%
Consumption – Year growth rate: + 4,3%
Source: USDA. Projeção 2008-2012: Agroconsult
Yield Consumption
Million Ton
13,0
12,3
13,2
12,8
11,6
12,7
14,014,2
14,5
14,9
15,3
15,7
16,0
42,3
35,3
47,4
42,1
38,9
42,1
51,2
54,2
57,6
60,2
63,0
66,0
69,5
9
10
11
12
13
14
15
16
17
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Mil
hõ
es h
a
-
5
10
15
20
25
30
35
40
45
50
55
60
65
70
Mil
hõ
es t
.
Área
Produção
Corn / Brazil Corn / Brazil –– Planted area and YieldPlanted area and YieldActual 2000 to 2007 Forecast 2008 to 2012Actual 2000 to 2007 Forecast 2008 to 2012
Area +2,5%
Yield +5,1%
Source: IBGE; Projeção 2007-2012: Agroconsult
Million ha
Million Ton
Corn demand in BrazilCorn demand in Brazil
Source: USDA. Projeções: Agroconsult
Annual growth rate: + 7,0%
Annual growth rate:+ 5,0%
Aves
10
15
-
2
4
6
8
10
12
14
16
2006/07 2012/13
milh
ões
t.
50,3%
Suínos
2,9
3,9
-
0,5
1,0
1,5
2,0
2,5
3,0
3,5
4,0
4,5
2006/07 2012/13
milh
ões
t.
34,0%
SwineChicken
Million Ton
Million Ton
Sugar cane
Ethanol and Sugar Production
Facts on Brazilian Ethanol production / trade
�25% of ethanol (anhydrous alcohol) is added within regular gasoline
� Within the current season 7,1 million ha are being harvested. The forecast is to reach 10,4 million ha in 2012/13
�In average the sugar production provides 30% of profitability, whereas ethanol provides 26%
�2007 the Brazilian automotive industry produced 1,8 million cars. Of this amount, 1,4 million was flex fuel, in other words, 78%.
Year Production Consumption Exportation
2006/07 (actual) 17,5 11,8 3,52012/13 (forecast) 37 25 7
Billion Liters
Sugar cane growth regionsSugar cane growth regions
Ethanol exportation main ports
2007/08
359 sugar mill plants currently operating + 67 being built/enlarged until 2011Legal Amazon
85 sugar mills within North/Northwest region
274 sugar mill plants within center-south region
Source: MMA.gov.br, Unicamp, Unica
Source: Anfavea Agroconsult
Domestic vehicle salesDomestic vehicle sales
1,41,5
1,41,3
1,51,7
1,8
2,12,2
2,32,4
2,52,6
0,0
2,3
0,0 0,1 0,1
0,4
0,9
1,4
1,81,9 2,0
2,12,2
-
0,5
1,0
1,5
2,0
2,5
3,0
2000
/01
2001
/02
2002
/03
2003
/04
2004
/05
2005
/06
2006
/07
2007
/08*
2008
/09*
2009
/10*
2010
/11*
2011
/12*
2012
/13*
milh
ões
un
idad
es
Vendas Internas Totais Veículos FlexFuel
Growth rate from 2000/01 to 2006/07: 4,5% per year.
Growth rate from 2007/08 to 2012/13: 4,0% per year.
Million units
Internal sell (total) Flex fuel vehicle
Facts on Brazilian sugar production / trade
�Sugar production reached a record last year with 28,3 million Ton.
64% (18 M Ton) of overall production was exported
�From 2008/2009 on the forecasted production rate tends to grow
around 1,6 % per year and the exportations trends to follow the same rate
�Almost 65% is designated to soft drink industries (Coca Cola, PepsiCo,
Antarctica…)
� Historically the sugar/ethanol production ratio was 55/45, but it changed
to 50/50 in 2007/2008 and trend to reach 36/64 in 2012/2013
9,79,49,1 9,69,59,1 9,8 9,7 9,6 9,5 9,3 9,2 9,3
30,930,429,929,428,828,528,328,0
25,7
23,422,5
19,2
16,2
-
5,0
10,0
15,0
20,0
25,0
30,0
35,0
2000
/01
2001
/02
2002
/03
2003
/04
2004
/05
2005
/06
2006
/07
2007
/08*
2008
/09*
2009
/10*
2010
/11*
2011
/12*
2012
/13*
Milh
ões
de
ton
elad
as
Consumo Produção
Brazil: Sugar productionBrazil: Sugar production
Source: UNICA, Agroconsult
Production Growth Rate 2001/02 to 2007/08: 6,8% per year
Production Growth Rate 2007/08 to 2012/13: 1,7% per year
Consumption Production
Mil
lio
n T
on
4.007
4.5594.945
5.434
6.3556.646
7.168
8.064
8.558
8.981
9.447
9.941
10.404
3.000
4.000
5.000
6.000
7.000
8.000
9.000
10.000
11.000
2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08* 2008/09* 2009/10* 2010/11* 2011/12* 2012/13*
1000
ha
Brazilian Sugar cane growing area: actual and forecastBrazilian Sugar cane growing area: actual and forecast
Source: Conab. Agroconsult
Actual
Forecast
Cotton
�Brazil stands out with one of the highest productivities worldwide
�By using a high rate of technology, yield and quality are being improved
�Financial difficulty – deprivation of capital remains an issue
�Climate adversity within last two years (e.g. due to global warming)
�Market perspectives further drive area growth
�GMOs are no reality so far
Facts on Brazilian cotton yield
Yield (Kg/ha)Yield (Kg/ha)Actual 2000 Actual 2000 –– 2006 and Forecast 20072006 and Forecast 2007--20122012
Austrália 0,7%
Brazil 2,5%
China 1,5%
USA 3,0 %
Índia 12,4%
Source: USDA 2007-2012: Agroconsult
1.054
1.521
966
1.337
1.898
909
1.346
539
1.241
1.833
0
500
1.000
1.500
2.000
2.500
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
kg
/ha
Annual growth rate(% per year)
drought
Brasil 9,3%
EUA (-1,3%)
Índia 0,7%
China 0,4%
Austrália 22,9%
Paquistão 0,5%
0,0
2,0
4,0
6,0
8,0
10,0
12,0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
milh
õe
s h
a
Cotton Global Growing Area Cotton Global Growing Area Actual 2000 Actual 2000 –– 2006 and Forecast 20072006 and Forecast 2007--20122012
Annual Growth Rate
Source: USDA; Projeção 2007-2012: Agroconsult
USA-
BRAZIL BRAZIL -- Area and YieldArea and YieldActual 2000 Actual 2000 –– 2006 and Forecast 20072006 and Forecast 2007--20122012
Source: USDA Agroconsult
0,85
0,75 0,74
1,17
0,85
1,09
1,37
1,50
1,60
1,72
1,10 1,10
1,25
0,9
0,80,8
1,0
1,5
1,7
1,9
2,2
2,4
2,6
1,3
1,3
1,5
0,4
0,6
0,8
1,0
1,2
1,4
1,6
1,8
2,0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
mil
hõ
es h
a
0,0
0,2
0,4
0,6
0,8
1,0
1,2
1,4
1,6
1,8
2,0
2,2
2,4
2,6
2,8
mil
hõ
es t
Tx. Cresc. Área = 9,3%Tx. Cresc. Produção = 12,0%Area Growth Rate = 9.3%/yearYield Growth Rate = 12%/year
Million ha
Million Ton
Coffee
Facts on Brazilian coffee yield
�Manual harvest is getting more and more difficult due to high costs
and labor laws requirements.
Otherwise, mechanic harvest is taking place in medium and large farms
�Domestic consumers are willing for coffee quality improvement
(e.g. Global Coffee Shop chains like Starbucks)
�Strong requirements to produce Certified coffee in order to attend the
European and Asian market (traceability by certification agencies)
�Number of organic coffee producers are increasing as a structured
niche market serving the needs of selected consumers, with high value
added coffee
Coffee value chain
Harvest
Harvest
Dry
Processing
Toasted bean
Tasting classification
Pack
Commercialization
Coffee shops
Exportation
2100
2150
2200
2250
2300
2350
2400
2450
1999
/00
2000
/01
2001
/02
2002
/03
2003
/04
2004
/05
2005
/06
2006
/07
0
10000
20000
30000
40000
50000
60000
Area (ha) Yield (Bags)Cons. (Bags) Export. (Bags)
Brazilian Coffee area (Ha), yield and exportation 1999 – 2006/07
* 1 bag = 60 KgSource: Agrianual 2007
’000 Ha ’000 Bags*
Facts on Brazilian Livestock
� Brazilian livestock exportation is increasing due to meat quality improvement
� Internal purchasing power has been increased within Brazilian population conducting to more meat consumption
� Swine and chicken are mainly produced in cooperation with slaughterhouseby small farmers and became a profitable alternative of income
�Milk production in 2007 was 8,77 million litters. 4,4 million litters was for crude consumption and 4,37 million litters for industry (butter, yogurt, powder…)
Beef cattle production (Million ton)
Growth rate per year2007/08 – 2017/18: 2,5%
Actual Forecast Upper borderLower border
Source: Brazilian Agriculture, Livestock and Supply Ministry
Swine production (Million ton)
Growth rate per year2007/08 – 2017/18: 1,9%
Actual Forecast Upper borderLower border
Source: Brazilian Agriculture, Livestock and Supply Ministry
Chicken production (Million ton)
Growth rate per year2007/08 – 2017/18: 3,3%
Actual Forecast Upper borderLower border
Source: Brazilian Agriculture, Livestock and Supply Ministry
Outlooks
�According to Food and Agriculture Organization (FAO), the Brazilian current landutilization takes 78 million ha and still have 300 million ha arable area as potential
�Apart from the natural resources (favorable weather, water, soil and land to be explored), there is an auspicious scenario in agribusiness deals to next coming years
�In short-term, Brazil should get benefits due to commodities prices elevation within the international trade market, specially coffee, sugar and soybean.
�Within last two decades, technology evolution drove to yield improvement, representing one of the successful agriculture entrepreneur history
�After Gov. credit subsidies ceased, farmers had to invest in professional management, improve crop technology and be open to the international market
