The Brazilian Confederation of Agriculture and Livestock (CNA) has opened an office in China to “consolidate and expand the presence of Brazilian agricultural products in the growing Chinese consumer market and attract public and private investment from China for the country's infrastructure, particularly for the logistics of transport and storage of production.”
These are the two objectives that CNA will be working to achieve from its Beijing office and which will be heavily stressed by the organization's representatives in Beijing Wednesday, Nov. 14., with a Brazilian delegation traveling in China.
"By 2015, 30 million Chinese are expected to move up to the middle class, expanding significantly the local demand for food. This is an opportunity for Brazil, with its more sustainable production, to supply the market with dairy, meat and agricultural products with higher added value", said the president of CNA, Senator Katia Abreu, who leads the delegation heading to China.
In addition to intensifying trade relations with China and other prospective regional markets from the Beijing office, the goal of CNA is to identify opportunities for direct investments in infrastructure in Brazil, especially logistics, and other strategic areas for storing and depositing the national agricultural production.
"Investment in these areas will reduce transportation costs, which will ultimately reduce the final price of products sold to the Chinese market", noted the president of CNA.
Reports have been widespread about China investing in countries worldwide, and Brazil, which has been open to outside ownership of agricultural land and infrastructure investment for decades, is courting even more investment. The price of land has been increasing in Brazil and will continue to increase as the infrastructure improves for shipping to ports for export. Lower transportation costs mean higher potential profit.
Although several U.S. investors were among the pioneers in development of farming operations in Brazil. Other countries’ investors are jumping in. More Chinese investment seems extremely natural because this gives the country more control over its food security at a time when the outlook is for demand to outpace in-nation production.
Brazilian suppliers and Chinese importers are looking to intensify trade relations, according to CNA. Brazil's exports to China have grown since 2002, with a concentration in soybeans. Increased trade is a reflection of the Asian country's entry into the World Trade Organization (WTO).
Even though sales have been concentrated in soybean, the president of CNA advocates diversification of exports. "In 2011, Brazil sent about 22.1 million tons of soybeans to China, but in addition to soybeans, we can sell other products that are consumed by the Chinese", she said.
In meetings with Chinese leaders, Brazil will emphasize guaranteed quality. "We will detail the Agricultural Management Platform (AMP), featuring the Brazilian model that guarantees the quality of agricultural products exported and consumed domestically," said Abreu.
U.S. agricultural exporters have a battle on their hands in the short term to keep China as a main importer of U.S. ag production. And whether food security can be accomplished by China through buying overseas land and building processing facilities worldwide is a big question. The other question often referred to is quality of grains exported to China and whether Brazil can implement a higher standard of quality to earn business.
Even though the rest of the world, especially environmentalist have fought deforestation of Brazilian land, the Brazilians continue to promote forestry as an industry for outside investment. It was noted that meetings are being planned with Chinese businessmen investing in forestry activity because of “great potential in Brazil.”