Agro can grow without deforesting, says Lula’s former minister – 07/16/2023 – Market

Former Minister of Agriculture Roberto Rodrigues, 80, says that the “sky is the limit” for the growth of agribusiness production in Brazil, and that, to increase it, “it is not necessary to deforest anything else”. But, according to him, it is necessary to face “adventurers and bandits” who illegally deforest.

Holder of the portfolio between 2003 and 2006, in the Lula 1 government, Rodrigues says that the use of degraded pastures for agriculture is a reality, and that these areas can supply the need for more land.

“We can reach 500 million tons in 20 years, easily [a safra deste ano deverá atingir 316 milhões de toneladas]. But does it have a market?”, she asks.

In an interview, Rodrigues lists the factors that contributed to Brazil becoming an agricultural power, and what should be done, from now on, to continue growing in a sustainable way.

Brazil has been breaking records in agribusiness. It is one of the pillars of the GDP and has been developing at an accelerated pace in several regions of the country, where there is an increase in income and a drop in inequality. How did we get there? Internally, the main factor is technology, a fantastic business. 50 years ago, we imported 30% of what we consumed. Today, we are the third largest food producer in the world, and the first in trade balance.

From the 1990s until today, the area planted with grains in Brazil has grown by 103%; and production, 440%. If we think about chicken, we grew 526% in the period.

Today, we cultivate 77 million hectares with grains. For the most part, we do two harvests a year, or even three, in the same area. If we had the same productivity today as we had in 1990, we would need 126 million hectares to harvest this year’s crop.

We had important public policies, such as those that took farmers from states in the South to the Midwest and North of the country, with technology.

Another factor is the entrepreneurship of Brazilian rural producers, who left everything and went to the Midwest and Matopiba [Maranhão, Tocantins, Piauí e Bahia]more recently, occupying a territorial void that transformed the cerrado, which was something unwanted in the 1970s.

The cerrado today is Maracanã where the final of the food world cup will be played. Entrepreneurship was fantastic and quickly incorporated technology to increase productivity.

The external factor is the growth in demand, especially from Asia, with the increase in per capita income much greater than in developed countries. This generated a demand that was repressed and exploded. The privilege of having well-placed internal conditions led to an increase in production and exports, meeting external demand.

As mr. Do you assess the sustainability of this demand, with productivity and volumes harvested in Brazil growing rapidly? The OECD [Organização para a Cooperação e o Desenvolvimento Econômico] estimates that, in ten years, the world supply of food needs to grow by 20% so that no one lacks food and so that there is food security, which is the only guarantee of political and social stability in countries.

When the pandemic began, non-self-sufficient countries rushed to the market for food to guarantee supplies, as a country without food overthrows the government. Inventories were low and prices doubled in dollars, generating the food inflation that we have experienced in the last two years and that, only now, is starting to subside. So it’s a theme that will persist for a lifetime.

In the 2000s, Brazilian agribusiness exported US$ 20 billion. In 2022, US$ 160 billion, eight times more in 22 years. What country did this? It’s an impressive deal.

The first time we produced 100 million tons of grain was 2001. It took us 500 years to reach that point. Fourteen years later, in 2015, we produced 200 million, and this year, eight years later, more than 300 million tons of grain. It’s spectacular.

For the future, the themes that brought us here persist. There is great external demand, tropical technology being generated and entrepreneurship. What is missing? Public policy.

what kind of policy public? First, logistics and infrastructure. Until the 1970s, agriculture was coastal, but the “gauchada” went to the Center-West and pulled the rest of Brazil, like a locomotive pulling wagons of people from other states to the region. But the railroad, warehouse and port were not.

This year, we have huge crops of soy and corn and we have nowhere to store them. The producer is forced to sell, and as the buyer knows he has to get rid of it, the price drops spectacularly. Lack of logistical infrastructure.

This is not something the private sector can do on its own. It takes financing, legal certainty, tax reform, so that investors trust and make contributions to infrastructure.

Another point is trade. For increased production, the sky is the limit. We can easily reach 500 million tons in 20 years. But does it have a market?

We have to make a much greater diplomatic effort than what has been done to reach trade agreements. With China, for example, which guarantees the market for the next 20 years.

In the 1950s we threw coffee into the sea to lower inventories and improve prices. Can you imagine what we are going to do today with 300 million tons of grain? What if China doesn’t want to buy?

We have to have agreements with China, India, Indonesia, Thailand, Malaysia and with the big countries in the Middle East, which are rich and do not have supply options. And with developed countries as well. The European Union-Mercosur agreement is fundamental.

What else? There is no room for growth without sustainable technology. We need to do two harvests a year on all Brazilian farms, or even three, with irrigation.

Today we have by far the best tropical technology on the planet. But this is a dynamic process. If we stop, others pass in front. This is what happened to São Paulo. The father of modern Brazilian agriculture is Campinas. Go there today to see. It’s a sadness. There are no resources, there are no new researchers, everyone is retiring.

Research today is private, and we need public research. Because the private is only interested in large areas, and she is right. Are you going to invest in beets? No, it will invest in soy, corn, cotton and livestock. For other cultures, it is the state that needs to do public research.

World food production will grow in the tropical belt of the planet. Who is there is Latin America, sub-Saharan Africa and part of Asia. That’s where there is land available to increase the productive area and where the technology is still too low to increase production per hectare. The big explosion will be there.

Other regions will grow, but not with the same volume and ambition as this tropical belt. And the leader is Brazil. Who holds sustainable tropical technology is Brazil, not only for food but agroenergy, biomass. Brazil has a 44% renewable energy matrix. The world’s is 15%, and 15% because of Brazil. Without Brazil, it would be 11%.

We can be not only a great exporter of food to the whole world, but of technology and equipment. With what we’ve learned the hard way in 50 years, we can lead in this tropical belt and help the world become an energy producer.

Humanity’s challenges are food security, energy and climate change. The three will be resolved by tropical agriculture, and Brazil could be a leader in this process, not imposed, but a natural leader.

There are many criticisms of the advancement of agribusiness, especially from environmentalists and the Ministry of the Environment, regarding disrespect for the Forestry Code and the practice of deforestation. How to reconcile the advancement of agriculture with sustainable practices? For Brazil, there is no need to deforest anything else. On the contrary. We can use deforested, abandoned and degraded areas to recover and do agriculture. Today Brazil has more or less 9% of its territory with all cultivated plants, from lettuce to eucalyptus. Is very little.

We have more than 20% of pastures. A poor pasture, since livestock, for many years, was an activity without technique. But that has completely changed in recent years.

20 years ago we had less than one head [de gado] per hectare. It changed even for a matter of the outside to the inside. The area of ​​food today grows in Brazil from the pastures. The farmer is turning grass into food. We have at least 45 million hectares, which can be recovered for agriculture and forestry.

How do you evaluate the sector’s complaints about the lack of funding and programs to guarantee income? Brazil is the only large country that still does not have a rural income program. The last time this happened was in the 1970s. When I was a minister, the first thing I did, in 2003, was rural insurance.

First, because it is the only condition we have for income stability in the countryside. Last year we had a brutal drought in the South and it would have bankrupted everyone if it weren’t for rural insurance. But, today, we don’t even have 10% of the Brazilian planted area insured.

Because it is expensive, the government does not allocate resources in the Budget for this, to subsidy the premium [valor pago pelo segurado], something that happens all over the world. Insurance is key as it stabilizes activity.

No insurer will insure a producer who does not use technology. Rural insurance, therefore, drives the use of technology. It releases rural producers from official credit. Because, having insurance, any bank gives credit to the producer, as there is no risk.

In the US, every bank gives rural credit to farmers because they have insurance. In Europe too. Insurance is elementary.

How to increase it? It has to increase the resource for subsidy to the premium. For years, our crop insurance budget has been BRL 1 billion for 5 million producers. For political parties last year, it had R$ 5 billion.

We need R$ 10 billion. But put R$ 3 billion and let’s see the difference. Rural insurance stabilizes incomes, boosts technology and releases public banks from credit; and the private sector will finance.

It is also necessary to have a guarantee price, the old minimum price. Have a price range for each region of the country so that insurance can play its role in reassuring the producer who went bankrupt. This all helps to create a structured agriculture, not dependent on the Safra Plan every year, whether or not it will have credit.

Another essential thing is sustainability, which today is a precondition for competitiveness. Those who do not produce sustainably will not have a market, and this point is essential.

Strict control of diseases and pests is necessary to ensure that there will be no problems. Seeking increasingly biological and less chemical inputs, which today require imports.

Traceability, with identification of the origin of production. Putting an end to what is illegal, with illegal deforestation, criminal fires, invasion and land grabbing, clandestine mining. You have to enforce the laws.

Illegality beats sustainability. But this thing that is done by adventurers and bandits has to be dealt with to the fullest extent of the law. Otherwise, the competitor uses these defects as if they were the whole of agriculture, to depreciate our competitive condition.

---

Roberto Rodrigues, 80
Coordinator of the Agribusiness Center at FGV-EESP and special ambassador of the United Nations Food and Agriculture Organization for Cooperatives, he was Minister of Agriculture, Livestock and Supply between 2003 and 2006, in the Lula 1 government, and Secretary of Agriculture of the State of São Paulo (1993-1994). He is an agronomist graduated from Esalq‑USP and was a professor at the Department of Rural Economy at Unesp.