Brazil’s dependence on sales to China remains high – 03/20/2023 – Vaivém

The dependence of Brazilian agribusiness on purchases from China remains high. In recent years, the Chinese have been diversifying purchases and increasing the range of products purchased in Brazil.

This commercial relationship between the two countries should increase, since Brazil continues to be one of the main sources of agricultural raw materials for the world and the Chinese have demands that they will not be able to supply domestically.

President Luiz Inácio Lula da Silva’s (PT) visit to the Asian country this week should further strengthen relations between the two markets, since the previous government always had a bellicose relationship with the Chinese.

Were it not for the actions of the then Minister of Agriculture, Tereza Cristina, and the pressures of agribusiness itself, relations between the two countries would have been more strained.

In the last ten years, Brazilian agro exports to China totaled US$ 302 billion, against US$ 44.5 billion in the immediately previous ten years.

The Chinese are being important for the development of several cultures in Brazil, mainly soy. In 2000, they purchased 1.78 million tons of oilseeds. Last year, there were 53.6 million, according to Secex (Secretary of Foreign Trade).

More recently, due to the need to replenish internal demand, the Chinese also discovered Brazilian meats, greatly accelerating purchases.

Last year, they accounted for 43% of Brazilian foreign sales of “in natura” meat. They spent US$ 10.4 billion on the national protein.

The entry of the Chinese into the Brazilian meat market occurred for two basic reasons. The rise of a large part of the population towards a higher income pattern has increased the need for proteins.

In addition, the Chinese went through a period of severe health crisis in the production of proteins, and Brazil stood out as their main supplier. Brazil has quantity and affordable prices.

One of the difficulties faced by the Chinese was the return of avian flu, forcing the country to increase imports.

In 2014, they purchased 227,000 tons of chicken meat from Brazil. In 2021, the volume reached 639 thousand tons.

The 2018 African swine fever disrupted the production of this meat. Largest consumers in the world, the Chinese had to turn to the foreign market.

In 2014, they had little participation in the Brazilian market. In 2018, they purchased 156 thousand tons, a volume that increased annually until reaching 511 thousand, in 2021.

Consumption of part of pork and chicken meat was replaced by beef, whose demand also grew due to the increase in Chinese income. In 2014, Brazil exported 106 tons of beef to China. Last year, it was 1.24 million tons.

The Chinese have become the main importers of proteins from Brazil, leaving US$ 10.4 billion in 2022 with the purchase of 2.2 million tons.

Seeking to reduce American dependence, due to sharp friction in the Donald Trump government and which continues with Joe Biden, the Chinese have released corn imports from Brazil and are entering this market strongly.

In the first two months of the year, they already bought 1.1 million tons of Brazilian cereal, accounting for 13% of the volume exported by Brazil in the period.

In this diversification of imports, purchases of sugar also increased. The volume rose from 1.25 million tons in 2010 to 4.3 million last year.

The recent disruption of the vegetable oil market, brought about both by the pandemic and the invasion of Ukraine by Russia, has also placed China in the Brazilian market for this product. In 2021, they were left with 24% of the soybean oil exported by Brazil, a share that dropped to 6% in 2022.

The Chinese are also important in agribusiness products not related to food. They bought 8.85 million tons of pulp last year, well above the 2 million in 2010.

Brazilian cotton crops also expanded due to the Asian market. In 2022, despite stepping on the brakes on purchases, China acquired 522 thousand tons, 28% of the product exported by Brazil.

In this week’s visit to China, the Brazilian government hopes to reduce the procedures for exports and imports, since Brazil is dependent on various agricultural inputs exported by the Chinese.

One of the discussions at the Ministry of Agriculture will be on the release of beef exports and the change in the protocol that requires suspension every time a suspected case of mad cow appears in the country.

There is a consensus in the market that the interruption of exports is necessary and it shows the transparency of the Brazilian sanitary control system.

This interruption, however, should be localized, limited to slaughterhouses close to the area where the disease occurs while the case is evaluated by the laboratories.

China makes large investments internally and in other countries, mainly in Africa, to reduce food dependence.

The dependence of the Chinese on Brazil, however, remains, as demand grows and space for agriculture becomes increasingly restricted in the Asian country. They bet a lot, however, on research and technology to reduce this dependency.

Brazil will also remain dependent on the Asian country, mainly in inputs. Fertilizer imports totaled 6 million tons last year, at a cost of US$ 2.1 billion. Spending on agrochemicals reached US$ 350 million.