ITC Reports Brazil Ag Exports Growing, but Competition w/ U.S. Limited by Global Demand
Brazil is one of the world's largest agricultural economies and has emerged as a leading global exporter of numerous agricultural commodities, but its direct competition with the U.S. for sales of soybeans, grains, and meats to third country markets has been somewhat limited, said the International Trade Commission in its publication “Brazil: Competitive Factors in Brazil Affecting U.S. and Brazilian Agricultural Sales in Selected Third Country Markets." The ITC recently completed the investigation at the request of the U.S. Senate Committee on Finance.
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Brazil Becoming More Competitive in Export Markets; Potential for Further Growth
The ITC said low on-farm production costs have helped to make Brazil a competitive exporter of soybeans, grains, and meats in recent years, despite significant challenges, such as inadequate transportation infrastructure, high interest rates, currency appreciation, and burdensome labor laws and tax structures. However, Brazilian exports are likely to grow more slowly in the current environment, according to the ITC, particularly if rising domestic demand siphons Brazilian agricultural supplies from third-country markets. Nonetheless, Brazilian agricultural production and exports have the potential to continue growing significantly; large areas of untapped agricultural land remain, and research and development programs will likely foster improvements in production practices and yields in many agricultural sectors, said ITC.
Significant Implications for U.S., but Competition Limited due to Increase in Global Demand
Brazil’s status as a major agricultural exporter has significant implications for the U.S. and, according to the ITC, many in the U.S. agricultural community, business representatives, and policymakers have expressed concern that Brazilian agricultural exports to major third-country markets are competing directly with U.S. exports of similar goods. With the exception of cane sugar and coffee, Brazil’s exports are typically goods that the U.S. also exports in large volumes, such as beef, poultry, pork, corn, and soybeans. In many major U.S. export markets, while the value of U.S. agricultural exports increased, Brazil outpaced U.S. export growth rates, starting from a lower level of trade, said the ITC. However, the ITC said that although Brazil and the United States are both global exporters of grains and oilseeds, among other products, direct competition between the two countries currently is somewhat limited due to the substantial increase in global consumption.
Full ITC report available here.