Case Study: Brazil and Agribusiness
Case Study: Brazil and Agribusiness

Background
Brazil is the largest country in the world in terms of arable land. Only a fraction though is exploited for agricultural use. Brazil is one of the world’s biggest suppliers of agrifood commodities. Since 2007, it is the world’s largest exporter of red meat, poultry, sugar, coffee, and orange juice, and the second largest exporter of soybeans, soy meal, and soy oil. It is the third largest exporter of corn andthe fourth largest exporter of pigs and cotton. Brazil’s domestic market, the third largest market in terms vis-a-vie size in the developing world behind China and India, is also an investment target.1  China is the biggest market of Brazilian agricultural exports.

Despite Brazil’s dominance in world-wide agriculture, its history with major multinationals is relatively recent. Historically, the agrifood business has been concentrated in the hands of a few major multinational corporations, whose reach penetrated the developing world in the 1980s and 1990s. In the 1980s, biotechnology revolutionized the agribusiness industry. These firms lobbied for patents for their products. Subsequently the World Trade Organization required countries in accession to accept the patents.2   Raj Patel, author of Stuffed and Starved, notes that there are 10 companies worldwide that control half of the world’s seed supply. Also 10 firms control 84 percent of the $30 billion dollar pesticide market.3

In Brazil, traditionally, national companies and cooperatives farmed products for domestic staple production, while multinationals mainly farmed for middle class consumption and for international trade. Three main domestic firms (Ceval, Sadia, and Perdigão) produced soybeans for animal feed. However deregulation in 1990s, brought in the foreign multinationals (Bunge, Cargill, ADM, and Dreyfus) who replaced the domestic producers. These multinationals control the pesticides market in Brazil and worldwide, a crucial component of the oil seed production. Their dominance in Brazil coincided with the biotech revolution. Companies introduced genetically modified (GMO) seeds, furthering their competitive advantage.4

There has been considerable resistance by Brazilian NGOs to the proprietary control of strategic genes. They waged a battle against the introduction of genetically modified seeds. Nonetheless these seeds dominate soy production and are advancing in corn and cotton production.

Brazil’s domestic agribusinesses have grown dramatically in the past 5-10 years. There are now 20 Brazilian agribusiness companies that have annual sales more than $1 billion dollars.5

Situation
Brazil’s Forest Conservation Law, which was passed in 1965, limits the use of woodlands for agricultural purposes. Depending on the location, the law requires that owners to keep as much as 80 percent of the land in its natural state.6

In May 2011, the Senate in Brazil was presented with a law to revise the protection of the Amazon. Proposed changes included:

  • Exempting small landowners from requirement to preserve 80% forest
  • Giving amnesty to landowners who cleared forest before 2008
  • Reducing the strip of land that must be left intact along the banks of rivers and streams from 30m (100ft) to 15m (50ft).7

The Brazilian Senate held hearings to engage different players before they decided whether or not to pass the law with or without changes.

Players:

Foreign Multinational Agribusinesses
Brazilian Agribusinesses
Brazilian farmers and ranchers
Migrant farm and ranch workers
Brazilian consumers
Environmental NGOs

Activity
A team of students will represent each of the players in this conflict.
1. Each team writes a 1-2 page character study of their player and a 3-5 page paper explaining their perspective on the issue at hand.
2. The team presents their perspective to the class, who will serve as the Senate in Brazil. Use of technology and multi-media should be encouraged.
3. Once all the perspectives are presented the class will vote to either: pass, amend, or not pass the law.
4. Once the decision is made, students will write a 2-4 page paper reflecting on their personal feelings on the issue.


1  Wilkinson, John. “The Globalization of Agribusiness and Developing World Food Systems.” September 2009
2  Ibid.
3  Trigona, Marie. “The Soy Republic of Argentina.” September 3, 2009.
4  Wilkinson, John. “The Globalization of Agribusiness and Developing World Food Systems.” September 2009.
5  The global power of Brazilian agribusiness. http://www.businessresearch.eiu.com/global-power-brazilian-agribusiness.html
6  “Brazil does away with laws to protect large swathes of rainforest.” The Telegraph (June 30, 2011). Retrieved from: http://www.telegraph.co.uk/news/worldnews/southamerica/brazil/8537162/Brazil-does-away-with-laws-to-protect-large-swathes-of-rainforest.html