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Food and Agriculture Sector in India-Brazil Relations

by Amom Malemnganba Singh - 18 January, 2022, 12:00 542 Views 0 Comment

Introduction

India and Brazil have a decade-long relationship. Their multifaceted relationship stretches from plurilateral to multilateral arenas. Both countries are a member of Brazil, Russia, India, China, and South Africa (BRICS), Brazil, Africa, South Africa, India, and China (BASIC), G-20, G-4, India, Brazil, and South Africa (IBSA), International Solar Alliance (ISA). Jair Bolsonaro was the third Brazilian head of the state to attend India’s 71st Republic Day celebration 2020. During the visit, both countries have reenergized their bilateral relationship and have pledged to encourage technological cooperation for sustainable infrastructure. This article highlights the importance of the food and agriculture sector in India-Brazil relations.

Why Brazil?

Brazil is the fifth largest country in the world by size, the eighth largest economy in terms of purchasing power parity (PPP), and has close to 40 percent of the Gross Development Product (GDP) of Latin America and the Caribbean (LAC) Region. The country is a major exporter of agricultural products, a world leader in ethanol-based fuel technology, it also has a robust defense industry and a large producer of oil and gas.

Apart from being the most important trading partner of India in the entire LAC region. Brazil also had strong clout in the Mercosur which India aspires to strengthen its relations with the members. Brazil is a keen supporter of India’s candidature at the United Nations Security Council (UNSC) and other international bodies which are of important issues for India such as the Financial Action Task Force (FATF), and Nuclear Suppliers Group (NSG).

Brazil’s interest in India includes investing in biofuels, automobiles, research, and development in the Indian defense sector. It wants greater access to India’s agriculture markets and enhanced its cooperation in space research and cyber issues. During the India-Brazil Business Forum (IBBF) which took place on 27th January, 2020 Brazilian president Jair Bolsonaro stated, “Both India and Brazil share a common future and I am confident that together we will achieve all our goals in the years to come with a stronger India-Brazil relationship”. Piyush Goyal, Minister for Commerce & Industry and Railways stressed their relations are “backed by the business-friendly environment, rule of law and a vibrant society, India and Brazil are at the cusp of a very bright future”. The forum was one of the most productive between the two countries.

Food Industry

In Brazil, the food industry is one of the most important. In the past years, the food and beverage industry has undergone tremendous development. The industry is investing heavily in technical development and acquiring modern machines. There is also a rapid growth in health and energy drinks. Indian investors in the beverage industry should look to invest in the energy drinks sector. In 2018 the revenue of the food market in Brazil was among the ten highest-grossing in the world, amounting to almost US$ 105 billion (Alves, 2019). Being one of the largest food producers and exporters in the world, Brazil offers interesting opportunities for suppliers in the food processing industry (Switzerland Global Enterprise, 2019).

Figure 1: Share of major segments in the Brazilian Food Processing Industry by gross sales (%) in 2017

Source: Brazilian Food Processing Industry (ABIA)

The most important product categories are meat products, beverages, dairy products, tea, coffee, cereals, oils and fats, sugar, snacks, ice creams, condiments, yeast, wheat products, processed fruits and vegetables, dehydrated and frozen products, chocolate, candies, and fish (Fabiana Fonseca, Eros Nascimento, Alexandre Vendemiatti, 2018). Some major global food brands have made Brazil their home. Brazil is also home to some multinational beverage companies. Currently, the industry is very competitive due to investment by multinational companies, improved distribution networks, and demand for processed food (Invest in Brazil).

According to the Brazilian Food Processors’ Association (ABIA), in 2015, the Brazilian food processing industry generated US$ 168.3 billion, accounting for 9.5 percent of the country’s GDP of US$ 1.8 trillion.

In 2017 Brazil imported US$2.7 billion of intermediate food products. Mercosur and the European Union (EU) account for 31 and 27 percent, respectively, of Brazil’s import market for intermediate products (Fabiana Fonseca, Eros Nascimento, Alexandre Vendemiatti, 2018).

Figure 2: Import of producer goods in 2017

Source: SECEX

Agriculture Sector

In India and Brazil, the agricultural sector has played a critical role in strengthening the economy as well as in providing a primary source of revenue and generation of employment. To cope with its rapid increase in population, modernisation, and urbanisation. The Brazilian Agricultural Research Corporation (EMBRAPA) was created for its agricultural research needs. Its mission is to increase Brazil’s agricultural yield and food production to support its large population and to develop solutions for food supply crises that arose in many cities. The Corporation has developed and transferred technologies to Brazilian farmers (Paulo Corre, Cristiane Schmidt, 2014).

Brazil has strong agricultural technology start-ups. Vale do Piracicaba, has been described as the Silicon Valley of Agriculture. Raizen an integrated energy company is working in a joint venture with Shell by utilizing sugar cane for the production of ethanol. The company has around 860,000 hectares of cultivated land and is the largest integrated sugar producer in the world. In contrast to Europe and the US push for electric vehicles, Brazil has looked to reduce emissions by incorporating biofuels in petrol and diesel. This provides farmers with additional markets and has been positive for meeting the country’s carbon targets (Black, 2018).

Biotech company Promip is providing solutions to farmers facing major challenges from pests. The company is developing biological solutions which could help reduce the reliance on pesticides. They are also breeding pollinators such as stingless bees. Genica, biotechnology, is creating a vaccine for crops, utilising the soybean crop’s resistance to rust and reducing the use of fungicides. Aimirim is developing systems that use machine learning to help with the industrial aspects of ethanol production.

Figure 3: Agricultural Technology Start-ups in Brazil

Source: Author’s interpretation

In India, the public research system is led by the India Council of Agricultural Research (ICAR). Being an agriculturally rich country, a lot of factors such as climate change, population growth, and food security concerns, have driven the agriculture sector to seek more innovative approaches to improve crop yielding and get better farming results (Wasnik, 2020). In one of the programs launched by ICAR on 9th December 2019, “Maitri-Indo-Brazil Agri-Tech Cross Border Incubation Programme”. India and Brazil voiced on strengthening and promoting the best agricultural practices internationally, exchange of agricultural technologies and expertise between the countries. It also highlighted the importance of various agricultural and allied science technologies that are crucial for strengthening the agricultural sector.

Conclusion

With the ever-increasing contribution to the global food trade, the Indian food industry is poised for huge growth. With its immense potential for value addition, it has emerged high-profit sector (India Brand Equity Foundation, 2017).

In terms of trade balance in Brazil, almost 80 percent of the processed food and beverages are sold on the domestic market and 20 percent are exported. It can be observed that while the Brazilian market is mostly served by local producers, the share of foreign producers participating in this market is also increasing. This indicates that there is room for Indian producers on the Brazilian market (The Food Industry in Brazil, 2016).

According to Mintel, a market intelligence agency identified four important trends for the Brazilian food industry. Firstly, sustainability has become important for the Brazilian public. Consequently, they expect companies to advertise their product as sustainable and good for the environment. Secondly, health has become a key priority for the average Brazilian. Thirdly, in line with cheap but healthy foods. Fourthly, similar to other countries, gluten, lactose, and meat-free products are expected to become popular (The Food Industry in Brazil, 2016). By identifying these trends, India can access Brazilian markets and deliver the demand products which would give the highest consumer satisfaction.

While in the agricultural sector it is important to note that the collaboration with Brazil’s agricultural sector will provide India with an effective exchange and transfer of agricultural technologies. In return India with its wide scope of agriculture and allied sciences. It can provide expertise to Brazil and prosper more in the designated fields (Indian Council of Agricultural Research , 2019). Research cooperation between the countries will further enhance the promotion of agricultural technology start-ups taking the agricultural sectors to new heights.

At present India and Brazil need to promote policies on environmental conservation and climate change. Agricultural trade and investment should be expanded, sharing of agriculture-related information, and should work on the use of technological innovations for agricultural sustainability.

References

Alves, B. (2019, August 22). Statista. Retrieved from www.statista.com: https://www.statista.com/topics/5116/food-industry-in-brazil/

Ashok Gulati, Pravesh Sharma, Anisha Samantara, Prerna Terway. (2018). Agriculture Extension System in India, Review of Current Status, Trends and the the way For Ward . Indian Council For Research On International Economic Relations (ICRIER).

Black, A. (2018, July 19). Farmers Guardian. Retrieved from www.fginsight.com: https://www.fginsight.com/vip/vip/technology-helps-transform-brazilian-agriculture-63443

Fabiana Fonseca, Eros Nascimento, Alexandre Vendemiatti. (2018). Brazil Food Processing Ingredients. USDA Foreign Agricultural Service.

Financial Express. (2018, September 29). Retrieved from www.financialexpress.com: https://www.financialexpress.com/economy/brazil-and-india-increase-business-contact-in-agriculture-and-food-sector/1331282/

India Brand Equity Foundation. (2017, August). Retrieved from www.ibef.org: https://www.ibef.org/industry/indian-food-industry.aspx

Indian Council of Agricultural Research . (2019, December 9). Retrieved from www.icar.org.in: https://icar.org.in/content/maitri-indo-brazil-agri-tech-cross-border-incubation-programme-launched

Invest in Brazil. (n.d.). Retrieved from www.investinnbrazil.biz: http://www.investinbrazil.biz/industry/food-and-beverage/food-and-beverage-industry

Ministry of External Affairs, Government of India. (2019, January). Retrieved from mea.gov.in: https://mea.gov.in/Portal/ForeignRelation/Brief_dec_2018.pdf

Paulo Corre, Cristiane Schmidt. (2014, June). Public Research Organizations and Agricultural Development in Brazil: How Did Embrapa Get It Right? Economic premise, 1-10. Retrieved from www.worldbank.org.

Pedro A Arraes Pereira, Geraldo B Martha Jr, Carlos AM Santana, Eliseu Alves. (2012, April 19). Agriculture and Food Security . Retrieved from www. agricultureandfoodsecurity.biomedcentral.com: https://agricultureandfoodsecurity.biomedcentral.com/articles/10.1186/2048-7010-1-4

Switzerland Global Enterprise. (2019, May 29). Retrieved from www.s-ge.com : https://www.s-ge.com/en/article/global-opportunities/20192-c6-brazil-food-industry

(2016). The Food Industry in Brazil. Sau Paulo: Flanders Investment & Trade Market Survey.

Wasnik, S. (2020, January 13). Financial Express. Retrieved from www.financialexpress.com: https://www.financialexpress.com/defence/india-brazil-to-share-latest-technologies-in-the-agri-sector/1821844/

Amom Malemnganba Singh
Author is a Research Scholar at the Department of Political Science, Manipur Central University. A former intern at Latin America & Caribbean (LAC) Division, Ministry of External Affairs, Government of India. He writes in his blog Global Affairs on politics.
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