In 2007, according to Anfavea (Brazilian Automotive Vehicles Manufacturers Association), sales of agriculturla machinery increased 36.2% in Brazil, in comparison with the previous year, and reached 39.7 thousand units. Brazil produced 65 thousand agricultural machineries in 2007, 29% more than in 2006.
Agricultural Machinery Market in Brazil
|
2006 (US$ million) |
2007 (US$ million) |
2008 est. (US$ million) |
|
| Total Market | 3,359 | 5,233 | 5,490 |
| Local Production | 4,376 | 6,175 | 6,580 |
| Total Exports | 2,041 | 2,579 | 2,620 |
| Total Imports | 1,024 | 1,637 | 1,530 |
Note: Figures include tillers, wheel tractors, crawler tractors, combines, loaders and backhoes.
Source: ANFAVEA USD=2.35 Reais
A large portion of agricultural machineries manufactured in Brazil was for exports. In 2007, exports of agricultural machinery, including tillers, wheel tractors, crawler tractors, combines, loaders and backhoes reached 25,900 units, an 18.8% increase. The State of Rio Grande do Sul is the leader in production of agricultural machinery in Brazil, with 54.8% of the market, followed by Sao Paulo (28%), Parana (15.5%) and Minas Gerais (2.7%).
Brazil has most of the international agricultural machinery producers manufacturing locally and exporting agricultural machinery to other South American countries. Companies include Agco, Agrale, Catapillar, John Deere, Komatsu, Valtra, and CNH (Case, Fiat Allis and New Holland). Total installed production capacity in Brazil is 86,000 machines per year.
Top U.S. export prospects in this sector include sophisticated, state-of-the-art machinery with higher efficiency levels, including the following equipment: post-harvest machinery like field refrigeration units/storage for tropical fruits, fruit, grain, seed and vegetable cleaning, and sorting and grading machinery; GPS and precision agriculture devices; and poultry equipment.
Brazilian Agribusiness Sector
Brazil is a major producer of a variety of agricultural commodities and is the world's largest producer of coffee, sugarcane and oranges. It is also the world's second largest producer of soybeans, cattle meat, poultry, tobacco leaves, bananas and Brazil nuts, and the third largest producer of corn, pineapples, pepper and cashew nuts.
Brazil is one of the few countries still capable of increasing its planted area. In fact, Brazil has more unused commercially viable agricultural land than any other country in the world.
Its strength in the agricultural sector means there is growing demand for agricultural equipment that improves the quality and yield of crops and reduces costs. Moreover, since farms are generally large, Brazil is ideally suited to incorporate a wide range of American agricultural machinery and technology.
Brazilian farmers enjoy a comparative advantage in many agricultural segments, particularly the grain, fruit, fiber, and animal protein sectors. This advantage is due to a temperate climate with plenty of light, the world’s largest surface and ground fresh water reserves, excellent quality and diversity of soils and diverse agro-ecological systems.
The year of 2007 was marked by the rehabilitation of the Brazilian agribusiness sector, which experienced many problems in 2005 and 2006. The Brazilian agribusiness sector grew 5% in 2007, more than three times the results of 2006, when the expansion was only 1.5%. It was the best result in the past three years and reflects a grain production record of 133 million tons, an increase in local food consumption and the growth in exports and prices of agricultural commodities. Among the agribusiness sector highlights for 2007 was the production of sugarcane by-products, especially ethanol, which grew 6.4%.
Sector forecasts for 2008 are also optimistic since local farmers are currently highly capitalized; commodity prices, such as meat, soybean and corn remain high; and new crop records are expected for 2008. A higher use of field technology was also registered in 2007, exemplified by the good results presented by the production of agricultural machinery and equipment (41% increase in comparison to 2006) and insecticides and herbicides (22.6%). However, as the financial crisis unfolds, exports and prices have been falling.
Food and Agricultural Product Export to Brazil
Since the mid-1990’s, Brazilian consumers have developed a taste for imported food. Although the country is one of the most important commodity producers in the world and is self-sufficient in food, the opening of the economy exposed local companies to international competition and encouraged consumers to trade up. Traditionally, the top three suppliers of consumer-oriented food products to Brazil are Mercosul member countries, Europe, and the United States.
The United States has maintained this third position with an average market share of about 7 percent of food imports. Mercosul member countries and Europe together account for a 70 percent share. These two blocks present stiff competition for U.S. exporters, because Mercosul countries benefit from tax-free agreements and lower transportation costs, while Europe enjoys instant recognition and a reputation for excellence in the production of high-end foods. Nonetheless, U.S. sales of processed foods reached US$ 120.6 million in 2008, as Brazilian demand for food imports,
especially high-end products, continued to grow. With the recent economic slowdown, these imports are expected to decline. Considering that Europe is the direct competitor of the United States, U.S. exporters may find new opportunities to enter the market as local importers look for alternatives to European products in order to reduce costs and reduce exposure to the Euro.
For Additional Market Research on the Agribusiness Sector in Brazil:
Brazil: Agricultural Machinery Sector Update
Brazil: Agricultural Chemicals Industry Update