Short Project – John Nelson, Lucas McCloud, Meidy Candia-Leyva, Tomaso Veneroso and Zuzana

Bartosova

Brazil’s Evolution

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Brazil in 2012* Economics – Brazil’s economy is world’s seventh largest and expected

to rise to fifth within the next few years.

*GDP – Average quarterly growth from 1996 -2011 was 0.80% attributed to strong agricultural, mining, manufacturing and service sectors.

* Politics - Active leader in various regional and international forums as UNASUL, MERCOSUR, IMF, WTO and the UN.

* Population – Largest in Latin America - 205 million (fifth in the world).

*Resources – 8.5 million sq km, 14% world’s renewable fresh water. Home of world’s largest rain forest, the Amazon.

*Unemployment decreased significantly. Estimated in January 2012 at 5.5%

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Brazil in 2012 - Agriculture*Agriculture- Major sector in economic outlook. In 2004 agricultural GDP was $60.4 billion, 10% of total GDP.

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Brazil in 2012 - Agriculture*Has world’s largest cattle herd (170 million animals in the livestock sector) and is the leader in agricultural products (soybean).

*Has high quality land, a developed industrialized system, modern agricultural practices and a developed information structure.

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Brazil in 2012 - Agriculture *Brazil is the

strategic partner in the international agricultural trading scene.

*Key Trading Partners are European Union, China, United States, Argentina and Japan.

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Brazil in 2012 - Agriculture*Leadership – Brazil heads technology and

science in biofuels, deep sea oil production and agricultural research.

*Poverty – Currently 28% of population continues to live under the poverty line.

*Continued struggles with disparate income distribution in country.

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The Tipping Point

What were the tipping points that led to Brazil’s growth?

Transformation in Politics

*Past regimes, protectionism, Latin American ideology.

*New regime- “out with the old in with the new”.

*Non-traditional foreign affairs model, new ideas in politics.

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The Tipping Point

What were the tipping points that led to Brazil’s growth?

Economic Strategies

*Trade Policies - Brazil is an advocate of liberalization in agricultural trade policies. Removed trade barriers, quotas, taxes and export licenses.

*Domestic Agricultural Policies – PRONAF, micro loans and minimization of stockholdings such as (PEDRO).

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The Tipping Point

What were the tipping points that led to Brazil’s growth?

Economic Strategies Continued

*Market access battles – “Some won some lost”.

WTO, Doha Round Trade Talk, (IBSA), G-20, G-11

*New partnerships in agricultural trade with

China, Israel, Turkey and Egypt.

Q. What should Brazil’s role be in the regional and international arena?

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Future Outlook in Poverty and

Liberalization“Are the poor poorer and the rich richer?”

*Joaquin Bento de Souza’s model derived data from the 2001 Brazilian Input-Output Matrix from government figures and the Brazilian Agricultural Census to test current and future agricultural affairs in Brazil.

*Souza’s data confirmed majority of population 53% receives a minor percent of total income at 16.8% while the highest income group at 46% is comprised of only 10.9% of the population. See table 1.

*This data according Souza placed Brazil at the worst country in terms of income distribution in the world.

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Future Outlook in Poverty and

Liberalization

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Future Outlook in Poverty and

Liberalization*The impact of agriculture in alleviating poverty is key as agriculture hires the most unskilled labor.

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Future Outlook in Poverty and

Liberalization*Brazil has in a context removed many of the

barriers to agricultural trade. How much more can it do?

* Per Souza’s model using Doha & NAMA agreements as well as Tomaso’s model on animal protein and bio fuels, interesting findings where discovered simulating a world with no barriers to agricultural trade.

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Future Outlook in Poverty and

LiberalizationFinding

*Severity of poverty within household incomes reduced, thus reducing some income disparity but not in tremendous numbers.

Why?

*Both the small farmer and commercial agribusiness supplier would see gains. But distribution would not occur in every region equally.

*Strong increases in food prices would offset gains made.

*World population derives the bulk of protein from meat with an inevitable rising price in staple foods and inevitable increases in poverty (soy bean case).

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Future Outlook in Poverty and

LiberalizationRecommendations for Brazil

*Support domestic policies to promote agriculture and make investments in the education of its domestic workforce to compete in technologically advanced agri-sectors.

*Continue to develop new relationships in agricultural trade. Diplomatically seek to continue removing market barriers imposed by nations like the Japan, US and EU.

*Increase governmental support in the form of credit and investment, so small scale producers can increase their productivity to meet rising demand for goods.

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Future Outlook in Poverty and

LiberalizationRecommendations for Brazil

*Continue to pursue great investments and strategic relationships in ethanol and biofuels. Even though skilled labor is highly demanded in this sector, investments will not necessarily address income disparities in the long run in Brazil.

* In long term, overall agricultural trade liberalization is overstated, while the cost to small scale farmers in developing countries is often high.

*Our Long Project will dive further into the world of Brazilian ethanol, Biofuels, sugar production and climate change in Brazil.

Stay tuned….

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Brazil’s Evolution