Brazil’s agriculture sector is massive and highly integrated. So central and so extensive is this country’s farming industry that it is virtually food secure.
If Brazil were a diversified corporation and its economic sectors division of that corporation, then its agriculture sector would be classified on its books as a profit centre. A profit centre is a business unit or department within an organization that generates revenues and profits or losses. Management closely monitors the results of profit centres since these entities are the key drivers of the total results of the parent entity.
- The “B” in BRICS stands for Brazil. The south American country is part of the group of countries recognized to be the fastest growing economies in the world.
- The other countries that make up the BRICS club are Russia, India, China, and South Africa.
- The centrepiece of Brazil’s economy is its burgeoning agriculture sector. The BRICS member country is a leading exporter of a litany of agricultural produce, including citrus, beef, poultry, tea, and coffee.
Management typically uses profit centre results to decide whether to allocate additional funding to them and whether to shut down low-performing units. A profit centre manager usually has the authority to make decisions regarding how to earn revenue and which expenses to incur.
This graphic from Statista showing the economic performance of the agricultural sector alone demonstrates the sector’s importance to the country’s financial well-being. The value of exports generated by Brazil’s farming industry is larger than the gross domestic products of some countries in Africa even when combined.
Exports in Brazil, on average, are larger than the foreign exchange reserves of South Africa and Nigeria. Perhaps more fascinatingly when this figure reported in terms of exports is compared to what the agriculture industry imports, it shows that the farming sector generates a net surplus of US$ 83 billion for the country! This amount is the same as what the continent of Africa attracted in terms of foreign direct investment in 2021.
UNCTAD stated in its report that Africa attracted as much as US$ 83 billion in foreign capital in 2021.
Agriculture is central to the Brazilian economy and adds tangible value to the economy. Its success with the sector warrants further inquiry and study into what works for the farming sector and what does not. This inquiry into the agricultural success of Brazil should be done through the lens of the African countries that are dependent on farming for their livelihood. Granted, most African countries would not be able to replicate the comparative advantage Brazil enjoys from its farming industry.
For example, as will be seen, a clear distinction that sets Brazil apart as a leader of the pack when it comes to farming is the sheer size of its land mass. However, it is interesting to note that for all its success in farming, the country is still very poorly penetrated in terms of mechanized farming.
This means that farming in Brazil is still largely manual with minimal to little use of mechanized tools in growing crops and foods. This means that there is scope for greater yields and increases in the production of food in Brazil over and above what is produced presently. This is where countries in Africa can, despite their minuscule size, match Brazil’s comparative advantage in terms of land mass.
Countries in Africa need to make use of technology and mechanization when it comes to food production. Advanced methods of farming where mechanization is concerned can exponentially increase food production by increasing crop yields. The use of advanced technologies in food production is the reason why Israel, despite having less than 1% arable land, is a net exporter of food.
This net exporter of food status means that Israel produces food that is sufficient for its domestic needs and even exports the surplus.
- Brazil’s comparative advantage where agriculture is concerned is in its land mass and rich soils. The land mass of the BRICS member country at 8.5 million square kilometres can comfortably accommodate all the European Union member countries.
- Only a third of Brazil’s land mass is used for agriculture purposes and the BRICS country still has very low levels of agriculture mechanization.
- Agriculture contributes as much as US$ 83 billion to the Brazilian economy, equal to the amount of foreign direct investments crossing into African shores in 2021!
Looking at the contribution agriculture makes to the overall economy of Brazil it is not difficult to see why the profit centre allegory is apt to describe the sector.
According to Statista, agriculture contributes at least 4% of the annual value added to the gross domestic product of Brazil. It accounts for at least 9% of the people who are employed and able to work. On the face of it reading numbers 4% and 9% seem like they are nominal until one considers the sheer size of the country of Brazil in terms of land mass. Brazil is one of the largest countries in the world in terms of land area. It sits on no less than 8.5 million square kilometres.
Of this land mass, approximately a third is used for agriculture. For perspective’s sake, Brazil is the fifth largest country in the world after Russia, Canada, China, and the United States. The Brazilian Report states that all the countries that make up the European Union would fit inside Brazil’s borders!
To bring the perspective much closer to home, the land mass Brazil sits on is reportedly seven times larger than South Africa. Zimbabwe would fit twenty-two times into Brazil’s land mass, and Kenya would fit 15 times into the South American country. The country is large. The land it uses for agriculture purposes alone would be larger than some countries and continents. The vast land mass shows itself in the crop production metrics that the country reports. Britannica reports, “about one-third of the world’s oranges are grown in Brazil—more than twice the amount produced in the United States, which is the world’s second major supplier. Brazil is also the world’s main producer of cassava and a leading grower of beans, corn (maize), cacao, bananas, and rice.
Although the bulk of these products is consumed domestically, some are exported, including jute and black pepper from the Amazon region; palm oils from the Northeast coast; garlic from Minas Gerais; peanuts (groundnuts), oranges, and tea from São Paulo; and tobacco from Santa Catarina and the Rio Grande do Sul. Brazil nuts are economically important only in limited areas of the North.”
The livestock sector of Brazil’s agricultural sector is equally impressive in terms of scope and scale. The country has one of the largest livestock populations in the world, with over 200 million cattle. Again, for perspective, it is useful to make an important comparison to appreciate just how large this number is. At its peak, Zimbabwe was considered Africa’s paradise and its breadbasket.
- Brazil’s success has lessons for African countries and other BRICS member countries. Other countries need to develop the agriculture sector to be a self-sustaining profit centre that adds value to the rest of the economy.
- Brazil has other well-performing facets in its economy. The BRICS country’s thriving mining industry attracts investment from the largest mining companies. Additionally, the BRICS country has equally impressive manufacturing and services sectors.
Zimbabwe’s role in its regional bloc, the South African Development Community, was food security. This role was assigned to the country because of its thriving agricultural sector then. However, at its peak, Zimbabwe’s beef cattle head did ever exceed 1 million to 1.5 million cattle. Be that as it may, Zimbabwe exported beef then and continues to export beef to Europe, albeit at reduced and marginal levels in comparison to when agriculture was central to that economy. At its height, Zimbabwe’s beef herd did not even makeup 1% of Brazil’s current head of beef cattle. Brazil slaughters more cattle than the United States.
Extensive grazing lands feed Brazil’s beef head in the country’s South and Southeast regions. However, increasingly grazing lands are now extending into the northern states and frontier zones like Amazonia. Consequently, the meat packing industry, which supports the livestock sector, has its principal operations in Rio Grande do Sul.
This state is said to be closest to the beef-producing plains of Uruguay and Argentina. Brazil also produces large numbers of poultry which, together with beef are exported to other countries. The agriculture sector also includes fisheries and forestry both of which are impressive in terms of size and scale. The other lesson Brazil’s economic success can teach to African economies beyond farming is the diversification of its economy. There is little doubt that agriculture is one of the crown jewels of the Brazilian economy; however, diversification is not the be-all and end-all of the economy.
There are other facets of the economy that are thriving currently. Brazil is home to one of the largest mining industries in the world that attracts large amounts of capital from multinationals looking to exploit the country’s vast mineral deposits.
Going back to the beginning, the lesson for countries in Africa that are reliant on agriculture for their livelihood is to follow the lead of Brazil. They should promote and support their agrarian industries until they become self-sustaining profit centres that generate value for their countries the same way that agriculture does to Brazil. The focus for African countries when it comes to agriculture should be to be food-sufficient and export-oriented.
It is in this way that the African continent can be like Brazil which has earned the right to be called the world’s pantry.