A couple of notes on Brazilian agribusiness

 

Agrifirma, the Brazilian farmland investment company, announced a new joint venture with Fundo Brasil Agonegocio, one of Brazil’s biggest private equity investors.

The new fund, Agrifirma Brasil Agropecuaria, will receive an $82m investment in Agrifirma’s existing projects. Notedly, huge areas of undeveloped land in Brazil’s Bahia region.

 

Keep an eye on the gouvernement

No explicit connection with the note on Agrifirma above, but it is worth keeping an eye on how the Brazilian gouvernement is treating foreigners buying land in the country. Giovana Araujo, from Itau Unibanco recently pointed out that the legal imbroglio over the acquisition of rural land by foreigners (and by foreign-controlled Brazilian companies) remains unresolved. In August 2010, president Lula  approved a new legal opinion issued by the General Counsel of the Federal Government (AGU) concerning the acquisition of rural land in Brazil by foreigners. As a result, restrictions spelled out by a 1971 federal law on the acquisition of rural land by foreigners and by foreign-controlled Brazilian companies went back into effect.

Giovana  believes that there is  room for the new AGU interpretation to be legally contested, we believe that the solution of this imbroglio will come in the form of a new law. But this will take time. Between proposal, debate and approval, it might take a year or more for new legislation to be enacted.

Quick note on Brazilian agribusiness

Half of Brazil is covered by forests, with the largest rain forest in the world located in the Amazon Basin.

Agribusiness accounts for 37% of jobs in Brazil, 46% of Brazilian exports, and 29% of Brazil’s GDP.

Recent investments in technology and fertilizers increased the sector competitiveness.  Brazil is also known for introducing new plant varieties, and acquiring top-of-the-line agricultural equipment.

The result is high productivity. Brazilian foodstuffs industry is one of the few sectors to sustain consistent growth for decades.

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About Hildete Vodopives

Hildete de Moraes Vodopives is founder of Brazil Global and of the Harvard Strategists Bureau. She is a member of the Brazilian Investment Analysts Association (APIMEC-Rio) where she served as Corporate Relations Director and later, on the board. Hildete advises companies doing business in Brazil. She lives between Paris and Rio and is a member of the Harvard Club of Paris and of the Mercosur Women’s Forum.
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One Response to A couple of notes on Brazilian agribusiness

  1. sigmaprojeto says:

    Hildete — this news has been everywhere and it is great news to everyone in the agriculture business — and as you note, how the government addresses foreign investment will a leveraging factor.

    Given the infrastructure of Brazil is in need of a huge overhaul, it will be interesting to see how well this and future administrations will protect their investment of this sector. There is a picture that keeps reminding me of situations like this — an astronaut, on the surface of Mars, holding the country flag…. and sitting on a horse. Improving their infrastructure will domino everywhere in their economy as well as invite outside investors, much like the introduction of the interstate highways. From what I am seeing in my own industry in Brazil (IT / HRIS / Proj Mgmt), my belief for protecting these investments with the proper maintenance as well as considerable preparation for undertaking massive projects is an educational process that needs to be given a greater focus and much higher value in Brazil.

    Like

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