CONFIDENTIAL
FOR INTERNAL USE WITHIN
CLIENT COMPANY ONLY
AN INTRODUCTION TO THE
BRAZILIAN AGRICULTURE
AND FOOD SECTOR
FACT PACK - AGRICULTURE AND FOOD INDUSTRY BRAZIL
November 2015
São Paulo, Brazil
BRAZIL IS EXPECTED TO SUPPLY UP TO 40% OF THE
INCREASED GLOBAL FOOD DEMAND BY 2050
World-leading
producer and
exporter
23%* of Brazil’s GDP
Productivity
investments
BRL

Government
credit
programs
1tn in 2013
Agribusiness represents 1/3 of employment and
almost 40% of total exports
 Brazil is a top global supplier of a diverse array of agricultural
goods such as beef, ethanol,
cotton, soybean and
cellulose
SOURCE: IBGE, CEPEA/USP
BUSINESS SWEDEN
* INCLUDING AGRICULTURE, INDUSTRY, INPUTS AND DISTRIBUTION
6 APRIL, 2016
2
AGRICULTURE PRODUCTION VALUE IS EXPECTED TO
30% IN THE NEXT 10 YEARS
LAND USE FOR MAJOR CROPS IS PROJECTED TO INCREASE 20% BY 2024
AGRICULTURE GROSS PRODUCT VALUE (BBRL)
RURAL CREDIT, BY HARVEST PLAN YEAR (BBRL)
200
700
180
600
38
160
140
500
44
120
400
100
80
300
38
26
21
150
60
200
40
80
89
98
2011-12
2012-13
2013-14
112
20
100
0
0
2000
Total
2005
2010
2015
Main Animal Products
2025*
Main Crops
2014-15
2015-16
Capital Investment Financing
Production Financing
THE INCREASE IN RURAL CREDIT HAS SUPPORTED THE GROWTH IN AGRICULTURE PRODUCTION
SOURCE: MAPA, OECD
BUSINESS SWEDEN
* FORECAST BASED ON PROJECTIONS FROM THE BRAZILIAN MINISTRY OF AGRICULTURE
6 APRIL, 2016
3
GRAIN AND FRUIT PRODUCTION CONCENTRATED TO
THE SOUTH AND MIDWEST..
CROP GROSS PRODUCTION VALUE, BY PRODUCT (2014)
Roraima
Amapá
TOTAL = 297,14 BBRL
18%
Amazonas
Pará
Bahia
Mato Grosso
Soy (grain)
Sugar cane
Corn (grain)
Orange
Coffee (grain)
Tomato
Banana
Cotton
Other
Minas
Gerais
Mato Grosso
do Sul
Espírito Santo
São
Paulo
Paraná
Rio Grande
do Sul
15%
12%
Goiás
Sugar cane farms
Coffee farms
6%
6%
Rio de Janeiro
Soybean/Corn farms
5%
Brasília
Largest soy* and
corn production
area
MAIN CROPS
DISTRIBUTION
4%
Alagoas
Sergipe
Tocantins
Rondônia
30%
4%
Paraíba
Pernambuco
Piauí
Acre
Rio Grande
do Norte
Ceará
Maranhão
Santa
Catarina
Largest orange
and sugar cane**
production area
Orange Farms
Product
Brazil’s world
production rank
Brazil’s world
exporter rank
Total exports
2013 (BUSD)
Soybean Grain
2nd
1st
22,8
China
Sugar
1st
1st
11,8
China
Corn
3rd
1st
6,3
Japan
Orange Juice
1st
1st
2,3
Belgium
Coffee
1st
1st
4,6
U.S.
Main
importer
BRAZIL IS A WORLD-LEADING SOY, SUGAR, CORN, ORANGE AND COFFEE EXPORTER
SOURCE: CONAB, IBGE, MINISTRY OF AGRICULTURE, MINISTRY OF FOREIGN RELATIONS
BUSINESS SWEDEN
* MATO GROSSO STATE ALSO CONCENTRATES BIODIESEL PRODUCTION
** SÃO PAULO STATE ALSO CONCENTRATES ETHANOL PRODUCTION
6 APRIL, 2016
4
..AND ALSO ANIMAL PROTEIN PRODUCTION
BRAZIL IS THE WORLD´S LARGEST BEEF AND CHICKEN EXPORTER
ANIMAL GROSS PRODUCTION VALUE, BY PRODUCT (2014)
Roraima
Amapá
TOTAL = 175,36 BBRL
6%
Pará
Amazonas
Ceará
Maranhão
Alagoas
Sergipe
Tocantins
Rondônia
Bahia
Mato Grosso
Beef
Chicken
Milk
Swine
Eggs
36%
16%
Paraíba
Pernambuco
Piauí
Acre
7%
Rio Grande
do Norte
Brasília
35%
Goiás
Largest bovine
production area
Minas
Gerais
Mato Grosso
do Sul
Espírito Santo
São
Paulo
LIVESTOCK
DISTRIBUTION
Rio de Janeiro
Paraná
Bovine cattle
Swine farms
Chicken farms
Rio Grande
do Sul
Santa
Catarina
Largest chicken
production area
Largest swine
production area
Brazil’s world
production rank
Brazil’s world
exporter rank
Total exports
2013 (BUSD)
Beef
2st
1st
5,4
Russia
Chicken
3st
1st
7,0
Saudi Arabia
Swine
4st
4st
1,2
Russia
Product
Main importer
BEEF AND CHICKEN REPRESENT 71% OF THE TOTAL ANIMAL PROTEIN PRODUCTION VALUE
SOURCE: CONAB, IBGE, MINISTRY OF AGRICULTURE, MINISTRY OF FOREIGN RELATIONS
BUSINESS SWEDEN
6 APRIL, 2016
5
THE LARGEST BRAZILIAN COOPERATIVES ARE
CONCENTRATED TO THE STATE OF PARANÁ
Cocamar has approximately 12 500 associated producers.
Coamo has 27 975 associated producers generating 7
million tons, which represents 3,6% of total agricultural
production in Brazil
Company
Coamo Agroindustrial Cooperativa
Company
Cocamar Cooperativa Agroindustrial
Headquarters
Campo Mourão - PR
Headquarters
Maringá - PR
Net revenue (2014)
8,16 BBRL
Net revenue (2014)
2,74 BBRL
Main Business
Soybean, corn, wheat, coffee
Main Business
Soybean, corn, wheat, coffee, orange
SLC has 15 farms in Brazil, with 3 290 employees. SLC
Agrícola branch has 1,5 BBRL turnover.
C. Vale has 15 562 associated producers.
Company
C. Vale Cooperativa Agroindustrial
Company
SLC Participações S.A.
Headquarters
Palotina - PR
Headquarters
Porto Alegre - RS
Net revenue (2014)
4,61 BBRL
Net revenue (2014)
2,69 BBRL
Main Business
Soybean, corn, cassava, wheat, milk, chicken, swine
Main Business
Soybean, corn, cotton, implements
Comigo has approximately 4 000 associated producers.
Comigo produces 3,2 million tons of agricultural products
Lar has storage capacity of 1 million ton. It also manages a
network of 15 supermarkets.
Company
Cooperativa Agroindustrial dos Produtores Rurais do
Sudoeste Goiano
Medianeira - PR
Headquarters
Rio Verde - GO
Net revenue (2014)
3,02 BBRL
Net revenue (2014)
2,58 BBRL
Main Business
Soybean, corn, chicken, swine
Main Business
Soybean, milk, seeds
Company
Cooperativa Agroindustrial Lar
Headquarters
THE SOUTH REGION OF BRAZIL COMPRISES THE LARGEST AGRICULTURAL COOPERATIVES
SOURCE: VALOR, COMPANIES’ WEBSITES
BUSINESS SWEDEN
6 APRIL, 2016
6
THE FOOD AND BEVERAGE INDUSTRY HAS GROWN
MORE THAN BRAZIL’S GDP IN THE LAST 5 YEARS
LARGE CONSUMER MARKET AND EXPORTS SHOULD PUSH FOR GROWTH IN 2016
FOOD AND BEVERAGE INDUSTRY GROWTH
FOOD AND BEVERAGE INDUSTRY IN NUMBERS, 2014
7,6%
7,0%
5,0%
5,0%
4,0%
3,6%
3,0%
Food Industry GDP
240 BUSD
Total GDP Share
10,2%
Industrial GDP Share
22,5%
Local Market Sales
175 BUSD
Employment
1,9 million
Total Employment Share
4%
Investments 2014
5 BUSD
Expected Investments 2016
5 BUSD
6,0%
5,1%
4,2%
4,9%
3,9%
3,6%
3,8%
3,2%
3,5%
2,7%
3,1%
1,8%
1,6%
1,1%
1,0%
1,0%
1,1%
0,0%
0,1%
-0,2%
-1,0%
-2,0%
2016*
2015*
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
-3,0%
Food Industry Physical Production Annual Growth (%)
GDP Anual Growth (%)
DESPITE THE ECONOMIC RECESSION, THE FOOD INDUSTRY IS EXPECTED TO CONTINUE INVESTMENTS AND GROWTH
SOURCE: IBGE, ABIA, BNDES
BUSINESS SWEDEN
* FORECAST
* EXCHANGE RATE BRL/USD 2014 = 2,3475
6 APRIL, 2016
7
MEAT, FATS AND SUGAR ACCOUNT FOR 50% OF THE
INDUSTRIAL PRODUCTION OF THE FOOD INDUSTRY
FOOD INDUSTRY IMPORTS WHEAT FLOUR, MILK POWDER AND COCOA
FOOD AND BEVERAGE INDUSTRY PRODUCTION, 2013
5%
6%
Meat Products
120
Oils and Fats
100
Sugars
28%
13%
1%
2%
4%
12%
9%
80
Starch Products
Dairy
60
Vegetable
Products
Coffee
40
11%
TOTAL: 212,2 BUSD
20
Fish Products
Other
9%
FOOD INDUSTRY SALES BY SECTOR, PRICES OF 2014 (BBRL)
Alcoholic
Beverages
Non-Alcoholic
Beverages
0
2008
2009
2010
2011
Meat Products
Coffee, Tea and Cereal Processing
Dairy
Wheat Products
Chocolate, Cocoa and Candy
Fish Products
2012
2013
2014
Beverages
Oils and Fats
Sugars
Vegetable Products
Dehidrated and Frozen Products
MEAT AND BEVERAGES REPRESENT APPROX. 40% OF THE BRAZILIAN FOOD INDUSTRY, AND ARE THE FASTEST GROWING SEGMENTS
SOURCE: IBGE, ABIA
BUSINESS SWEDEN
6 APRIL, 2016
8
THE BRAZILIAN FOOD INDUSTRY IS CONCENTRATED TO
THE SOUTH AND SOUTHEAST REGIONS…
Roraima
FOOD INDUSTRY COMPANIES IN BRAZIL
Amapá
Amazonas
Pará
Maranhão
Piauí
Acre
Rio Grande
do Norte
Ceará
Number of
manufacturing plants
by state
0-375

Minas
Gerais
Mato Grosso
do Sul
Large companies, local and foreign are acquiring smaller
companies; the number of fusions of food companies tripled in
1T2015

There are strong Brazilian companies consolidated in the local
market, which are exporting and expanding to foreign countries

Many companies, including large ones, produce “food commodities”,
which can practice limited price differentiation compared to
competitors. Thus, competition takes place on the lowest price.
Espírito Santo
São
Paulo
Rio de Janeiro
Paraná
Rio Grande
do Sul
Logistics explain the existence of small regional food companies
across the country, which supply the local demand

Goiás
1500-3000
3000-4500
The main obstacle to the expansion of investments is the poor
logistics infrastructure. Lack of roads, railways and ports and
expensive freight make prices go up in distant regions
Brasília
375-750
750-1500

Alagoas
Sergipe
Bahia
Mato Grosso
São Paulo and Minas Gerais are the main food producing states
Paraíba
Pernambuco
Tocantins
Rondônia

Santa
Catarina
+4500
THE INDUSTRY IS GOING THROUGH A CONSOLIDATION PROCESS OF LARGE COMPANIES ACQUIRING SMALLER
SOURCE: IBGE, VALOR, ABIA, BNDES
BUSINESS SWEDEN
6 APRIL, 2016
9
… AND IS DOMINATED BY GIANT FOOD COMPANIES
Company
JBS S.A.
Capital control
Brazilian
Net revenue (2014)
120,5 BBRL
Business
Animal protein, dairy, cosmetics, cleaning products
Ambev is the largest brewery in Latin America and the 5th
in the world, operating in 14 countries. Ambev is part of AB
InBev, the largest brewer in the world.
Company
Ambev S.A.
Capital control
Brazilian/Belgian
Net revenue (2014)
38,1 BBRL
Business
Beers, soft drinks
BRF is the 7th largest food company in the world, present
in 110 countries. BRF has 60 industrial plants in Brazil,
and 95% penetration in Brazilian households.
Bunge operates more than 100 manufacturing plants in
Brazil, with 20 000 employees. Bunge is the largest
agribusiness exporter in Brazil.
Company
BRF S.A.
Company
Bunge Alimentos S.A.
Capital control
Brazilian
Capital control
Brazilian/Belgian
Net revenue (2014)
29 BBRL
Net revenue (2014)
34,1 BBRL
Business
Animal protein, processed food
Business
Food, oils, grains
Marfrig has an operational exports to over 100 countries,
and is the 4th largest beef producer in the world.
Food & Grains
Animal Protein
JBS was the 2nd largest food company in the world in
2013, with 43,2 BUSD in annual sales, only behind Nestlé.
JBS has 216 000 employees, acting in 22 countries.
Beverages
MEAT, GRAINS AND BEVERAGES ARE THE MAIN BUSINESS OF THE LARGEST FOOD COMPANIES
Cargill maintains 19 industrial plants in Brazil, as well as 10
000 employees. Cargill is the 2nd largest soybean exporter
in Brazil.
Company
Marfrig Global Foods S.A.
Company
Cargill Agrícola S.A.
Capital control
Brazilian
Capital control
US
Net revenue (2014)
21 BBRL
Net revenue (2014)
26,2 BBRL
Business
Animal protein
Business
Processed food, storage and reselling of grains
THE BRAZILIAN FOOD INDUSTRY COMPRISES LARGE COMPANIES CAPABLE OF INVESTING IN HIGH-TECH PRODUCTS
SOURCE: VALOR, COMPANIES’ WEBSITES, MEDIA OUTLETS
BUSINESS SWEDEN
6 APRIL, 2016
10
PUBLIC FINANCING AND COST EFFICIENCY WILL DRIVE
BRAZILIAN AGRIBUSINESS IN THE NEAR FUTURE
CONSUMER TRENDS
INDUSTRY DRIVERS
Government
financing
BNDES financing and government programs
will continue to drive both agricultural
production and the purchase of new
equipment manufactured in Brazil. Public
financing is essential for investments in Brazil
Quality
As consumers become more conscious about
quality issues, label info, guarantee of origin,
traceability, risk control and quality
certification, solutions for such issues are
becoming more important for food producers
Cost efficient
technology
Many large producers are focused on
commodities, where competition takes place
on the lowest price. Cost efficient solutions
and reuse of by-products (such as biogas) are
major drivers
Sustainability
Consumers are getting more environmentally
conscious. In parallel companies are
increasingly adapting to environmentally
friendly standards.
Regulatory
compliance
Food regulations, as well as environmental
legislation are getting stricter. This is an
opportunity for suppliers of: food safety
equipment, dryers, automation and packaging
solutions, food analysis equipment
Healthier
products
Organic and functional products are niches
where growth is expected for the next years, a
trend also impacting Brazilian agriculture and
food production.
Mobility
Companies are searching for logistics
solutions which can generate precise and fast
information, in order to minimize losses.
Transport and storage solutions are major
concerns for agribusiness companies
Meat
consumption
trends
While increasing globally, meat consumption
growth in Brazil is starting to stagnate as
consumers are increasing consumption of
other food stuffs.
BRAZILIAN FOOD CONSUMER MARKET IS DEVELOPING AND GETTING MORE DEMANDING
SOURCE: SWITZERLAND GLOBAL ENTERPRISE, EUROMONITOR, RESEARCH
BUSINESS SWEDEN
6 APRIL, 2016
11
FOOD AND AGRICULTURE OFFERS GREAT
OPPORTUNITIES FOR SWEDISH COMPANIES IN BRAZIL
Investments
Demand
 BNDES and government financing programs for
clients of locally established manufacturers
 Recent economic slowdown and higher inflation in Brazil
 Pursue of clean and cost efficient technology
 Beef production to slow down due to local demand
saturation
 Production of healthier products and innovation
 Lower commodities price
Players
 Large organized
cooperatives who need
to invest (e.g. storage,
transport, implements)
 Brazilian large exporters
who want to grow
Market
Which
What
 Protection of local industry
opportunities
challenges
make Brazil
interesting?
should companies
be ready to face?
 Poor infrastructure for
roads, energy, ports and
airports
Market
 Large agribusiness market, internationally integrated
 Advantages: diverse climate and land availability
 Diversified production and growth
 Devaluated BRL is stimulating exports
 Language barrier, mainly
for agriculture
Business in Brazil
 Confusing and excessively bureaucratic food
regulations
 Complex tax system
 High import tariffs and other taxes
LARGE AND GROWING AGRICULTURE AND FOOD PRODUCER WITH INCREASING DEMAND FOR TECHNOLOGY
BUSINESS SWEDEN
6 APRIL, 2016
12
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6 APRIL, 2016
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CONTACT US
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Rua Joaquim Floriano, 466 – cj 1908 – Ed. Office
BR 04534-002 – São Paulo - Brazil
Phone: +55 11 2137 4400
Fax: +55 11 2137 4425
[email protected]