Can Brazil’s agricultural exports surf the coming geopolitical waves?

For two decades, globalization supported Brazil’s robust growth as a major agricultural exporter. However, recent events have shown that the geopolitical shift away from globalization and a rules-based international order toward a more fragmented environment carries significant implications for international relations and trade.

Currently, Brazil is the world’s foremost net exporter of food and agricultural (F&A) commodities, leading the world in exports of feed and food commodities such as soybeans, animal proteins, sugar, coffee, and more. Rising import demand, most notably in China and the rest of Asia, has driven export growth.

Now, China is by far the largest single destination for Brazilian F&A exports, accounting for some 33% of their total value. The EU-27 and US are the next most important destinations, with these top three together representing 54% of Brazil’s F&A exports by value.

Brazil’s rise as a leading agricultural exporter has seen the country become ever more dependent on imported fertilizers and crop protection products. Meanwhile, local refining capacity growth has lagged fuel demand, and imports account for 25% to 30% of Brazil’s diesel use.

This dependence on imported farm inputs and the concentration of Brazil’s agribusiness exports raise questions about how the country’s agribusiness sector may need to adapt to deal with a geopolitical environment that is less benign than it was 10 or 20 years ago.

Although Brazil’s scale as a supplier of key commodities confers a degree of protection and bargaining power in the face of potential geopolitical obstacles to trade, the route to resilient growth will be via reducing dependence on imported farm inputs and diesel while also diversifying both export destinations and products. These strategies are likely to help Brazilian agribusiness maintain export growth and increase resilience in a more uncertain geopolitical environment.