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Agriculture in Brazil and Relations with the Eu DIRECTORATE GENERAL FOR INTERNAL POLICIES POLICY DEPARTMENT B: STRUCTURAL AND COHESION POLICIES AGRICULTURE AND RURAL DEVELOPMENT AGRICULTURE IN BRAZIL AND RELATIONS WITH THE EU STUDY This document was requested by the Director-General of the Directorate-General for Internal Policies. AUTHORS POLICY DEPARTMENT B members: Albert MASSOT Guillaume RAGONNAUD Francesco TROPEA COORDINATION AND EDITORIAL RESPONSABILITY Albert MASSOT Policy Department B: Structural and Cohesion Policies European Parliament B-1047 Brussels E-mail: [email protected] EDITORIAL ASSISTANCE Catherine MORVAN LINGUISTIC VERSIONS Original: EN ABOUT THE EDITOR To contact the Policy Department or to subscribe to its monthly newsletter please write to: [email protected] Manuscript completed in March 2014. © European Union, 2014. This document is available on the Internet at: http://www.europarl.europa.eu/studies DISCLAIMER The opinions expressed in this document are the sole responsibility of the authors and do not necessarily represent the official position of the European Parliament. Reproduction and translation for non-commercial purposes are authorised, provided the source is acknowledged and the publisher is given prior notice and sent a copy. DIRECTORATE GENERAL FOR INTERNAL POLICIES POLICY DEPARTMENT B: STRUCTURAL AND COHESION POLICIES AGRICULTURE AND RURAL DEVELOPMENT AGRICULTURE IN BRAZIL AND RELATIONS WITH THE EU STUDY Abstract: This study consists of: 1) an introductory section setting out the main physical and demographic data; 2) a general chapter on the Brazilian economy; 3) an in-depth analysis of the agricultural sector in terms of both production and commercial aspects; 4) an overview of conflicts and potentially conflictive issues in EU-Brazil relations; 5) and finally, some general comments on the new CAP 2014/2020. IP/B/AGRI/NT/2014_03 MARCH 2014 PE 529.052 EN Agriculture in Brazil and Relations with the EU ___________________________________________________________________________________________ CONTENTS LIST OF TABLES 3 LIST OF FIGURES 5 LIST OF MAPS 5 1. INTRODUCTION 9 1.1. Administrative organisation and policy challenges 9 1.2. Physical geography: the economic regions 10 1.3. Demography: multiracialism, unequal spatial distribution and ageing 12 2. THE BRAZILIAN ECONOMIC: BASIC DATA 15 2.1. General economic structure: agro-trade capacity, industrial diversification and gradual move towards the tertiary sector 15 2.2. The (controversial) role of 'Agri-trade' in Brazilian development 16 3. BRAZILIAN AGRICULTURE: A LEADING SECTOR AT INTERNATIONAL LEVEL 19 3.1. Basic data 19 3.2. Production structure (I): main vegetable sectors 21 3.3. Production structure: (II): main animal sectors 23 3.4. Agricultural trade 24 3.5. EU agricultural trade with Brazil 25 3.6. Brazil's international position 28 4. CONFLICTS AND POTENTIALLY CONFLICTIVE ISSUES IN EU- BRAZIL RELATIONS: AN OVERVIEW 31 4.1. An analysis of EU-Brazil trade conflicts 31 4.2. Genetically Modified Crops 34 4.3. Biofuels 36 5. COMPARISON BETWEEN THE AGRICULTURAL POLICIES OF BRAZIL AND THE EU 37 3 PE 529.052 Policy Department B: Structural and Cohesion Policies ___________________________________________________________________________________________ 5.1. Brazil's agricultural policies 38 5.2. The Common Agricultural Policy 2014-2020 38 MAIN BIBLIOGRAPHICAL REFERENCES 51 4 PE 529.052 Agriculture in Brazil and Relations with the EU ___________________________________________________________________________________________ LIST OF TABLES Table 1 Political and administrative organisation 11 Table 2 Brazil's main socioeconomic and macroeconomic indicators 16 Table 3 Brazil's main agricultural products 20 Table 4 World ranking of Brazil's main agricultural products, 2011/2012 21 Table 5 EU-28 trade with Brazil, 2010-2013 26 TABLE 6 35 Top four global biofuels producers TABLE 7 38 Brazil's main agricultural support measures TABLE 8 39 Heading 2 in detail - Sustainable Growth: Natural Resources, including the Common Agricultural Policy TABLE 9 40 Architecture of the new direct payments system TABLE 10 41 Components of the new direct payments system 5 PE 529.052 Policy Department B: Structural and Cohesion Policies ___________________________________________________________________________________________ 6 PE 529.052 Agriculture in Brazil ____________________________________________________________________________________________ LIST OF FIGURES Figure 1 Brazil's economic indicators 17 Figure 2 Manufacturing exports 18 Figure 3 Brazil commodity exports 18 Figure 4 EU-28 agricultural trade with Brazil in 2013 27 Figure 5 EU-27 imports of agricultural products in 2012 28 Figure 6 33 The Path of CAP Expenditure, 1980-2020 Figure 7 34 Evolution of export refunds in the framework of the CAP, 1980-2013 Figure 8 49 Top sugar exporters in the world LIST OF MAPS Map 1 Map of Brazil 9 Map 2 Regions and States 12 7 PE 529.052 Policy Department B: Structural and Cohesion Policies ___________________________________________________________________________________________ 8 PE 529.052 Agriculture in Brazil ____________________________________________________________________________________________ 1. INTRODUCTION 1.1. Administrative organisation and policy challenges Brazil is a Federal Republic of 26 states and a federal district (MAP 1), whose capital is Brasilia (population 2 789 000) (2013 estimate). Brazil operates a presidential system (Dilma Roussef, ‘Partido dos Trabalhadores’ - PT, has been President since January 2011) and a bicameral legislative system: a Congress (Lower House) with 513 representatives elected for four years, and a Federal Senate (Upper House) with 81 members elected for eight years. All members of the Executive and Legislative branches are directly elected. Fifteen political parties are represented in Congress. The main political groups are: the abovementioned PT (left-wing), the PSDB (‘Partido da Social Democracia Brasileira’), the PMDB (‘Partido do Movimento Democrático Brasileiro’) and the Democrats (DEM, conservative). There is a powerful agricultural lobby in Congress (‘Bancada ruralista’), fervent defenders of the interests of major landowners and agribusiness. Each state has its own government and legislative mechanism, making the tasks of government extremely complicated and inducing a permanent search for political compromise. The next elections due to be held in Brazil are the 2014 presidential, gubernatorial and legislative polls. The PT seems to find it increasingly difficult to channel the demands of an expanding middle class in a context of slow growth and rising expectations, as the mid- 2013 rash of mass demonstration illustrated. During the June 2013 football Confederations Cup, numerous protests erupted in Brazil. Initially a movement against the increase in public transport fares, it assumed gigantic proportions, venting anger about a range of issues (including new stadium projects for international sports events, quality of public services or corruption). MAP 1: MAP OF BRAZIL Source: US Department of State. 9 PE 529.052 Policy Department B: Structural and Cohesion Policies ___________________________________________________________________________________________ 1.2. Physical geography: the economic regions With a surface area of 8 515 767 km² and a population of 200 million (2013 estimation), Brazil is the world’s fifth largest country in terms of area as well as the sixth largest country in population. This also makes it the most vast and most populous country in Latin America. Its enormous size and huge population also explain the low average population density (22, 43 inhabitants/km²) and the striking geographic, climatic and sociological contrasts. Five large regions may be distinguished for statistical purposes, which in turn contain various States (MAP 2 - TABLE 1): - Southern region, located between the Atlantic Ocean, Argentina, Uruguay and Paraguay, composed of the states of Paraná, Santa Catarina and Río Grande do Sul. Mainly mountainous terrain is to be found to the north, while vast plains (pampas) are the feature of the southern section. The latter, with a sub-tropical or mild climate similar to certain EU countries and good quality land, is highly developed and has a marked European influence in the form of a large migrant population of German and Italian origin. The main crops grown here are soybean, maize and corn, and there are also large industrial nuclei in Río Grande do Sul (petrochemical sector) and Paraná (automobiles). The main cities are Porto Alegre (population 1 467 000, and state capital of Río Grande do Sul) and Curitiba (population 1 848 000, state capital of Paraná). - South-Eastern region, on the Atlantic coast, comprising the states of Espírito Santo, Minas Gerais, Rio de Janeiro and São Paulo. This region is by far Brazil’s most populous (84.5 million: 42.2% of the entire population of Brazil) (TABLE 1), and the most industrialised, accounting for more than half of GDP despite a steady fall since 1985 in favour of the central-western region. In terms of agriculture, soybean and cereals are the main crops as in the Southern region, alongside citrus fruit (in São Paulo state), creating a large processed products industry (concentrated and frozen fruit juices). The region contains three large cities at the heart of the largest metropolitan regions: Rio de Janeiro (population 6 136 000, the federal capital until 1960, now capital of the state of the same name), Belo Horizonte (population
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