BRAZIL: BREADBASKET OF THE WORLD – A Light Emerges for the Post-Crisis

Yes, the current pandemic, despite all its terrible implications, has sparked an interesting “light at the end of the tunnel” for emerging markets, especially Brazil.

Brazil has strong prospects, in the near future, of becoming a true “breadbasket of the world,” and this goes beyond just the export of food products—it extends to all sectors!

Of course, everything said about the post-crisis period still involves a good deal of speculation. However, some aspects can already be seen as certain in the future, among them, one very important:

The dynamics of global relations will be completely transformed!

Let’s look at some of the main aspects that will certainly affect us very positively.

a) Greater diversity of players in the international market:

One of the aspects that seems obvious, and is becoming more evident each day, is that when markets reopen and the economy starts moving again, the “bipolarity” of the market (USA–China) that existed until now will have disappeared from the international scenario.

Whether due to the difficulty and long recovery time of the American economy, or the increasing challenges China will face in maintaining its trade partnerships with the rest of the world.

This will open doors to a new dynamic in international relations, one that will favor local and intra-bloc relationships.

In this context, a large consumer market—previously inaccessible due to strong international competition—opens up for Brazil (the largest producer in Latin America in almost all sectors).

b) Greater rise of developing countries:

In addition, studies show that the recovery time of developing economies will be much shorter than that of major economies.

A study by McKinsey & Company*, for example, shows that in a scenario where recovery begins at the end of 2020, major economies such as the United States and the European Union will take at least four years to return to pre-pandemic economic levels. Meanwhile, developing countries such as Brazil are expected to achieve the same performance within 1.5 to 2 years.

A significant advantage when considering global competitiveness!

*Source: Covid-19: Briefing Materials - Global Health Crisis and Response (04/03/2020)

c) Prospects for new markets:

In addition, the European Union was already facing pressure even before the coronavirus outbreak.

The United Kingdom voted in a referendum to leave the bloc (the well-known Brexit), and several other conflicts among member countries had already revealed a certain level of instability within the union.

The COVID-19 pandemic further intensified the imbalance within Europe—Germany and France appear to have more financial resources and infrastructure to deal with the situation, while Italy, Spain, and Portugal are facing greater challenges.

On May 13, in an interview with the Financial Times, French President Emmanuel Macron expressed concern about maintaining balance to ensure the survival of Europe as a bloc.

An important point for Brazil is that the European Union has consistently stated that one of its main paths out of the crisis lies in trade agreements outside the USA–China axis. One of the key agreements in this regard is with Mercosur (whose political agreement was announced last year).

This is one of the reasons why negotiations have continued behind the scenes during the coronavirus crisis at an accelerated pace. Negotiating teams have been meeting regularly, and the final agreement text is expected to be released in the coming days.

In other words, in the near future, a free-market environment may open up for Brazilian companies, granting access to a consumer market across 32 countries (with over 500 million consumers), along with a reduction in export taxes on 93% of goods and services.

Why is all of this important for Brazil?

Yes, it appears that the world will emerge from the crisis less globalized, but the creation of self-sustaining economies does not happen overnight.

Despite the challenges posed by climate change and infrastructure limitations, Brazil still holds strong potential to become a major breadbasket for the world.

With increased use of technology, Brazil can boost productivity and competitiveness in agricultural products, creating more international opportunities.

However, it is necessary to open new channels—or rather, explore new horizons—to distribute surplus production.

With higher productivity and lower prices, demand for Brazilian products is expected to increase, even in a context of limited market liquidity.

Consumers are likely to prioritize products and services that come from “closer to home” (literally).

Therefore, as mentioned, trade within Mercosur and the search for new markets for Brazilian products should become a key priority for Brazilian companies moving forward.

To offer high-quality, competitively priced industrial products—reducing reliance on costly imports—it is essential to make domestic industries more efficient, competitive, and technologically advanced.

There is no doubt that trends point toward reduced use of large office spaces, increasing digital transformation of markets, and growing importance of investments in transportation infrastructure.

We must adapt and supply our cities—and the world—quickly and efficiently.

Even while confined to our homes, it is important to continue generating new ideas and seeking creative solutions that benefit everyone.

The world does not stop. It may be unwell, fragmented, and concerned, but it still needs Brazilian products and services.

And Brazilians—who have already faced many crises—will overcome this one as well, with resilience and emerge even stronger than before.