Asia Beyond China


Whenever I hear about agribusiness trade with Asia, it is generally about trade with China. It is no coincidence that the country is called the Asian giant. The geopolitical weight and the growing Chinese demand for agricultural products draw more attention than the commercial opportunities that arise among its neighbors. China’s power of attraction is so great that sometimes we forget to notice other regions in Southeast Asia, where there are dynamic economies, which are commercially interconnected with growing consumer markets.

Singapore, for example, has a per capita income above US$ 65,000, with consumer demand for quality products. Vietnam has a much lower GDP per capita, approximately US$ 2,700, but the country has an expressive income growth, above 30% between 2015 and 2019. Thailand, Indonesia, and Malaysia also had an increase in per capita income above two digits.

The reflection of the increase in income has a direct impact on food consumption. According to data from the Food and Agriculture Organization of the United Nations (FAO), coffee consumption in Vietnam increased by more than 30% between 2014 and 2018. In the same period, milk consumption grew by 13.2% in the country. Fruits have also become more present in the diet of the region’s population. Consumption of apples increased by more than 5.7% in Malaysia and sales of grapes were up 20% in Indonesia.

Income growth helps to form a new middle class and directly impacts the increase in demand for higher value-added foods. These five countries together – Singapore, Malaysia, Indonesia, Thailand, and Vietnam – have more than 470 million inhabitants. Due to its size, its dynamism, the region cannot be left out of the Brazilian agricultural sector’s international action plans.

In order to expand its actions to internationalize agribusiness companies, the Brazilian Confederation of Agriculture and Livestock (CNA) took an important step in November: it installed in Singapore its second representation in Asia – the first one started in 2020, in Shanghai, China.

In the last century, Singapore – a cosmopolitan, modern center that seeks to connect East and West – has become a new operating front for CNA.The large presence of capital and ease of doing business are just some of the aspects of this country, which is also an efficient logistical hub, with impressive port capacity, responsible for distributing around 30% of the products sold in the region.

The CNA representation aims to seek business opportunities in Southeast Asia for companies in the agricultural sector. Not only in the Singapore market but also in countries like Thailand, Indonesia, Malaysia, and Vietnam. In 2020, exports of Brazilian agricultural products to this group of countries totaled US$ 7.2 billion, which represented a 32% growth compared to 2019. However, these products are still mostly grains, animal protein, sugar, and cotton.

The value exported to Southeast Asian countries is higher than the total agribusiness exports to the United States during the same period. Nevertheless, Brazilian business was able to establish a more diversified agenda towards the Americans, which includes not only our trade balance star products, such as cellulose, beef, and orange juice but also others, such as honey, fruits, and nuts.

The fact that we do not export directly does not mean that the populations of Southeast Asian countries are not consuming Brazilian quality products. They are, though unknowingly. And this happens because the brands are usually European or North American, but the inputs are Brazilian.

Europe and the United States specialize in importing agricultural products from all over the world, then processing, tagging, and re-exporting them. They have become major food exporters because they have absorbed steps to add value and, thus, conquer consumers all over the world. This is the case of Brazilian coffee, sold for roasting in Europe, to break into supermarkets in Asia, bearing indications of Italian, German, or Swiss origin.

Settling in Asia is more than just looking for new markets for agribusiness. It means creating shortcuts to allow direct contact with consumers and to favor the addition of value to products in Brazil. It is about a strategy to open new paths for businesses that involve more links in different agricultural chains.

Brazilian agribusiness needs to watch the region without being overshadowed by the great demand of the Chinese market. In fact, Chinese demand is a facilitator for the presence in Asia, as it allows scaling in the complex logistics of product distribution in the region. In this regard, Singapore’s excellence in port and distribution infrastructure complements the export effort of companies seeking to enter the region. Therefore, business opportunities in Southeast Asia demonstrate that it is possible to go beyond China, combining strategies that favor Brazilian products.

CNA wants to promote a coordinated internationalization strategy, based on its presence in Singapore and Shanghai, in order to allow the sector to take advantage of opportunities in the Chinese market, without losing sight of other dynamic economies in Southeast Asia. Because it is in that part of the world that the greatest consumer market of Brazilian agricultural products is located. It is up to the private sector to build shortcuts to add value to its products and, thereby, conquer those markets that are eager for quality food.

Lígia Dutra is the International Relations Director at the Brazilian Confederation of Agriculture and Livestock (CNA).

(•) Originally published on Broadcast.