It is no secret that the culture of the farming world is strongly influenced by the romantic ballads of country music. But I confess my surprise when I heard a song by Bruno & Marrone in which a passionate heart is challenged to say “I love you” in Mandarin. The song managed to unite Brazilian agriculture and China through love verses, an association I had never seen before.
In an international environment polarized by the United States and China, in which the dispute for markets takes on proportions of a trade war, the Asian superpower must go beyond the economy; It has to win hearts and minds. This is a big challenge for China in Brazil. Therefore, associating “agribusiness,” “farming ,” “love,” and “China” is definitely a sign of China’s increasing influence in the Brazilian agricultural sector. And that’s for a reason.
The extensive interdependence in trade of agricultural products is a source of concern, suspicion and fear in bilateral relationships between Brazil and China. Fear is justified on both sides. In the case of Brazil, because it leaves more than 33% of its exports in the hands of a single buyer. For China, the concentration of large import volumes in a single supplier (i.e. Brazil).
The study published in April this year, entitled “China Agricultural Outlook 2021-2030,” helps to better understand the interdependence of China and Brazil in food production and consumption for the next decade. Providing revealing data, the document predicts that the modernization of Chinese agriculture, based on available technologies, could increase production by 2% by 2030. Consumption, on the other hand, will continue to grow at much higher levels than national production. For example, it predicts for the next ten years the increase in animal protein and dairy products consumption in the order of 24.7% and 32.6%, respectively.
The obvious conclusion is that, in order to bridge the gap between future demand growth and domestic production capacity, China will need to import even more than it does today. The challenge of finding suppliers capable of meeting this growing demand will be no small task.
In 2020, the increase in purchases of the main agricultural products grew impressively in China, impacting international prices. Products of interest to Brazil, such as grain and animal protein, had an increase in Chinese imports of 28% and 60.4%, respectively, compared to 2019. Observing data on grain imports, we noticed that corn and wheat increased by 140% and 130% compared to the previous year. For soybean, the jump was smaller;: 13.3%, compared to 2019, but the record volume reached 100.33 million tons. Concerning animal protein, the highlight was pork imports, which reached 4.39 million tons, an increase of 108% compared to 2019.
The constant pressure to increase food imports is one of the central pillars of sustaining the country’s food security policy. Chinese leaders know that, even with every incentive to increase agricultural productivity, there are limitations in the availability of land, water, and other natural resources which makes self-sufficiency in food production for its 1.4 billion inhabitants difficult to reach.
Fear of dependence on a few food vendors forced the Asian country to set a goal of diversifying its suppliers. That would mean relying less on countries like Brazil, Australia, and the United States.
In the short term, it may seem impossible for China to find other soy and beef suppliers that match Brazilian quality and price. However, Chinese investments to develop agriculture in African and Southeast Asian countries have been huge. In May this year, the Chinese embassy in Tanzania celebrated, on Twitter, the first shipment of 120 tons of soybeans grown in that country to supply the Chinese market. It may seem too little compared to total soy consumption in China, but it was only the first shipment. Anyone who follows the speed of transformations in the Chinese economy knows that making the “impossible to be possible” is at the heart of that country’s development model.
Within this scenario, Brazil can also reposition itself in world trade. The country has immense agricultural production potential and is also an indispensable ally in the supply of food to China.
Last year, we supplied 40% of all beef imported by the Chinese, as well as 64.1% of their soybean. There is an obvious complementarity between Brazil’s productive capacity and China’s consumption need, which has become even more evident during the pandemic. While several production chains suffered from supply disruption , Brazilian agribusiness kept its international commitments and guaranteed safe food. Thus, even with the goal of diversification pursued by the Chinese, Brazilian agribusiness will continue to be a well-known and reliable supplier in the global market.
Bruno & Marrone’s song shows that China is already in the future of agriculture, whether in trade or in country music. This suggests that, in order to diversify our exports to the Asian country and get to know its consumers, we will need to learn much more than just saying “I love you” in Mandarin. We will have to master the entire language, putting fears aside, and understand their culture.