The Dynamics of Brazilian Farming and Ranching: 
Implications for Players in the Value Chain

A Multi-Client Study

March 2010

Background and Study Objective

Brazil's agricultural sector has shown significant growth in the past 30 years. The objective of this report is to identify the driving forces behind such growth and identify those driving forces of importance in the near future. While growth derived from largescale farms is well known, what are the other factors playing an important role in Brazilian agricultural progress? It is believed that there are many other drivers, some of them structural, yet the major question is, what will be the trend for each driver, each market segment and each cluster of farm profiles?

Knowing that Brazil is considered a country with vast agricultural frontiers and high potential for near-future agricultural output, a closer look is needed to better understand the investment opportunities in this country. This study targets an audience that is interested in an in-depth analysis of farm profiles and the trends, issues and drivers that will open up new avenues for commercial relationships with these farm establishments.

Challenges for anyone analyzing the Brazilian agricultural sector include data availability and data reliability. To execute this project the AgraFNP (a division of Informa Economics) project team will use both primary data proprietary to them and data from public sources. For example, the project team will use its own resources to identify and develop farmer profiles that have important implications for all entities that serve the agriculture sector by providing inputs and services, as well as those that depend on a reliable supply of agricultural products to serve industry and consumers in Brazil and throughout the world. The project team also will use a wide variety of publicly available data and information, including the latest Brazilian agricultural census data. When appropriate, the project team will identify problems and gaps in thepublicly available data and make corrections when necessary.

Similar to other economies, the Brazilian agricultural sector is heterogeneous and has a great amount of variation among farm types. The spectrum of farms is wide and the business opportunities can only be addressed and analyzed in sub segments such as crops, livestock activities, regions, and technology levels among others. There are numerous ways to classify crop and livestock farmers. It is AgraFNP's objective to analyze the latest Brazilian agricultural census data and verify what data makes sense to utilize. In those cases where census data can not be used, AgraFNP will use its own data base on Brazilian farmers as well as other primary and secondary sources of information. Some of the preliminary farm classifications that AgraFNP will analyze are: mega farmers, larger family farms and corporate farming on the crop side and for livestock, integrated hog and poultry farmers, dairy farmers and beef cattle operations. Such analyses also will consider regional variations and farm scales, whether in cultivated land area or herd size. Specifically in the citrus and sugarcane segments, attention also will be given to the captive farm operations which are owned and/or leased by sugar mills and frozen concentrated orange juice companies.

Aside from the need to characterize the farm segment, this report also will address the current and near-future issues that will either drive or block further farm growth. While climatic conditions are conducive to year-round agriculture production in most parts of the country, there are historical and new issues that tend to hold back some of Brazil's agricultural development. While agrarian reform and subsistence farming issues have prevailed in Brazil over the past 50 years, new challenges have surfaced, including environmental concerns, traceability issues and farm labor abuse. In becoming a main player in the global commodity markets, Brazil has had to recently deal with image problems related to these issues.

Subsistence farming - as well as small family farming supported by the federal government - also will be addressed, understanding that such farm operations represent a relatively small share of the total farm value generated and, longer term, this share will diminish. Focus for these farmers will be on historical and near future trends.

With an understanding that the scope of this report will focus on cash crops and the main livestock categories (see section in the project scope) a good portion of theanalysis will concentrate on those farm and ranch establishments that represent a major share of the agricultural output. At first glance, those farm properties with over 100hectares of land will be given special attention given that these 470 thousand farms account for nearly 80 percent of farmlands. The picture appears to be similar for cattleas 90 percent of the beef cattle population is concentrated on ranches with over 100 hectares.

The entire prospectus and enrollment in pdf form

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