BRASILIA: Despite Brazil being one of the world’s greatest producers and suppliers of grains, the products are not at the top of the list of shipped products to the Arab market. Soybean amounted to only 3% of the total revenue gained by the country with sales to the region last year, with maize at 5.5%. Specialists explain these figures mainly by the production profile of the Arab nations, who don’t have large-scale industry for grain processing, and by the demand that comes from other regions of the world experimenting accelerated growth, such as Asia.
“Exports to Arabs increased, but the market is not as large and doesn’t grow as the Asian”, says Welber Barral, partner at Barral M Jorge Consultoria and former secretary of foreign trade of Brazil. Meat, sugar and ore were at the top of the list in Brazil’s exports ranking to the Arabs in 2004 and remained still at the same places last year, according to data from the Ministry of Development, Industry and Foreign Trade (MDIC) compiled by the Arab Brazilian Chamber of Commerce.
But grain sales are on the rise. In the case of maize, Brazilian exports to Arabs went from 100,000 tons ten years ago to four million tons in 2014. It was a forty-time jump. Soybean sales went from 245,000 tons to 770,000 tons in the same period, with a cumulative growth of 214%. During these ten years, maize exports reached its peak in 2013, with soybean doing it in 2014.
In the case of maize, there was a big jump of Brazilian sales to the Arab market in 2008, 2009 and 2010, right after the United States announced incentives to ethanol production from the commodity. The number of Arab countries buying the Brazilian product went from two in 2007 to eleven in 2008. Last year, the buyers were at 13, with Egypt and Saudi Arabia answering for half of the imports.
“The largest maize producer in the world is the United States. This boom is due to the substitution. The United States used maize for ethanol, there were harvest shortfalls”, points out the Arab Chamber’s CEO, Michel Alaby. There was also a big increase in 2012, a year of a strong American grain harvest shortfall, and another the next year also, in 2013. Last year, exports declined.
The director of Business Development of Cerealpar, Steve Cachia, points out other reasons for the increase of Brazilian maize supply to the Arabs. “The growth was strong, shows that the demand increased over there and that the market has opened up to Brazilian”, he said. Contrary to soybean, maize processing to animal consumption doesn’t require an industrial structure, it’s not so complex, according to him. But Alaby believes that the maize shipped by Brazil is used, in the Arab world, mainly for the human nutrition industry.
In fact, before the total that Brazil shipped of soybean to the world last year, 46 million tons, the amount sold to Arabs was small. “The big market is Asia, soybean sales to Asia increased four times from 2001 to 2010 due to the dramatic increase of demand”, says the partner at Barral M Jorge Consultoria.
But there was good progress in the exports of the grain. The scientific researcher from the Institute of Agricultural Economy (IEA), Marisa Zeferino Barbosa, believes that this increase is due to aggregate demand. “In response to the increase in the grain consumption directed to animal feed. Thus, soybean demand is related to the increase of meat consumption in the importers country, given that meal is an important ingredient in the composition of animal feed”, she says.
Purchases of Brazilian soybean, in the Arab world, were made especially by the United Arab Emirates and Morocco in 2004. Both remained at the top until 2006. Morocco remained a large buyer, among the Arabs, until 2009, but Saudi Arabia and Egypt were the main countries responsible by the increase of Brazilian exports in the last few years.
Big players
Specialists state that the grains market, such as soybean and maize, is dominated by large multinational companies. “It doesn’t depend upon trade promotion, brand, the ones that define are the large tradings. If, due to logistic issues, the production here is delayed, send from another place”, says Barral. “It’s the big players, as in the case of sugar”, says Alaby.
