Nissan strengthens presence in Brazil

On a visit to Nissan’s vehicle construction site in Resende, Brazil, president and CEO Carlos Ghosn announced that Nissan will also create an engine plant capable of producing 200,000 engines a year.  Ghosn noted that creation of the plant not only strengthened the company’s presence in Brazil, but also reaffirmed confidence in the Brazilian market.  EIN news states that the plant will begin its production of the 1.6-liter, 16V I-4 flexfuel engine, with 111 hp and torque of 15.2 kgfm – when using ethanol – one of the most efficient in the Brazilian market.  The engines will be inside all Nissan vehicles produced in Brazil.  Nissan has currently invested US$1.5 million in the Brazilian industrial complex and plans to expand the number of auto stores to 240 by the year 2016.  Read the article here.

Press Release: Crop Producers Face Losses with U.S. Farm Bill

logoticCrop Producers in Brazil Lose US$ 4.34 Billion with U.S. Subsidies

 

Brasília, March 26, 2014- The president of the Confederation of Agriculture and Livestock of Brazil (CNA), Senator Katia Abreu, announced on Wednesday the creation of an observatory to monitor the process of implementation of both the U.S. Farm Bill and the Common Agricultural Policy (CAP) of the European Union.  There are concerns that U.S. subsidies could cause damage to farmers, compromising the performance of Brazilian agriculture abroad.  The recently approved policies by the U.S. will result in a loss of US$ 4.34 billion for Brazilian exporters of corn, soy, and cotton between 2014 and 2018.  

 CNA projects that Brazilian soy producers will lose US$ 2.5 billion in exports, based on an annual average annual loss of US$ 480 million between 2014 and 2018. American incentives will result in a 3% decline in the price of grain.  For corn, CNA estimates a total US$ 1.5 billion loss with an annual impact of US$ 280 million and a price reduction of 4%.  Brazilian Cotton producers will lose a total of US$ 340 million with an annual loss of US$ 70 million and will experience a 4% decrease in price.

 The numbers are part of the study “Agricultural Policy of the United States and the European Union: Impact on Brazilian Agribusiness,” prepared by Agroicone Consulting at the request of CNA.  It is the first formal position of agribusiness on incentives since the WTO (World Trade Organization) cotton dispute in 2010.  

The unpublished research was presented on Wednesday at CNA headquarters in Brasilia, where a seminar attended by experts and officials from 14 countries was held.  In addition, both Neri Geller, the Minister of Agriculture, Livestock and Supply (MAPA) and Paulo Mesquita, director of the Economic Department of the Ministry of Foreign Affairs were present.

 Harmful Subsidies

 Other data indicators also worry CNA.  The new U.S. Farm Bill will allow grants totaling US$ 64.5 billion to U.S. producers for the three commodities.  ”The crop production sector [in Brazil] is outraged by the size of these harmful subsidies, which can both expand the production area in the United States and cause a depression of prices in the international market,”  said Senator Abreu.

 The president of the International Relations Committee of CNA, Eduardo Riedel, says the U.S. law “may affect soybean exports from Brazil.”  This is the first time the crop has entered the American soybean subsidy program. In recent years, U.S. producers of soybeans – the main export item in the agenda of Brazil – received no subsidies from Washington, but are now covered with political support in the package approved in February. Brazilian exports of soybeans, meal and oil generated US$ 30.96 billion in 2013, surpassing the performance of oil and derivatives (US$ 22.37 billion).  The aid comes as Brazil seeks to overcome U.S. production to become the largest producer of the grain.  The official expectation is a harvest of 854 million tons, which is a reduced forecast from earlier this year at 4.6 million tons.  He also stressed the possible damages that the policy of income insurance may cause to other products, such as corn.  The study points to the possibility of a decline of 4% in the international price of grain.

 Riedel endorsed the president of CNA for private initiative.  Executive and Legislative Brazilians work jointly in assessing such impacts . The idea has been accepted by both the Ministry of Agriculture and Ministry of Foreign Affairs and is represented by the Director of the Economic Department and the chairman of the Agriculture and Parliamentary Front (APF), Luiz Carlos Heinze (PP – RS).  Ambassador Clodoaldo Hugueney, a consultant at CNA, was also one of the coordinators of the debate.

 Another one of the changes highlighted by the president of CNA is the transfer of direct payments for agricultural insurance. This will keep the distorted effect of previous programs because the insurance guarantees income to the producer at any price point .  “It is clear that Americans are not seeking efficiency and productivity. They are rewarding only the amount,” says Senator Abreu.  This perception is shared by Mark Langevin, the International Relations chairperson of the Brazilian Association of Cotton Producers (Abrapa) in the United States.  For him, the new law does not “bring great stimulus to increase crop yields.” 

 According to the director of Agroicone, André Nassar, who led the study, ”even with the remunerative prices, subsidies reduce the risk to producers and will respond to government incentives.”  He says that the impact on corn and soy were big surprises for Brazil.  Horrys Fiança, the agricultural attaché of the Embassy of Brazil in Washington, believes that despite the 2 % cut in the budget, the new farm bill should implement greater spending to direct payments of subsidies to U.S. producers, due to the adjustment of minimum prices.

 Although the U.S. Farm Bill dominates the debates, the European Common Agricultural Policy (CAP) was also discussed by the experts. The representative of CNA in Brussels, Maria Almeida, said that Brazil needs to pay attention to the issue of sugar. Commodity exports are limited to 1.3 million tons / year without payment of benefit to foreign sales . However, export quotas will cease to exist by 2017, which could cause Europe to further increase their exports and to grant subsidies to their exporters, impacting the international market.

 Links:

 CNA Notícias Do Dia (News of the day)

 CNA Notícias Do Dia (News of the day)

 CNA Brasil website

 

U.S. ethanol imports from Brazil down in 2013

U.S. imports of sugarcane ethanol from Brazil fell by 40% last year, to 242 million gallons. Because Brazil is the largest source of ethanol imports into the United States, this drop led the United States to be a net exporter of the product for the year. Export volumes of corn-based ethanol to Brazil declined, but were more than offset by higher export volumes to Canada and a number of other countries. Although the net level has varied from month to month, since 2011 the United States has both imported ethanol from and exported ethanol to Brazil.

Ethanol is primarily used as a blending component in the production of motor gasoline. The United States and Brazil are the two largest producers and exporters of ethanol in the world, with ethanol being produced from corn feedstocks in the United States and sugarcane in Brazil. Starting in 2010, growing corn harvests and limited growth in the domestic ethanol market led the United States to become a net exporter of ethanol and the world’s leading supplier. At the same time, decreased sugarcane harvests in Brazil led to significant reductions in Brazilian ethanol output and a reversal in traditional ethanol trade patterns, as U.S. volumes began entering Brazil to meet domestic demand.

Brazilian ethanol production recovered in 2012. This reduced Brazil’s need for U.S. ethanol imports, while Brazil exported significant volumes to the United States, largely due to growing U.S. Renewable Fuel Standard (RFS) targets. In addition to the RFS, the California Low Carbon Fuel Standard (LCFS) creates an incentive to import sugar-based ethanol from Brazil because of its lower carbon intensity, seen in imports of ethanol into the West Coast from Brazil.

Brazilian ethanol output typically peaks during the fourth quarter (October-December) of each year. In the fourth quarter of 2013, Brazil had a record sugarcane harvest and increased ethanol production. However, U.S. imports of ethanol from Brazil fell by 95% compared with the fourth quarter of 2012, when drought in the United States pushed domestic production to record low levels. Another major driver was the U.S. Environmental Protection Agency’s (EPA) announcement of proposed reductions to 2014 RFS, as well as growing volumes of biomass-based diesel imports.

The remaining volumes of ethanol imported into the United States from other countries came from Canada or countries that have facilities to convert hydrous sugarcane ethanol originally produced in Brazil to anhydrous ethanol for the U.S market. U.S. ethanol imports enter the country primarily on either the East Coast (PADD 1) or West Coast (PADD 5). West Coast imports of ethanol averaged 30% of total U.S. imports. Despite the geographic disadvantage of shipping Brazilian ethanol to the West Coast compared to other U.S. regions, imports into PADD 5 continued to benefit from the advantage that sugarcane ethanol provides in meeting the California LCFS. The California LCFS regulates the carbon intensity (CI) of gasoline and diesel fuels sold in the state. Depending on the production process, Brazilian sugarcane ethanol has among the lowest CI values of any fuels currently available for meeting the LCFS target.

In 2013, the United States imported 306 million gallons and exported 622 million gallons of ethanol, the latter of which was the third highest annual total on record. The United States remained the world’s largest supplier of fuel ethanol, despite high corn prices and increased domestic demand. Canada received more than half of all U.S. ethanol exports, with its total reaching 325 million gallons last year. U.S. exports to Brazil fell to 33 million gallons, as increasing volumes of Brazilian ethanol were available for domestic consumption. U.S. ethanol exports made their way increasingly to other countries in Latin America, as well as Europe, the Middle East, and new destinations in Asia and Africa. U.S. ethanol was exported for the first time to the Philippines and Tunisia, and large volumes of U.S. ethanol were sent to the United Arab Emirates, Mexico, Peru, and Western Europe.

The trend in 2014 is for the United States to remain a strong net exporter of ethanol, with the potential for substantially larger levels of exports, given the recent abundant corn crop and EPA’s proposed reduction in domestic RFS targets. While favorable blending economics are likely to drive domestic ethanol demand, the United States is likely to remain the world’s leading ethanol supplier. U.S. ethanol import volumes in 2014 will likely be contingent on a combination of Brazilian sugarcane yields, final advanced biofuels RFS targets, and imported volumes of competing advanced biofuels, such as renewable diesel.537c47f8dd305.image

Brazil: “Air shipments have enabled us to create a niche market of great quality fruit”

Euroconte is the Brazilian company behind Bátia, one of the country’s oldest, most traditional brands, introduced in 1976 as an export company committed to the shipment of top quality exotic fruits to the international market, pioneering the export of all kinds of products to Europe and the United States, including mangoes, grapes, melons or papayas.

Over all those years we have faced many challenges due to Brazil’s circumstances, such as the dollar/real exchange rate issues, and climatic changes as well,” affirms Denise Braga, who has been in charge of Euroconte since 1995. Over time, the Brazilian export business has naturally experienced some changes. “We used to do a lot of maritime shipments, which require good management to prevent the risk of unforeseen problems, but currently we focus almost exclusively on air shipments.

The reason for the company’s focus on air shipments is twofold. On the one hand, there are marketing motivations, such as in the case of guavas, where demand is not large enough to warrant maritime shipments; on the other hand, it ensures that the fruit arrives in perfect conditions in terms of both appearance and flavour.

“We are very happy with that decision because we created a niche market of great quality fruit. We currently ship, among other products, Palmer mangoes, tropical avocados, and guava, and have become the leading exporter of figs in the past ten years, for which we own a Global G.A.P. certified farm. The only product we ship by sea is ginger, as it has a very long shelf life,” explains Denise.

According to Denise, one of the majors issues for Brazil in recent times have been the changes in the weather. “In November and December last year, for example, with the fig campaign starting, we faced the driest summer on record; a season which is normally a very rainy period. Over time, the length of the avocado season has also changed, being reduced from twelve to seven months.”

Euroconte’s main clients are Europe, Canada, the United States and Asia. “We were the first company to ship figs to Asia, namely to Hong Kong,” says Denise. Figs, of the ‘Purple de Valinhos’ variety, are also the company’s main source of revenue, as unlike other fruits, they have a very long season, lasting from November to August. “Every single day we have a harvest and shipment in order to ensure their freshness, which is a very tough job,” explains Denise. “99% of our figs are exported to Europe, as the U.S. is closed to Brazilian figs due to phytosanitary restrictions.”

There are differences between the characteristics of fruit distributed in the domestic market and that shipped overseas, mainly in terms of appearance, maturation and shape. “Europe, for instance, does not accept fruit with physiological defects, like spots, which makes the selection of fruit for export a very hard process, thus resulting in higher prices. “For this reason, we prefer not to work with the local market, instead, to focus on top quality fruit, enabling us to provide a top quality service to the importers,” concludes Denise Braga.batia2