Segment goes beyond the primary sector with positive balance of $125bn
06/14/2023
The trade balance of the Brazilian bioeconomy closed 2022 with a surplus of $124.7 billion, considering the sum of export and import operations related to the primary sector, bioindustry, and bio-based industry. The figure represents a growth of 49.4% compared to 2021, the highest since 1997. The surplus last year was double the positive balance of $61.5 billion recorded in Brazil’s total trade balance last year.
The performance of the bioindustry was the result of increased exports not only of primary products but also of the bioindustry, with growth above 30% in these two main segments.
The data were collected by the Bioeconomy Observatory, linked to the Center for Agribusiness Studies of the think tank Fundação Getulio Vargas (FGV Agro). The study involved researchers Felippe Serigati, Roberta Possamai, and André Diz, who followed the methodology developed by the observatory, with an analysis of items of the bioeconomy components based on the GDP input-output matrix. A correlation was then made with the Mercosur Common Nomenclature (MCN) classification, using the official foreign trade data, Mr. Diz said.
The work, according to Mr. Diz, is pioneering in the sense that it looks at the trade balance with the bioeconomy cutout. He points out that in 2022 the bioeconomy’s trade balance was strongly influenced by the performance of the primary sector, composed of 34 activities and 705 products related to agriculture, but also the bioindustry, the manufacturing industry with inputs 100% of biological origin, with a total of 59 activities and 1,802 products. The study shows that the primary sector of the bioeconomy had a trade surplus of $69.4 billion and the bioindustry of $64 billion.
Another component of the bioeconomy, the bio-based industry, defined as the industry that uses some bio-based inputs, such as cotton footwear and apparel, with 51 activities and 1,683 products, had a deficit of $9 billion. The study shows that, historically, this component has a negative balance, but even so, the bio-based industry accounted for 10.6% of the growth in the bioeconomy’s trade balance surplus last year, as the deficit narrowed to $13.1 billion in 2021.
For Mr. Diz, the data show that the primary sector can bring competitiveness to the industry. But more than participating as a producer, he said, Brazil should also play a role in the current debate about the environment, sustainability, and climate change, issues increasingly linked to the bioeconomy and international trade.
The improvement in the bioeconomy’s trade balance, the researcher emphasizes, is mainly due to the growth in exports, which totaled $162.6 billion last year, with an increase of 31.2% compared to 2021. The growth was led by primary products, whose shipments totaled $75.1 billion in the year, points out Mr. Diz, but the bioindustry also showed comparable performance, with $74 billion in foreign sales. “Brazil’s difficulty in exporting higher value-added products is always discussed, and the difference we have in this regard and between the primary sector and the bioindustry is very large,” he said.
He acknowledges that part of the bioindustry’s performance in 2022 is related to cyclical factors, such as the rise in commodity prices. “It is clear that the performance of the bioindustry is also related to the competitiveness of the primary sector. If the country can produce coffee, soy, and oranges at competitive international prices, the Brazilian industry benefits from this. But the most important thing is that we can place these products abroad, and this creates a completely different economic dynamic. There is a lot of talk about an alleged dispute between the agricultural sector and the industry, when in fact there is a relevant part of the industry that takes advantage of the primary sector’s competitiveness.”
The study shows that in the most recent period, Brazilian exports of primary products of the bioeconomy have been growing faster since the third quarter of 2021, with the resumption of global economic activity and the relative adaptation to the pandemic scenario.
However, the primary products of the Brazilian bioeconomy are still concentrated in soybean, 61.9%, followed by cereals, 17.8%, and coffee, 11.3%. In the bioindustry, the main products shipped were vegetable oils, with 19%, followed by beef, with 18.3%, and chicken and pork, with 15.8%. In the bio-based industry, the main exported product was laminated wood with 12.1%, followed by leather and pneumatics with 9.7% and 9.2% respectively.
There is, he says, the possibility of increasing the growth because part of the industrial sector uses these competitive advantages of Brazilian primary production to add value and reach the international market. The bioindustry manages to grow at rates close to those of the primary sector, both in terms of value and variation. According to the survey, the primary sector’s exports in 2022 will grow by 35.5%, while the bioeconomy will grow by 31.7%. Since 1997, the study shows, the trade balance of the bioeconomy has contracted in only five years.
The bioeconomy, according to the researcher, is being discussed in the United States and the European Union in a context that includes attention to deforestation and changes in the power generation mix.
“Brazil has to insert itself in this context from the point of view of production and discussion. The countries have different geopolitical roles, the United States remains the largest economy in the world, and China is revolutionizing much of the technology. Brazil is already an important exporter of primary goods, but now we have to look at the multiplier chain with which it can benefit from this competitiveness,” he added. In April, the European Parliament approved a law banning products from deforested areas, a measure that has worried Brazil’s agricultural sector.
“If the international markets demand traceability of production, let’s improve the process and show that our product is divorced from the problem of deforestation. We will take our domestic environmental and agricultural policies so that this is not an obstacle in the international market. We have a good position today, but we must maintain it, taking into account the environmental issue,” Mr. Diz said.
*Por Marta Watanabe — São Paulo