The country may account for more than half of exports in the 2022/23 global season
10/17/2022
Sugar production in Europe; Brazil is expected to export 30 million tonnes of the product in 2022/23 season — Foto: Dario Pignatelli/Bloomberg
Brazil is expected to continue to dominate the sugar market in this global season 2022/23, which tends to be marked by a small surplus in production. The latest rains in the Center-South of the country contribute to this scenario, which have helped in the development of crops for the next local season.
Brazilian mills may export 30 million tonnes of sugar in the 2022/23 local season, estimates Plinio Nastari, president of Datagro, a consultancy firm specialized in agriculture. If confirmed, this volume would be more than half of the sugar to be traded in the current international cycle — the consultant foresees global shipments of 57 million tonnes.
With this, the distance between the shipment volumes of Brazil and India, the second-largest exporter of the commodity, is likely to grow. The authorities in New Delhi indicated that they should issue export licenses for 8 million tonnes in this cycle, below the 11 million of last year’s season.
India will probably produce 36 million tonnes of sugar this harvest, already considering 4.5 million tonnes converted to produce ethanol, according to Datagro. India’s biofuel program has limited the country’s ability to compete with Brazil in the sugar market. Since 2017, the production of ethanol has seized 15 million tonnes of sugar, the consultancy says.
In Brazil alone, the Center-South may produce 36 million tonnes in the next local crop (2023/24), and there are still the volumes of North and Northeast regions. The increase of the Brazilian relevance in the global market raises the impact of climate and fuel prices in the country on global prices.
The difference between global supply and demand in 2022/23 is expected to be narrow, 1.87 million tonnes, Datagro predicts. The calculation, presented last week at a dinner with executives of mills that Citi Brazil promoted in Ribeirão Preto, in the countryside of São Paulo state, is similar to others in the market, such as that of Itaú BBA, which recently forecast a surplus of 2.1 million tonnes.
But this slight slack can be dilated. Mr. Nastari doesn’t rule out that production in South-Central Brazil is 2 million tonnes higher than the initial forecast, which would increase the surplus to 3.8 million tonnes.
Some mills already signal a scenario of robust supply in the next harvest. Mill Coruripe, for example, believes that the rains are favoring its crops so much that there may be more cane than it can crush in a normal cycle.
“If the rains continue, there will be 1 million tonnes more than capacity,” says CEO Mario Lorencatto. Today, Coruripe can grind up to 15.2 million tonnes per harvest in its five plants in the states of Minas Gerais and Alagoas. The company is already expanding its capacity in Limeira do Oeste, in Minas Gerais, by 1 million tonnes, and will add a sugar plant to this distillery.
Investments like that, however, are the exception in the sector. “The companies are reluctant [to invest in capacity] because of the increase in interest rates,” says André Cury, in charge of the Commercial Bank of Citi Brazil. According to him, even with the good prices last year, the mills opted to generate cash and reduce leverage, which is currently close to 1.15 times.
In São Paulo, the productive picture is also favorable. Usina Santa Isabel, which has two units in the state, expects, with the crushing of this season and the next, to recover a good part of the losses with the 30% decrease it had in the last cycle, says chief financial officer Fabio Montecchio. In the current cycle, crushing may reach 5.6 million tonnes.
Despite the ample supply, the international trade scenario continues to favor price increases, believes Mr. Nastari. The prices continue 30% above the level of two years ago, near 17.8 cents a pound, and the consultant sees room to reach 19.50 cents a pound until March.
In part, price maintenance is in global demand. Datagro estimates that consumption will increase by 2.5%, above the average of the last decade, which was 1% per year.
In private meetings with investors in Washington, policymakers emphasized commitment to goals
10/17/2022
Banco Central
With the monetary tightening cycle over and the Selic benchmark interest rate at 13.75%, the Central Bank tried to demonstrate a vigilant attitude with the conduct of monetary policy in private meetings between directors and investors in Washington, in the scope of the meetings of the International Monetary Fund (IMF) and the World Bank.
Market participants heard by Valor on condition of anonymity emphasize the cautious tone of the Brazilian monetary authority and the emphasis given to the willingness to bring inflation back to the target.
Roberto Campos Neto, Central Bank’s president, took part in two meetings closed to the press on Friday and tried to reinforce his commitment to make inflation converge back to the targets. In one of the meetings, he reportedly said twice that he wanted to convey the message of serious commitment to the target, besides being concerned, in particular, with the dynamics of services inflation.
Mr. Campos Neto’s statements come in the wake of movements in the interest rate market that point to the possibility of the Selic rate cuts cycle starting as early as March 2023. He also stated, in one of the meetings, that the Central Bank’s job is to bring inflation back to the target and that the monetary authority will do whatever is necessary for this to happen.
Mr. Campos Neto was even questioned in one of the events about the behavior of inflation expectations and about when the cycle of Selic cuts might start. And, when analyzing the market’s behavior, the president of the Central Bank stated that part of the expectations of interest rate cuts embedded in the curve are more related to technical positioning and the probabilities of the scenario ahead.
Thus, according to one of the participants, Campos pointed out that the yield curve does not necessarily place reductions in the Selic faster than the Focus.
Thus, according to one of the participants, Mr. Campos Neto pointed out that the yield curve does not necessarily place cuts in the Selic rate faster than Focus, Central Bank’s weekly survey with economists.
In the Focus published last week, the median expectation of market economists is that the cycle of Selic cuts will start in June 2023, when the relevant horizon for the conduct of monetary policy will already be fully in 2024. A market professional present at one of the meetings even pointed out the perception that the Focus scenario, with the start of the easing cycle in June, still seems to be the most adequate for the Central Bank, at least for the moment.
Mr. Campos Neto was also questioned about the Brazilian fiscal situation and, in the perception of market participants, adopted a slightly more optimistic tone with the public accounts, although he emphasized the uncertainty in the scenario. “He noted that the data are coming in very good and better than expected, but also said that there is a degree of uncertainty in the future,” said one of those present.
This same source observes that Mr. Campos Neto, in his presentation, compared fiscal measures that have been implemented to contain the surge in energy commodity prices and noted that the measures adopted in Brazil are below the actions of other countries. “This set a tone of less concern about fiscal policy. It seems that the caution in this area is more in the long term, in the fiscal framework,” said the source.
Also present in Washington, Fernanda Guardado, Central Bank’s director of international affairs and corporate risk management, took part in a private meeting with investors, in which she used a more cautious tone when talking about the fiscal uncertainties ahead.
Ms. Guardado also maintained a more concerned tone when speaking about fighting inflationary pressures. According to market players, she was attentive to the existing uncertainties in the labor market and the degree of economic slack. A person who was present at the meeting stated that Ms. Guardado was in a more cautious position in relation to unobservable factors, such as the output gap (a measure of the economy’s slack), given that there were significant revisions in the economic scenario, which started to show a more closed gap.
In the September meeting of the Monetary Policy Committee (Copom), Ms. Guardado was one of the dissenting votes, defending an additional 25 basis points increase in the Selic, to 14%. The majority of the committee, however, voted to maintain the key interest rate at 13.75% at the meeting.
The only event open to the press in Washington with the presence of Roberto Campos Neto took place on Saturday, at a Group of 30 (G30) seminar. During his participation, he observed that the domestic interest market has begun to price the beginning of a cycle of Selic cuts in March 2023 and stated that this could mean “that the markets understand that we have done our job”.
Mr. Campos Neto also pointed out that Brazil has had three consecutive months of deflation. “A lot of that was because of government measures, so we don’t think it’s a special reason to celebrate. But the dynamic is improving,” he stated in the opening of his panel at the event.
Company has become Brazil’s first carbon-neutral steelmaker
10/17/2022
Silvia Nascimento — Foto: Silvia Zamboni/Valor
At a time when there is a global race for decarbonization in the steel industry, the largest emitter of carbon dioxide in the industrial sector, Aço Verde do Brasil (AVB), a small long steel mill in Açailândia, Maranhão, has already overcome this challenge. The company already manufactures its steel without using fossil fuels. This has earned AVB — which has only seven years of operation — a certification issued by SGS as the first carbon-neutral manufacturer in this segment.
The mill’s emissions, measured since 2018 by SGS, were 0.1 tonne of CO2 per tonne of crude steel manufactured that year. In the following ones: 0.06, -0.04 and 0.02 tonne of carbon dioxide. The small increase in 2021 is linked to the start-up of the blast furnace 2. The measurements followed World Steel Association (WSA) standards.
The world average of CO2 emissions in the steel sector, involving the various types of mills, is 1.84 tonnes of CO2.
Silvia Nascimento — a shareholder together with other members of the Nascimento family — has been in the executive command of the company since April and wants more. “Our goal is to make AVB also a company with zero waste generation.” To achieve this, she is investing in projects to turn this waste into co-products for use in the company’s own facilities.
“We don’t use fossil fuels and we reuse all the gases emitted at the plant in production equipment operations,” she said. “And now we will reuse all the waste.”
While increasing steel production, after starting operation of a new blast furnace, the company is investing nearly R$70 million in a thermoelectric plant to generate 12 MW of energy from the recovery of gases generated in the production process. It is expected to be completed by the end of this month. The energy generated in the thermal plant will supply one third of the company’s consumption. It will replace part of the renewable energy that is currently purchased.
“Our philosophy is sustainability,” says the businesswoman and executive, a native of Belo Horizonte, capital of Minas Gerais state, who was “summoned” by her father at the end of 1999 to help him run the business of the Ferroeste group. “I have been with the company for 23 years. I left several things behind in the United States, where I was at that time, and became more involved in the family business.”
Since then, she has held leadership positions in the companies of the group. In 2008, a project arose to add value to pig iron, made by Gusa do Nordeste, and steelmaker AVB was created from this base in Açailândia.
The project faced some obstacles, including the global financial crisis (Lehman Brothers’ bankruptcy), which scared away potential financing and affected the purchase of equipment. After several years of persistence and investments of over R$1.5 billion, says Ms. Nascimento, the steel mill was ready. It started operating at the end of 2015 producing pig iron and billets.
Three years later, the company began with the rolling mill equipment, able to make 600,000 tonnes per year. It has become the largest long steel mill in the Northeast region.
The time of the steel mill construction process allowed the company to improve the project, the executive said. “We have a business that goes from planted eucalyptus forests, to make the biocarbon for the pig iron blast furnace, to the final product. We even have a gas factory installed in the plant, which is common only in large steel mills,” said Ms. Nascimento.
The executive has a degree in Business Administration from the University of Miami, where she lived for nine years, three of which in a boarding school. In Brazil, she took the Program for Development of Managers (PDD) at Fundação Dom Cabral, near Belo Horizonte, in 2004.
After that, a full dedication to the company. She has held several positions at AVB, until reaching the top, when she became CEO. Most of her time is divided into managing office in the capital city of Minas Gerais, where she lives, the mill in Açailândia — monitoring the operation — and São Paulo, for contacts with the financial market.
In 2021 and this year, the company issued two Certificates of Agricultural Receivables (CRA), totaling R$650 million, to strengthen its capital structure and invest in the eucalyptus reforestations (more than 60,000 hectares) it has in Maranhão and Piauí. Also at the end of last year, AVB obtained approval with the Securities and Exchange Commission of Brazil (CVM) in the B category (over-the-counter securities).
According to the executive, the company acts as if it were already publicly traded, publishing its earning reports on a quarterly basis and advancing in corporate governance. For 2023, for example, at the next shareholders’ meeting, she intends to appoint three independent board members. Today the board is formed by her, her father (who chairs it), her brother, and her sister. The members will be people with experience in the real estate market, sustainability, and the financial sector.
Is all of this a preparation for a future IPO on the stock exchange? Ms. Nascimento does not deny this, but says it is still too early to decide on an IPO.
In addition to logistics costs, exporters are impacted by the high volatility of the foreign exchange rate, the growth of global trade barriers and the “Brazil cost”
10/17/2022
The rise in fuel prices and the disruption of global transport chains have put the price of international freight at the top of the problems faced by Brazilian exporters. This is what shows the survey conducted by the National Confederation of Industry (CNI), still unpublished, seen by Valor. In addition to logistics costs, exporters are impacted by the high volatility of the foreign exchange rate, the growth of global trade barriers and the “Brazil cost.”
Jose Velloso — Foto: Leo Pinheiro/Valor
“The purpose of the survey was to have a snapshot of the complaints of Brazilian exporters,” said Constanza Negri Biasutti, CNI’s trade policy manager. “We understand that it should be the main base for trade policy strategies from now on.”
The survey was answered by almost 600 exporters of all sizes, which evaluated 43 different obstacles.
Logistics had already been pointed out as a critical point in the most recent edition of the survey, 2018, but the problem became much worse with the pandemic, said José Velloso, head of the Brazilian Machinery Builders’ Association (Abimaq).
Even as the most acute phase of the pandemic has passed, the maritime routes are still disorganized and there is a lack of containers, said Luis Rua, the director of markets of the Brazilian Association of Animal Protein (ABPA).
Before the pandemic, 80% of the ships arrived at Brazilian ports in the estimated time, he said. Today, only 30% manage to do so. This impacts land logistics and document flow, with increased costs. In addition, the delay in shipment may lead to the collection of fees by the ships for the delay.
The cost of international freight and the lack of containers are also pointed out as an obstacle by the Brazilian Association of the Cosmetic, Toiletry and Fragrance Industry (Abihpec). The CNI survey indicated results for the sector convergent with the nationwide snapshot.
The Economy Ministry informed that the international freight cost was $1,500 in May 2020, then peaked at $11,100 in September 2021. In the first week of this month, it was at $3,700. The values refer to the transport of a 40-foot container considering the Freightos Baltic Index (FBX), the industry’s benchmark.
The hikes are explained by the higher demand after restrictive measures to locomotion, increase in fuel prices, and reduction in the transport offer. The recent drop is related to lower fuel prices and reduced global demand for goods.
The logistics costs occupy four positions among the five biggest problems pointed out by Brazilian exporters in the survey. The second most cited problem is the high tariffs charged by the ports.
This complaint is related to the charge of cargo screening fees by ports, said Ms. Negri. Since 2016, CNI has been discussing the illegality and abusiveness of this fee at the National Agency for Waterway Transport (Antaq). CNI alleges that the task should be performed exclusively by the Secretariat of Federal Revenue. There is, however, a double screening.
The cost of domestic transportation is the third most pointed out problem in the survey. Mr. Velloso believes that infrastructure concessions, which have gained momentum since the Temer administration, are in the right path. However, it will still take time before domestic transportation problems stop being a factor in the loss of competitiveness of Brazilian products.
“These obstacles pointed out as the main ones shed more light on the need for Brazil to attack this logistics and foreign trade agenda,” Ms. Negri said.
Improving this point would support gains in other fields showed by the survey – such as the time spent on customs clearance, shortened with the implementation of the Single Foreign Trade website. Customs bureaucracy, indicated as a critical obstacle by 39.56% of the companies in 2018, was now listed by 21.9% of them.
The main exporter of products from the manufacturing industry, the machinery and equipment sector highlights the so-called Brazil cost, said Mr. Velloso. For example: imported inputs are about 20% to 30% more expensive than in other countries because of customs clearance costs, import taxes and the foreign exchange rate.
Several tax rules, complex and interpreted in different ways by government agents, are also the target of exporters’ complaints. According to Mr. Velloso, Brazilian products are exported with nearly 7% of their value in taxes that should, but were not eliminated along the production chain.
In his view, the three main steps to be taken by the next administration should be: approve a tax overhaul (more specifically, the proposal to amend the Constitution 110, which is pending only the approval by the Senate) and the restoration of the insurance instruments and export credit.
The Economy Ministry says that it has taken measures to soften the impact of higher commodity prices and transportation costs. It cites the 20% reduction in import tax rates for almost 90% of products. In addition, the rate of the Freight Additional for Renewal of the Merchant Marine was cut to 8% from 25%. A third initiative was the exclusion of the terminal handling charge from the calculation basis of the import tax.
Increasingly present in the national production chain, the import of services was included in the drawback regime. Thus, the collection of taxes will be suspended for services used in the production of items for the foreign market.
The ministry also highlighted the Single Foreign Trade website, with which the average time spent by a company to import fell to nine days from 17. At the current stage, this tool can be used for about 30% of foreign purchases.
The website also reduced the clearance time for exports to less than five days from 13. According to the ministry’s calculations, the savings with less delay reach $30 billion a year.
Company toinvest R$56.2m in Paulínia unit until the end of the year
10/14/2022
Xavier Andivia — Foto: Divulgação
Boehringer Ingelheim’s Animal Health division in Brazil has been growing above the nationwide average, and in order not to lose traction the company will invest R$56.2 million by the end of the year in its plant located in Paulínia (São Paulo). In the last two years, the plant has already received R$92.2 million in investments.
“We want to secure the supply of our products, preserve our value chain and avoid emergencies and unplanned costs,” said Xavier Andivia, who took over the command of the division in July.
According to the National Union of Animal Health Products Industry (Sindan), the segment grew 21.9% in the first quarter and 7.6% in the second quarter, compared to the same periods in 2021. Boehringer Ingelheim advanced 34% and 11.2% in the same comparisons. The company does not inform its revenue in Brazil.
“Despite the war [in Ukraine, which increased production costs] and inflation in the world – and in Brazil – animal production is very strong. We are not exempt from the impacts, but our team has been able to bring great results in all segments,” the executive said.
The Paulínia plant is important for Boehringer’s strategy because, besides supplying the Brazilian market, it also produces medicines that are exported to 70 countries – mainly antiparasitic for pets and bovines.
“We will not stop investing, as we have to increase production and be more efficient. We have long-term investment plans, which involve investments in people and technology. The demand for Paulínia’s products grows worldwide,” Mr. Andivia says.
The drop in the Chinese demand for imported pork and low beef prices due to the livestock cycle are on Mr. Andivia’s radar. But, according to him, the company is expected to continue growing at double-digit rates in Brazil.
Stocks of the two giants have the largest share since 2014
10/14/2022
On Thursday, Vale ON represented 15.448% of Ibovespa’s theoretical portfolio, while Petrobras PN accounted for 6.966% — Foto: Divulgação
In every four trades carried out in B3’s stock market in October, at least one involved Vale’s common shares or Petrobras’ preferred stock. It is the first time that the two heaviest assets of the stock exchange reach the level of 25% of market turnover since 2014, when it was at 25.16%, according to a TradeMap’s survey made at Valor’s request.
Even with the slowdown of the global economy and mounting fear of recession, which generate uncertainty for commodities, the increase in the participation of international investors in the local market in recent months helps to explain the movement. This is because the group usually prioritizes securities with more liquidity, like the two commodity producers and big banks. On Thursday, Vale ON represented 15.448% of Ibovespa’s theoretical portfolio, while Petrobras PN accounted for 6.966%.
Specific factors impacted the appetite for shares. The oil company reacted well to the result of the first round of Brazil’s presidential election, with a tight dispute and the election of a more conservative Congress, which in theory favors a privatization drive. The mining company had a negative performance after becoming the target of Cosan, which acquired up to 6.5% of its shares.
Gabriela Joubert, Inter’s chief analyst, says that in October foreign investors have once again shown a greater preference for the Brazilian stock market due to the momentum of the local economy compared to developed and emerging countries. “Developed countries are starting or in the middle of a cycle of interest rate hikes, while there is already a discussion about cuts here,” she said. “And emerging countries, especially China and Russia, are going through particular difficulties and global problems.”
Ms. Joubert says the macro panorama already helps the Brazilian stock market and, when foreign investors look at Brazil, there is a preference for companies like Vale and Petrobras. Her perspective for the future is that foreigners will continue to see attractiveness in B3.
Along these lines, this month, foreign investors made a net contribution of R$1.2 billion in shares listed on B3 by October 10. This year, international investors have invested R$71.26 billion. In the same period, local institutional investors withdrew R$105.06 billion, and individual investors took R$2.44 billion out of the market.
But despite the high turnover involving the two securities, their performances tell different stories. Vale, which is down 6.83% this year and had already been depreciating in recent months with the slowdown of the Chinese economy, suffered an additional blow after Cosan unveiled that it is buying up to 6.5% of the mining company’s shares, in an offensive that part of the market saw as the first step in an attempt to take control of the largest company on the stock exchange.
“There was a strong correction in the stock, to R$62 in September from a level above R$100 in March, following the uncertainties in China. With this, the positioning was low, and some asset management companies were short on the security, which boosted some purchases. But at the beginning of last week, this dynamic got stronger and the rumors that something was happening started,” said Antonio Heluany, a partner and a commodities analyst at Taruá Capital.
He understands that, thinking in longer terms, Cosan’s incursion into Vale is positive. In his vision, the mining company will be able to benefit from the presence of an executive “with an industry head” in its board, helping the company to have a direction for the future beyond the distribution of dividends in the market.
However, he points out that the investors’ disappointment may have come after frustrated speculation regarding the increase in the securities’ turnover. “As the company was already looking to unlock value from the base metals business, a move in this direction could have had a greater impact. Cosan’s entry, on the other hand, is not an event that gets the securities moving in the short term.” At the moment, Taruá is exposed to Petrobras, but not to Vale.
Inácio Ponchet, CEO and manager of Lato Capital, also cites concerns with the current level of iron ore. He says he still doesn’t like the signals from the Chinese economy and also shows concern with the European scenario, since the production capacity has been reduced by 50 million tonnes due to the energy crisis.
“Nobody knows how Europe will come back from the crisis. However much the price of gas recedes, it won’t necessarily return to the level of when the continent had the subsidized Russian product. And I don’t see China’s economy coming back fast either, so ore may remain under pressure. Oil, on the other hand, seems a little more protected because of the supply restriction,” he said.
Petrobras preferred stock is up 74.08% in 2022, the third-best performance at Ibovespa. There was a further gain in October after the result of the first round of elections pointed to a tight race for the presidency and a more right-wing Congress, in theory less inclined to state intervention in the economy and state-owned companies.
“Foreign investors seem more relaxed than local investors about the outcome of the election, but we can certainly have impacts on Petrobras. I understand that in case Bolsonaro wins Petrobras is the cheapest company on the stock exchange, with great chances of appreciation. If Lula (Workers’ Party, PT) is elected, I understand that there will be a waiting period until the announcement of the new CEO of the company and the details of its investment plans,” said Mr. Ponchet. The manager has, through the index, a position in both companies.
Mário Braga, an analyst at Control Risks, says that a potential Lula da Silva administration is likely to adopt a pragmatic posture in relation to the business environment and try to move forward with structural reforms in 2023, especially a tax reform. It should focus on simplifying the system, but come with more taxes on the richest and possibly on some sectors, such as mining and oil & gas.
“To compensate for the potential loss of revenue, the government will probably seek the introduction of taxes on dividends and wealth. Considering a broader green agenda, the reform is likely to also favor eco-friendly industries or products, such as renewable power or electric cars,” says Mr. Braga.
“There will probably be an appetite to raise taxes [and royalties] for the mining sector. It is unlikely, though not impossible, that the next government will take a similar approach to the oil and gas sector and resort to a tax to cushion price shocks as well. As long as the global markets for metal commodities and energy remain strong globally, companies in these sectors in Brazil will remain more exposed to risks of tax increases,” he added.
Retailers and telcos will also be subject to sanctions if they have sold smartphones in the same conditions
10/14/2022
Apple filed a writ of mandamus asking the granting of injunction suspend the decision — Foto: Jeenah Moon/Bloomberg
The 18th Civil Court of São Paulo determined on Thursday that Apple will pay a fine of R$100 million for selling iPhones without a charger. And retailers and telecom operators that sold Apple phones without a charger are subject to the same penalties imposed on the manufacturer, including fines, search and seizure of devices, says Rodrigo Roca, head of the National Consumer Secretariat (Senacon) of the Ministry of Justice.
“We will start administrative proceedings against every retailer who disobeys our determination,” Mr. Roca told Valor. The lawsuit linked to the R$100 million fine was filed by the Brazilian Association of Borrowers, Consumers and Taxpayers (ABMCC). Apple will also have to deliver a charger for those who bought a model that comes without the accessory in Brazil. The court decision can be appealed.
At 6:20 pm this Thursday, Apple filed a writ of mandamus in the 20th Court of the Federal District, asking “the granting of injunction to immediately suspend any and all effects […] against Apple and its resellers”. This Friday the new iPhone 14 starts being sold in the country, without charger. The brand’s cell phones are sold without charger since 2020.
According to the Retail Development Institute (IDV), which represents 72 associated retailers, the responsibility for offering the charger lies with the manufacturer. “The industry must respond for their strategic decisions to launch products, officially offered to the market, not fitting to retail, which, as everyone knows, sells the products purchased from industry, any responsibility,” the institute said in a statement. Conexis, the organization that represents the operators, did not reply to a request for comment.
Mr. Roca pointed out that Thursday’s court decision, which mentions a provisional remedy applied by Senacon, opens an important milestone in the judiciary’s perception of the issue. “Apple has already been the target of previous administrative sanctions coming from [Consumer-protection watchdog] Procon in São Paulo, Rio de Janeiro and Fortaleza, including million-dollar fines, but it continues in the infringing practice,” Mr. Roca said. “And there is no news of payment of fines so far.”
In early September, the Ministry of Justice determined the suspension of the sales of all iPhone models without charger and imposed a fine of more than R$12.2 million to Apple, in a decision published in the Daily Gazette on September 6. On September 12, Senacon sent administrative notices to Apple product resellers informing them of the penalties related to selling the device without the accessory considered essential to the operation of the devices.
For Mr. Roca, the argument that the charger removal follows a sustainable manufacturers’ agenda is flawed and overdue. “If the charger harms the environment, the initiative is 12 years overdue because no one gave massive warning in a campaign about conscious disposal of these items.”
Mr. Roca notes that the Ministry of Justice’s determination is not restricted to smartphones. “No device can be sold without items essential to its operation.”
The sale of smartphones without wall chargers is not exclusive to Apple. In October last year the Ministry of Justice notified Samsung and Apple again for non-compliance with an administrative decision made in 2020 on the subject.
Some Samsung devices, such as the Galaxy S22 line, launched earlier this year, are sold without a charger in Brazil. However, the manufacturer offers a free charger to consumers who wish it.
“We reinforce that the company always offers the consumer the option to redeem the charger, free of charge, when the product does not bring the accessory inside the box,” the manufacturer stated.
The compatibility of electric and electronic equipment chargers is also a concern in Europe. On October 4, the European Parliament approved legislation that standardizes the charging ports for cell phones and electronic equipment sold in the countries of the European Union. The measure adopts USB-C as the standard charging port in the European bloc and will force Apple, for example, to modify its iPhones, which currently use Lightning connector. By the end of 2024, all cell phones, tablets, and cameras sold in the bloc must have the USB-C standard. Laptops must be adapted by the end of 2026.
At the end of June, telecoms regulator Anatel opened a public consultation in order to define technical requirements for the standardization of wired smartphone chargers to the USB-C port.
Measure also increases competition with inclusion of forests in Asia
13/10/2022 8:45PM Updated 20 hours ago
Brazil has close to 10 million hectares of planted forests, of which almost 5 million are FSC certified — Foto: Divulgação
After 11 years of negotiations, the Forest Stewardship Council (FSC) approved Thursday the possibility of including new forests in its certifications, under strict conditions. The decision was made at a global meeting held in Bali, Indonesia, and will certainly have an impact on the planted forest sector in Brazil.
FSC was created in 1994, aggregating several “green seal” initiatives around the world and creating an international, non-governmental, independent forest certification system based on environmental, social, and economic viability criteria.
Until now, a rule of thumb in the FSC system has prevented certification for forests planted on deforested areas after 1994. The Bali meeting has changed this rule, paving the way for certification of areas that were converted between 1994 and the end of 2020, provided that strict compensation criteria are met.
In other words, companies will have to pay the price. If a company is directly responsible for the deforestation and planted a forest later, it will have to compensate each deforested hectare with a recovered hectare. In the case of indirect responsibility – that is, the company bought a property from someone who deforested it –, it will have to restore 30% of the area.
In addition, the company that wants certification for its products will have to repair any social damage, regardless of direct or indirect liability.
Rafael Benke, CEO of Proactiva Results, a consulting company in ESG and human rights, who is taking part in the global meeting in Indonesia, said that the change in FSC’s rule “is a milestone not only for the forestry segment, but for sustainable development.”
“There are hundreds of millions of hectares that will be able to integrate the FSC system through socio-environmental compensation,” he said. “It will be a commercial stimulus for the integration of these areas which, consequently, will generate a positive socio-environmental impact with the compensations.”
Lineu Siqueira Junior, a co-founder of FSC and a member of its Policy and Standards Committee, emphasized that the measure does not mean an incentive to deforestation, but a standardization of conversion issues (deforested areas converted into forest plantations), with strict principles and rules.
Brazil has close to 10 million hectares of planted forests, of which almost 5 million are FSC certified. And with the seal, recalls Mr. Siqueira Junior, Brazilian industries of paper and pulp, wood panels, boards and floors, among others, have gained a lot of market abroad.
In this context, he acknowledged that there was a strong resistance from the segment in the country to the change in the FSC rule, due to the greater competition that will be generated.
Large Asian companies, which were out of the market due to lack of certification, are expected to start to compete for market if they meet all the criteria. Investors, especially from the United States and Europe, are also fostering plantations in Africa.
But Brazil is well positioned when it comes to technologies and customers, said Mr. Siqueira Junior, and will also be able to profit. There are many companies in the country that can use the new rule.
The decision made by the FSC after more than a decade of discussions falls within the “United Nations Decade on Ecosystem Restoration (2021-2030),” created by the United Nations General Assembly, following a proposal by 70 countries concerned about the loss of biodiversity and the impact of climate change on nature and living beings.
Led by the United Nations Environment Programme (UNEP) and the Food and Agriculture Organization (FAO), this initiative is considered crucial: today, only 1% of climate funding is dedicated to forest restoration, while restoring 30% of priority ecosystems would prevent 70% of species extinctions, according to a study published in 2020 by “Nature.”
Sector is independent of economic policy, profits from external scenario
10/14/2022
Braulio Borges — Foto: Ana Paula Paiva/Valor
Brazil’s agribusiness sector grew 25 percentage points faster than the country as a whole in recent years and saw income increase threefold compared with states in the Southeast region in the second quarter. Most people involved with this sector voted for Jair Bolsonaro (Liberal Party, PL) in the first round of the presidential election, on October 2, and will probably do it again in the runoff, two weeks from now.
The sector has expanded above the national average in the last two years and was less impacted by turbulences during the latest recessions and the pandemic. This thriving economic reality diverges from that of the country, and the sector’s rising political influence partly explains why people in this field back President Bolsonaro, experts say.
In the first round, former President Luiz Inácio Lula da Silva (Workers’ Party, PT) received 48.43% of the votes, compared with Mr. Bolsonaro’s 43.2%. Mr. Lula da Silva got more votes in the North and Northeast regions. Mr. Bolsonaro won in the Central-West, South, and Southeast regions, especially where the agribusiness sector is dominant – rural regions of Santa Catarina, Paraná, and São Paulo, the Central-West region, the so-called Triângulo Mineiro (in the west part of Minas Gerais) and the southern part of the North region.
Between 2019 and 2022, the territory where Mr. Bolsonaro did better, the same where Brazilian agriculture is stronger, showed a real average growth of 30% higher, while GDP growth in the other regions was much slower, with an income level below the peak seen in the 2011-2014 period, said Braulio Borges, an economist at LCA Consultores.
“This remarkable jump in the real income from agriculture between 2019 and 2022 was not due to a higher volume, but to relative prices much more favorable as a reflection of more expensive agriculture commodities in dollars and a very weakened real against the dollar since mid-2020,” he said.
In volume, agricultural GDP – considering only production, not the whole chain – probably saw an average growth of 1% a year between 2019 and 2022, while the Brazilian GDP expanded by 1.1%, he said.
The agricultural GDP over the 2019-2022 period reached R$2.08 trillion adjusted by inflation, up 29.4% from the previous four-year period, Mr. Borges said. “Even though this is a sector with an 8% share in Brazil’s GDP, this is a spectacular jump. This means R$472 billion more compared with the 2015-2018 period in terms of income,” he said.
Looking at the rest of the economy, excluding sectors such as public administration, imputed rent, and financial transactions, which would account for 60% of the Brazilian GDP, the growth was much lower, at 3.8%.
While the high price of commodities and the weakened real favors farmers, it means more expensive food and higher inflation for the rest of the population, the economist said. The agriculture sector accounts for 8% of the Brazilian GDP but can reach 28% if services and the whole chain are included.
This is a different Brazil, said Mr. Borges. “A country that queues up to buy R$500,000 pickup trucks,” he said. “A Brazilian Texas, more conservative and strengthened by the agribusiness sector. It starts in the north of Rio Grande do Sul, and goes through Santa Catarina, the Central-West, and the new frontier in the Northeast. This region has grabbed most of this income gain and voted massively for the current administration.”
Even though voters associated this situation with the Bolsonaro administration, historical and cyclical factors explain the recent bonanza in this part of the country, said Sergio Vale, the chief economist at the consultancy MB Associados.
“Over the last four decades, the states with the greatest weight of agribusiness have grown the most,” said Mr. Vale. “There are two main reasons for that. One is that agribusiness ended up integrating more with the world [than other sectors, like industry]. The other is prices, which led agriculture-producing states to have a higher real income growth.”
Mato Grosso and Mato Grosso do Sul are expected to grow above 5% this year. The other agriculture-producing states in the Central-West, North, and Northeast regions will also perform above the country’s average, MB Associados projections show.
Mr. Vale’s calculations, based on figures from the Brazilian Institute of Geography and Statistics (IBGE), show that between 1986 and 2023 Mato Grosso will grow 695%, compared with Brazil’s 108.7%. From 2012 to now, the per capita GDP of the Central-West states will probably have expanded by more than 10%, compared with Brazil’s 4.7%.
This year, the states where income grew the most in the second quarter, compared with the same period in 2021, are those with a greater share of agribusiness in the local economy.
This bonanza is seen not only in Brazil, he said, as it has benefited all the agricultural commodity-exporting countries.
In his view, linking this income boom to the Bolsonaro administration, therefore, sounds exaggerated. “It’s not about fiscal policy, reforms, or Bolsonaro. It has to do with agricultural commodities. They are driving this growth,” said Mr. Vale.
The economist divides Brazil into three major categories: the South and Southeast regions, which have developed and, in a way, stagnated; the Central-West region and the new agricultural frontier, which are getting rich through agribusiness; and the Northeast, which could become an important hub, especially due to its proximity to markets such as the European Union.
Messrs. Borges and Vale believe that, despite the sector’s majority association with Mr. Bolsonaro, a victory of Mr. Lula da Silva could ease the pressure on the environmental front, favoring exports to markets like the EU.
“There is a backward-thinking segment of agribusiness that considers that environmental protection is an obstacle. Nothing could be more wrong: the Mercosur-EU trade agreement was put on hold precisely because [Brazil’s] environmental policy is moving backwards,” said Mr. Borges. “And this agreement would greatly expand the market for Brazilian agricultural products in Europe.”
The regions where agribusiness is predominant have experienced less economic turbulence in recent decades, said Felippe Serigati, a researcher at the Agribusiness Center of Fundação Getulio Vargas (FGV Agro).
“From 2000 to now, the agribusiness universe was by far the economic sector that grew the most. It was an average growth of 3.5% per year, compared to the Brazilian economy’s 2.3%,” he said.
“The regions where agriculture is the predominant economic activity and was able to boost regional services and employ most of the local labor force did not feel the impacts of the crises we have gone through since the 2000s with the same intensity,” he said.
He cites as examples the 2015-2016 recession and the crisis caused by the Covid-19 pandemic, which had a greater impact on industry and services.
In addition to the growing economic importance, in the last 20 years the sector has gained political relevance, both in terms of representation in Congress and in the search for political support from the sector’s representatives and in defending the interests of the Legislative and Executive branches’ agenda, the expert said.
“From 2000 on, the sector has clearly gained a greater political space and more prestige. And it has a greater capacity for mobilization. The agribusiness agendas today have greater convergence with a larger fraction of the Brazilian population,” he said.
In the first round of the election, 70% of the members of the Parliamentary Agricultural Front (FPA) who ran for reelection to the Chamber of Deputies won and will have a new four-year term. Of the 241 members in the lower house, 218 ran for new seats and 153 were reelected.
A survey by FPA indicates that the group will have at least 158 representatives in the new legislature. The list only accounts for former members who were out of office and are returning to the lower house, and the continuity of reelected members.
Despite the substantial number of FPA members, important representatives from the agricultural sector will be left out in 2023, including Neri Geller (Progressive Party, Mato Grosso, MT), a former Agriculture minister and vice-president of the FPA, and Aline Sleutjes (Social Liberal Party, PSL, of Paraná), the group’s institutional coordinator.
FPA, a strong ally of President Bolsonaro that typically has a great presence in the lower house, is expected to also grow in the Senate.
With the return of former members who were out of the office and the victory of allies who occupied other positions, FPA projects at least 40 senators from 2023 onwards – out of 81. New members may raise this number to 45 seats. In the last legislature, there were 39 senators aligned with this group.
The group, reinforced by names like Tereza Cristina (PP of Mato Grosso do Sul), a former minister of Agriculture, can be crucial for passing measures dear to the agribusiness sector that are stalled in the Senate, such as changes in how environmental permits are granted, in land regularization, self-control of agricultural inspection and registration of pesticides.
The proposal increases to R$47 per share from R$40
10/13/2022
Apollo raises offer, and Braskem sale gains new steam The proposal increases to R$47 per share from R$40 By Stella Fontes, Mônica Scaramuzzo — São Paulo 12/10/2022 7:04PM
The negotiation to sell petrochemical Braskem got hectic again — still before the outcome of Brazil’s presidential elections, which were being pointed out as a milestone in Novonor’s (formerly Odebrecht) calendar. Valor found out that U.S.-based asset manager Apollo Global presented last week a new proposal to buy 100% of the petrochemical company, at R$47 per share.
According to sources close to the negotiations, the bid, which evaluates Braskem at around R$37 billion — considering 100% of its capital — is being formalized with Novonor.
The first offer made by Apollo, at R$40 per share, was considered too low by both the controlling shareholder and the creditor banks, which hold the petrochemical company’s shares as a guarantee for the debts of former Odebrecht. Other interested parties also came to formalize offers, but none pleased the sellers.
A source says that Apollo had indicated in informal talks the new price and would already be formalizing the proposal. Other potential buyers, including Unipar and BTG Pactual, did not make new offers. Unipar would still be interested in Braskem’s assets in São Paulo, in an operation with a price equivalent to R$60 per share.
In reaction to the news about the sale process, Braskem shares rose 20.4% on Tuesday on B3, the highest on Ibovespa, traded at R$33.58 each. Still, they are far from the R$55 seen at the beginning of this year. According to analysts consulted by Valor, in addition to uncertainties about the company’s sale process, which will not be immediate, the prospect of a downturn in the global petrochemical cycle will continue to punish the stocks.
Apollo is interested in the stakes held by Novonor and Petrobras in the Braskem. In addition, it plans to make a public offering for the outstanding shares, taking the company private in Brazil.
According to a source close to the sale proceedings, Apollo has conditioned its offer on due diligence and one of the most critical points, for the manager, would be Braskem’s situation in Alagoas. Although the petrochemical company has advanced a lot in the negotiations with authorities about soil sinking in Maceió — linked to its old rock salt operation, the understanding is that there are still risks, including financial ones. Along with the second-quarter results, the company updated the amount provisioned to cover expenses with the geological problem, bringing the account to R$12.9 billion so far.
Apollo, Novonor, and Unipar declined to comment.
For BTG Pactual analysts, Apollo’s new offer is positive and represents a substantial premium over the share price. Still, the bank points out that the negotiations are still expected to take a long time.
Analysts Pedro Soares and Thiago Duarte point out that Novonor’s debt with creditor banks is around R$14 billion. In the values of the new offer — of R$50, considering the price informed by the columnist Lauro Jardim, with daily O Globo, which reported first-hand that Apollo had presented a new bid — Novonor would raise R$15.3 billion with the sale.
After discounting the taxes on the capital gain of more than R$1.6 billion, the net amount received would be below the amount necessary to fully cover the debt. “We believe that creditors will play an important role in the final terms of any proposal, so the current value suggests that negotiations are unlikely to be as direct and may last a bit longer,” they wrote.
Still, for the bank, the investment thesis remains unchanged with or without a proposal, reflecting a company that currently has a more diversified portfolio and the capacity to generate cash even under the current adverse macroeconomic conditions. BTG Pactual has a buy recommendation for Braskem, with a price target of R$68.
/i.s3.glbimg.com/v1/AUTH_37554604729d4b2f9f3eb9ad8a691345/internal_photos/bs/2022/a/i/Lj61PCRXuiltI8NHhZ1Q/17agr-100-acucar-b10-img02.jpg)
/i.s3.glbimg.com/v1/AUTH_37554604729d4b2f9f3eb9ad8a691345/internal_photos/bs/2022/0/M/LcJlPGQJ2jBbD9zuAJdQ/140922aco-20verde21.jpg)
/i.s3.glbimg.com/v1/AUTH_37554604729d4b2f9f3eb9ad8a691345/internal_photos/bs/2022/q/X/B5JRwvRUKgoaqfio38vw/27emp-300-abimaq-b4-img01.jpg)
/i.s3.glbimg.com/v1/AUTH_37554604729d4b2f9f3eb9ad8a691345/internal_photos/bs/2022/M/r/R0pjTATJCiKlrA2bHBjg/14agr-300-boher-b10-img01.jpg)
/i.s3.glbimg.com/v1/AUTH_37554604729d4b2f9f3eb9ad8a691345/internal_photos/bs/2022/2/B/b5XmeNTPKG00Nn0htteQ/14fin-100-vale-c6-img01.jpg)
/i.s3.glbimg.com/v1/AUTH_37554604729d4b2f9f3eb9ad8a691345/internal_photos/bs/2022/w/M/BuCRITTiyxVtpAw5fI5Q/14emp-100-apple-b7-img01.jpg)
/i.s3.glbimg.com/v1/AUTH_37554604729d4b2f9f3eb9ad8a691345/internal_photos/bs/2022/i/H/5881eUThGJnrro1YVKeA/14agr-100-floresta-b10-img01.jpg)
/i.s3.glbimg.com/v1/AUTH_37554604729d4b2f9f3eb9ad8a691345/internal_photos/bs/2022/h/W/k9VA93RYKuBHrFtvFATA/24bra-100-bmacro-a4-img02.jpg)
