Brazil negotiates with China for the agricultural transformation of the country
by Jamil Chade
In an ambitious project, the Brazilian government wants to transform millions of hectares of pasture into agricultural production areas. But to do so, it is negotiating China's participation in financing a plan that can change the country's rural landscape and increase productivity without the need for any deforestation. Despite the cancellation of the trip of president Luiz Inácio Lula da Silva to China due to pneumonia, technicians of the Ministry of Agriculture continued the meetings and visits to entities and Chinese agencies.
The trip aimed to reposition Beijing in the national economy by signing more than 20 agreements. All of them will be postponed until a new date is confirmed for Lula's visit. Brazil is the leading food supplier for China, and the Asian country is the main destination for Brazilian agribusiness exports. Now, the Brazilian government wants the Chinese to also participate in land conversion in the country to increase productivity and ensure supply. According to the Ministry of Agriculture's calculations, converting pasture to crops will cost US$ 3,000 (R$ 15,700) per hectare. In Brazil, at least 40 million hectares could be converted, which implies that such a project would require more than US$100 billion.
One of the paths sought by Brazil is the participation of COFCO, China's largest food and agriculture company. In 2021 alone, the state-owned company handled 130 million tons of commodities, moving US$ 42 billion (R$ 220 billion). The company has expanded worldwide in recent years, precisely in search of supply guarantees for China's rapid growth.
The idea of the Lula government now is that the Chinese finance the conversion of land in Brazil and that, over the years, the producers pay back these credits in the form of soy, corn, or any other product. A second option would be for the Chinese to help finance the BNDES. The Brazilian bank, in this case, would facilitate credit for domestic producers who opt for the change. Government sources have indicated that COFCO has signaled interest and will appoint a person in Brazil to start talks. The government has also commissioned a study at Embrapa to evaluate how extensively the eroded pasture lands could still be converted. Some estimates indicate that the area would be twice as large as known today.
Carlos Favaro explained to the Chinese interlocutors that the Brazilian government would stimulate the conversion of 40 million degraded pastures into arable areas, which would practically double the area destined for agricultural production without deforestation and with sustainability.
One of the messages was delivered at an event organized by the China-Brazil Business Council (CEBC) in partnership with the Institute of Finance and Sustainability (IFS), the Climate Bonds Initiative (CBI), and the Global Environment Institute (GEI). "This program will be encouraged by the government with attractive credit lines. Instead of thinking about new deforestation, the producer raises funds to convert pastures using lime, fertilizers, and organic matter," the minister told representatives of Chinese financial institutions and investment funds. During the event, the Special Advisor to the Minister of Agriculture, Carlos Augustin, asked the Chinese to provide long-term financing for pasture conversion in Brazil.
In his assessment, this would be in the interest of the Chinese themselves since it would also contribute to increasing the food security of the country that needs to feed 1,4 billion people. "We can double agricultural production," said Fávaro at an event this Monday in Beijing. According to him, segments of producers bet more on deforestation to be able to expand production. But the logic may change with the financing guaranteed by BNDES."