Brazil: A Key Country for Global Grain Production

Takaaki Kakudo, General Manager Multigrain Project Dept. Grain Project Div. Ⅱ, Food Resources Business Unit Mitsui & Co., Ltd.

"Hello, I am glad to see you."

Daiki arrived at the Mitsui & Co. Head Office building located in Ohtemachi, Tokyo. When he arrived at the building entrance, a man welcomed him with a smile.

Daiki was secretly relieved, thinking "I was imagining 'Bussan-jin' to be intimidating, but he looks nice". He said to the man, "Thank you for meeting me today", and bowed.

"My name is Takaaki Kakudo, and I work for the Food Resources Business Unit of Mitsui & Co. I heard about you from your father. So, you would like to know what a sogo-shosha does and how it contributes to the food and energy problems in the world."

Mr. Kakudo invited Daiki into the company cafeteria, ordered tea for two, and started talking.

"I deal with soybeans in my work, which is one of the four major grains along with corn, rice, and wheat."

"Soybeans are ingredients for food such as natto and tofu, right?"

"Of course, they are used as human food, but there is a large global market for soybeans, and food is not their only application. The oil extracted from soybeans is used as raw materials of biodiesel and provides energy, and the strained residue of soybeans is distributed as feed for livestock such as cattle and pigs."

Mr. Kakudo showed the screen of his tablet to Daiki and continued, "First, please look at this graph."

Change in soybean imports by country (Unit: million tons)
Change in soybean imports by country
Source: U.S. Department of Agriculture (USDA)

Looking at the graph, Daiki said,

"The imports of soybeans have increased and are projected to increase at an astounding rate. The increase in imports by China is especially huge."

"Please look at this graph next." Mr. Kakudo showed another graph on his tablet screen.

Change in soybean exports by country (Unit: million tons)
Change in soybean exports by country
Source: U.S. Department of Agriculture (USDA)

"The imports increase, and the exports naturally increase as well. Oh, looking at it closely, I can see that Brazil's increase in exports is a lot higher."

"That's right. As you can see in different statistical data, Brazil will be an extremely important country when it comes to grain production."

"Is Brazil going to be the key to grain production?", asked Daiki. Mr. Kakudo nodded in response to the question, and showed another graph on the screen.

Comparison between acreage under cultivation and cultivatable acreage (Unit: million ha)
Comparison between acreage under cultivation and cultivatable acreage
Source: The Brazilian Institute of Geography and Statistics (IBGE)

"It's clear if you compare Brazil and the U.S. in this graph. Brazil has 400 million hectares of cultivatable acreage, which is larger than that of the U.S. Even if we exclude the Amazon's precious rain forests from the cultivatable acreage, there’s still 250 million hectares of cultivatable acreage left. It's not that all of these areas can be cultivated, because land development is restricted to a certain percentage to protect the natural environments that are left uncultivated. But only 60 million hectares have been cultivated so far. Therefore, considering the growth potential, Brazil is considered to be more important than the U.S."

A trading company's work does not finish with expansion of farmland

"If you have such a huge land area that can be cultivated, why don't you make soybean fields now? Oil can be extracted for energy and livestock feed can be made from soybeans, so it can solve both issues — food and energy problems."

"Certainly, in the last several years, the soybean exports of Brazil have increased dramatically, but they have various issues that the U.S. does not have. In order to make a contribution to solving these issues, Mitsui & Co. is planning to establish an operation which will act as the base for grain strategies. Mainly, my Food Resources Business Unit is developing a business plan."

"What's the operation?"

"Mitsui & Co. has almost 120 thousand hectares of farmland in Brazil through a subsidiary company called 'Multigrain'."

"120 thousand hectares? It's difficult to imagine how big that is."

"It is approximately double the size of Tokyo's 23 wards."

"Double the size of Tokyo's 23 wards!"

"It is half the size of the entire Tokyo metropolitan area, or about 20 times the area surrounded by the Yamanote Line. Of the almost 120 thousand hectares, a little less than 40 thousand hectares should be left as uncultivated land to protect the natural environment. This means that 80 thousand hectares can actually be cultivated, 70 thousand hectares of which have already been cultivated."

"I had no idea that a Japanese sogo-shosha was transforming fields in Brazil into cultivated land."

"We are not only changing uncultivated fields into cultivated land. It is the Bussan-jin's mission to contribute to solving the various issues we discussed earlier, through this project."

"Sounds great! Please tell me more about it," Daiki said, his eyes shining with excitement. Mr. Kakudo nodded with a smile, and started talking in detail.

©2013-2014 Nikkei Business Publications, Inc. Nikkei Business Online Special, Translated by Mitsui & Co., Ltd.

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