BRIC countries post opportunities, challenges to U.S. trade
February 24, 2012 | 02:19 PM
Brazil, Russia, India and China all offer opportunities and individual challenges to American exporters, four trade experts said at the USDA Agricultural Outlook Forum on Thursday.
The “BRIC” countries make up 80 percent of the economic growth worldwide, are home to 30 percent of the world’s middle class, and are becoming major players in both food demand and agricultural productivity, said Mike Dwyer, the director of global policy analysis at the Agriculture Department’s Foreign Agricultural Service.
Seneri Paludo of the Mato Grosso farm bureau in Brazil described an “intensifying use of land” in his country, where pastures are being converted to crop land to meet global demand for soybeans, feeding a growing international market that includes China. Two new roads being built to the north will make it easier for producers to reach overseas market, he noted.
Brazil is increasing productivity further, Paludo said, by planting corn as a second crop after the soybeans are harvested.
The next revolution in Brazil will be in beef, he said, noting that ranchers are moving away from grazing cattle and are starting to feed with corn and meal.
High labor costs and commercial tariffs continue to be the major challenges to Brazilian agriculture, Paludo said.
Russia’s accession to the World Trade Organization, announced in December, should have “meaningful benefits” to the United States., said Eric Trachtenberg, a former Foreign Agricultural Service officer now with McLarty Associates.
Once Russia has complied fully with its membership application and is accepted into the WTO in August or September there should have meaningful benefits to U.S. agriculture, Trachenberg said, because export tariffs and quotas are expected to drop and there should be more clarity on sanitary and phytosanitary rules.
He cautioned, however, that the Russian bureaucracy remains “unreformed,” with continuing corruption.
India has seen real price increases in food in the last five years and is putting a priority on establishing food price stability, said Rip Landes, an economist with the USDA Economic Research Service.
Production in India is not responding to demand, and government subsidies are rising, Landes said, noting that it is the states, not the central government, which establish policies, such as taxes on the movement of goods across state lines.
“One observer said that India needs to have a free trade agreement with itself,” Landes said.
China has great potential in agricultural production, but it faces many problems and remains an “extremely complex and intricate market,” said William Westman, a former Foreign Agricultural Service officer who served in China and is now a vice president of international trade with the American Meat Institute.
Water is a critical issue in China, with limited arable land and a water table in the north and west that is “dropping very fast,” Westman said.
China is also retooling and rebuilding to meet the demands of its expanding middle class, Westman said. “Not unlike the U.S., they want quality food and safe food,” he added.
Pork and pork meat products are dominant in China while beef is so far “not important” there, Westman said. “But when China is open to beef, it will change the world market,” he said.
China’s main production needs are in technology and mechanization, he said, although the country will be challenged with what to do with its peasant and transient farmers once their farms are consolidated into larger operations under direct government control.