Brazil drops in on an ally

Brazilian Agriculture Minister Roberto Rodrigues counts his New Zealand counterpart, Jim Sutton, a friend. Picture / Richard Robinson

New Zealand farmers are well aware of the benefits that trade liberalisation could bring.

But few could match the passion of the Brazilians in arguing that agricultural trade barriers must go.

Brazilian Agriculture Minister Roberto Rodrigues last week paid a flying visit to his old mate Jim Sutton - our minister for both agriculture and trade negotiations - to catch up on issues surrounding the Doha round of trade talks.

Rodrigues - who like Sutton started his career as a farmer - believes the removal of agricultural trade barriers is one of the great issues of the age.

"The opening of agricultural markets is much more than a question of generosity," he said. "It will be a necessity to maintain democracy and peace."

He argues that the biggest challenge for the world in the 21st century is to reduce the gap between rich and poor.

"Globalisation has had good results and bad results. The good results are in the improving trade and overall wealth of the world but the bad side is that there has been more concentration of wealth and that has resulted in more social exclusion."

Social exclusion is a growing threat to democracy, Rodrigues says, not just in third-world countries, but within rich countries.

"Countries like Germany have some regions where there is 30 per cent unemployment."

One of the most obvious ways to address this is to address the inequity of a system where rich countries pay farmers not to produce and poor countries pay for the right to produce, he says.

While he doesn't believe the issue will be resolved by the end of the Doha round - which comes to a head in Hong Kong this December - he is optimistic.

"It is only a question of time."

Rich countries are beginning to understand, but it is a slow process.

There is no question that Brazil regards New Zealand as an ally in the trade talks.

Rodrigues describes Jim Sutton as a personal friend, with whom he has worked closely as part of the Cairns Group, a collection of nations with a special interest in agriculture.

It includes Argentina, Australia, Bolivia, Brazil, Canada, Chile, Columbia, Costa Rica, Guatemala, Indonesia, Malaysia, New Zealand, Paraguay, the Philippines, South Africa, Thailand and Uruguay.

There is also no question that Brazil is fast becoming one of the world's agricultural powers.

It is among the top five exporters of a long and growing list of agricultural products, including beef, coffee, orange juice, sugar, poultry, corn, soy beans, cocoa and tobacco.

Its dairy industry is also growing fast but production - 22.6 billion litres in 2003 - is mostly consumed domestically.

But that is expected to change if production growth averaging 4.5 per cent a year continues.

In New Zealand Rodrigues made a point of meeting Fonterra officials and visiting the company's Innovation Centre in Palmerston North.

He hopes Brazilian farmers, who belong to 150 dairy co-operatives, will follow New Zealand's lead and create a Fonterra-style mega co-op.

"Exporting milk, like other sectors, whether it be sugarcane or soy beans, is a question of scale," he said.

"I am a proponent of industry mergers in Brazil. The model that Fonterra has developed is exactly this. I came here to see how you can do it."

What he has learned is the impetus for change needs to come from farmers.

Like their New Zealand counterparts, Brazilian farmers were forced to cope with massive change as free market policies were implemented.

While New Zealand's reforms took place in the mid-1980s, Brazil opened its economy to international competition in the space of three years in the early 1990s.

Thousands of farmers were forced off the land. But those who remained were extremely efficient, he says.

Brazil has a generation of young, technologically savvy farmers who are switched on to what is happening in commodity markets and focused on adding value to their products.

Rodrigues is hopeful that as Brazil's dairy co-operatives consolidate and modernise, there will be further opportunity to work with New Zealand for mutual benefit.
There is certainly scope for them to partner with Fonterra, he says.

Farming in Brazil

* Brazil has 262 million hectares of agricultural land (New Zealand has 17 million hectares).

* Agriculture accounts for 30 per cent of its exports.

* It provides 37 per cent of all jobs.

* The country produces about 23 million tonnes of dairy product per year - mostly for domestic consumption.