Despite Slowdown China Still Depends on Brazil

05/07/2014 - 09h15

The world looks on as the Chinese economy slows down.

The GDP annual growth rate once over 10% is now a cause for concern and oscillates between 7 and 7.5%.

But the agribusiness sector should not worry so. Increased income for a considerable segment of the population together with urbanization have modified Chinese eating habits.

As a result, the country can buy less minerals but the demand for food is still on the rise.

The Chinese who were net exporters of grain until 2007 are now importers of grain as well as meat.

The Chinese dependence on food products opens new doors for Brazil. And the demand is precisely for products that are booming in Brazil.

This is the case of corn, which has seen the biggest increase in production in Brazil. 42 million tons were produced in 2006 compared with 82 million produced in 2013.

Corns is exactly the grain that China will have difficulty supplying. Chinese imports reached 2.7 million tons last harvest and will remain at 7 million this year.

They could reach 22 million tons in 2023/24, according to the USDA (US Department for Agriculture.)

Soy imports will meet 112 million tons within the next ten years. Last harvest reaped 60 million tons.

This year they are expected to reach 69 million.

China also imports wheat, cotton, sorghum and even rice.

According to analysts at Rabobank (a bank specializing in agribusiness), meat, mainly beef, could be the "new soy" for China. This could open doors for Brazil.

The Chinese imported 297 thousand tons of beef in 2013. According to the bank, this will double by 2018.

The USDA estimates pork imports are also due to rise 59% in ten years and chicken imports are set to rise 45%.

However this sector is delicate. Brazil will have to make more of an effort if it is to meet its demands.

Translated by MILLI LEGRAIN

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