Agribusiness: the biggest business in Brazil

A classic book, originally published in 1957, in the USA, was released these days in Brazil. In the Portuguese title, it is “An agribusiness concept”written by Harvard professors John Davis and Ray Goldberg.

Responsible for the Brazilian edition, lawyer Rafaela Parra, from ESG Law, provides a great service to academia, translating a work that changed the understanding of the importance of agriculture in the global economy.

As she herself puts it, in the preface, “A concept of Agribusiness” is an iconic and timeless study. The maxims of professors John Davis and Ray Goldberg, although they occurred long before the geopolitical phenomenon of globalization, are pillars for understanding the relationship between production, international trade and the various actors in the modern agribusiness gear..

I can say that, as a teacher, I experienced this story linked to the evolution of knowledge in the rural economy. Before, we taught about the “rural environment”. Now, we deal with “agribusiness”. The focus of our analyzes changed.

The person who initially brought the pioneering concept of “agribusiness” to Brazil was Ney Bittencourt de Araújo (1936-1996), then president of Agroceres, a national company that went beyond its commercial limits.

Ney, a visionary as much as, especially, Ray Golberg, led a brilliant team of technicians and scholars of Brazilian agriculture that made Agroceres a center of excellence. He organized seminars and even published books, such as the avant-garde “Agroindustrial Complex: Brazilian agribusiness” (nineteen ninety).

Influenced by the new approach, which would change the paradigm of the rural economy, we began at the university to pay more attention to those relationships that linked the rural economy to the economy in general. “Agroindustry” was the first broader term used to explain the change that was occurring in agrarian society.

In this context, we no longer consider agriculture in isolation, but the agro-industrial complex that surrounded it, including the rich concept of production chains that, methodologically, forced us to consider the links that, from beginning to end, participated in the chain of value generation originating on the land.

The more the technological modernization of the countryside continued, along with the country’s urbanization and globalization, the more the importance of the futuristic vision formulated by Davis and Goldberg became clear. They shed light on the path of civilization.

In the past, our great-grandparents worked the land and raised isolated animals in the fields. They made their own sausage and cheese, eggs were fetched from the henhouse’s nest, free-range chickens died at the right time. They produced beans and rice, and cassava, to extract flour; corn was the grain that fed the animals, including the horses and donkeys on duty.

From the garden came cabbage, one or another vegetable; from the fatted pig, the lard was also removed for cooking. Manure was the fertilizer for the crops. Everything worked as an almost closed cycle of production and consumption. What was left over was sold in bulk.

Today, everything has changed. The cities flourished, the countryside emptied. Farmers specialized. Large companies process agricultural products, supermarkets have replaced corner stores. Vegetable oil appeared, eggs come in a box, rice and beans can be bought packaged. NPK fertilizers flourish crops, tractors retire working animals. The vegetable garden disappeared, along with the old chicken coop. No one knows what “bulk” merchandise means anymore.

It has become difficult to define where the generation of value for rural producers begins and ends. Thus, a curious hillbilly analysis emerged, widely used to describe the concept of agribusiness, dividing it into 3 economic phases: before the gate, within the gate and after the farm gate. It’s pedagogical!

Established in 1982, Cepea (Center for Advanced Studies in Agricultural Economics), linked to ESALQ/USP, in Piracicaba, became the great reference in understanding modern Brazilian agriculture. Its analysis methodology, following the teachings of Davis and Goldberg, separates the GDP (Gross Domestic Product) of agribusiness into 4 segments: inputs, primary (agriculture), agroindustry and agroservices.

For 2023, in the calculation up to September, Cepea indicated the following percentage participation of each of those segments in total agribusiness GDP:

• Inputs: 5.5%
• Primary: 27.5%
• Agroindustry: 23.5%
• Agriservices: 43.5%

Note that the primary segment, that is, that of agriculture itself (within the farms), corresponds (Cepea Bulletin, full – PDF – 3 MB) to just over 1/4 of the value of the total GDP of agribusiness. In other words, it means that rural producers in Brazil operate an economic complex that generates three times its own value.

In the year to September 2023, agribusiness represented 24.1% of the total GDP of the Brazilian economy. And the PO (Occupied Population) across national agribusiness, including field workers engaged in self-consumption, totaled 28.34 million people, representing 26.8% of the Brazilian PO.

Conclusion: agribusiness is the biggest business in Brazil. Perhaps the only one capable of taking us to a rich and sustainable future.

(Do you know any better?)