Brazil set to spend US$122 billion

OTTAWA—Farmers in Brazil could be set to spend a record US$122 billion this year, triggering a potential growth opportunity for Canadian manufacturers, according to Canadian Manufacturers and Exporters (CME).

Brazil, the world’s second largest food supplier, will likely focus on productivity to leverage higher food costs into bigger profits by investing heavily in machinery and crop inputs.

“For the past decade, Brazil has been a market Canadian companies have watched with keen interest,” says Jeff Brownlee, vice-president, public affairs and partnerships at CME.

However, there are significant regulatory hurdles for exporters. Brownlee says it will be key to provide a stable climate that reassures investors looking to grow operations in Latin America.

Those regulatory hurdles could include the frequent concerns about Canada’s Investment Canada ACT (ICA) review process’s lack of clear guidelines in defining “net benefit” and also national security concerns.

There are already several positive economic signs indicating a shift in Brazilian private-sector investment is underway.

Equipment sales at Latin America’s largest annual farm machinery fair totaled US$1.1 billion earlier this month – up more than 50 per cent from one year ago. The use of fertilizer is also on the rise, jumping a projected six per cent to 26 million tonnes.

“Brazil is a market Canadian manufacturers simply cannot ignore,” says Brownlee. “It’s the world’s seventh largest economy by GDP and imports more than US$187 billion in goods each year. It’s time companies begin to take a second look.”