AGRITECH IN BRAZIL Opportunities for Swiss SME's in the country's driving sector - January 2021 - Switzerland ...
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AGRITECH IN BRAZIL
Opportunities for Swiss SME’s in the country’s driving sector
January 2021
Official Program In Cooperation With
Contents
INTRODUCTION ........................................................................................................... 6
BRAZIL & AGRICULTURE .................................................................................... 7
Brazil - where Farming is Big Business _____________________________________ 7
The Success Story of Tropical Agriculture ___________________________________ 8
Agriculture, Environmental Sustainability and the Amazon _______________________ 9
OVERVIEW OF THE BRAZILIAN AGRIBUSINESS............................................... 11
Key Numbers of the Brazilian Agribusiness __________________________________ 11
Global Leader for the Production of Main Commodities ________________________ 14
Cotton 14
Coffee 15
Soybean 15
Sugar 16
Orange Juice 16
Beef 17
Poultry 17
Livestock ________________________________________________________ 18
SWOT Analysis of Agritech in Brazil 2020 – 2024 ____________________________ 21
Challenges for the future _____________________________________________ 21
DIGITAL AGRICULTURE IN BRAZIL .................................................................. 23
Open Eco-Systems & R&D for Tropical Agriculture ____________________________ 23
Brazilian Agri-Tech Market____________________________________________ 26
TECHNOLOGY OPPORTUNITIES FOR SWISS INDUSTRY IN DIGITAL
AGRICULTURE ................................................................................................... 28
Meteorology & Risk Management _______________________________________ 28
Weather Stations 28
Weather Forecasts 28
Microclimate monitoring 29
Climate Risk Modelling 29
IoT, Sensor Technology & Platforms ______________________________________ 29
Livestock Automated Weight Monitoring 31
Behaviour and Feeding Monitoring 31
Crop Imaging Technology (Satellite, Aerial and Field) __________________________ 32
Satellite NDVI imaging 32
Aerial imaging 32
Deep Neural Networks for Image Recognitions 32
Multispectral or Hyperspectral Cameras 33
Pests & Diseases in Crops _____________________________________________ 33
Weather Related Disease Modelling 33
Biological Control Systems 34
Automatic Insect Traps 34
Irrigation, Soil & Plant Nutrition ________________________________________ 34
Irrigation Automation and Monitoring 34
Topsoil Mapping 36
In-Field Nutrient Analytics 36
Biological and Organic Soil and Plant Nutrition Products 36
Precision Farming __________________________________________________ 37
Geospatial Analysis Techniques 37
Prescription mapping 37
Management Zone planning 37
Smart Application or sensor-based VAR 38
Robotics and Drones ________________________________________________ 38
Mechanical Weed Control Robots 38
Milking Robots 38
Drones 39
Animal Genetics Market ______________________________________________ 40
Tracking & Supply Chains_____________________________________________ 41
Block Chain Driven Food Supply Chain Applications 41
Food Authentication Technologies 41
Animal Nutrition________________________________________________ 42
Bioactive ingredients 43
Alternative proteins 43
Insect Protein 43
Algal Protein 43
Niche Market Opportunities ___________________________________________ 44
Grape Market 44
Specialty Fruits 44
Agroforestry/ICLF (Integrated Crop-Livestock-Forest) 44
Bio Energy Market 45
Carbon Farming 46
Small Farmers/Risks Management 46
Tropical Agriculture 46
Farm-To-Consumer E-Grocery 46
Food Waste Reduction Systems 47
CONCLUSION ..................................................................................................... 48
RESEARCH METHODOLOGY AND SOURCES .................................................... 50
LITERATURE & INFORMATION SOURCES ________________________________ 50
DATA ANALYSIS AMAZON FIRES ______________________________________ 53
DIVERSE APPENDIX MATERIAL ....................................................................... 54
Real Case: Medium-Sized Soya Producer and IoT _____________________________ 54
Digitization in pig farming – Agriness Case _________________________________ 54
ABOUT S-GE ............................................................................................................... 56
CONTACT US .............................................................................................................. 56
Disclaimer The information in this report was gathered and researched from sources believed to be reliable and are written in good faith. Switzerland Global Enterprise and its network partners cannot be held liable for data, which might not be complete, accurate or up-to-date; nor for data which is from internet pages/sources on which Switzerland Global Enterprise or its network partners do not have any influence. The information in this report do not have a legal or juridical character, unless specifically noted.
Introduction In the following report, the reader will have an insight into this very important sector for the Brazilian economy. Agribusiness is and will remain for the upcoming decades the main driver of the economy of the country. The Swiss Business Hub Brazil, as responsible to foster the exports of Swiss companies to Brazil and aware of the level of innovation that Switzerland can offer to a sector that is increasing its digitalization at a fast pace and demanding niche technologies with the highest level of reliability, envisioned the strong positive impact a comprehensive report on the sector could have for both countries. It aims to provide a substantial overview of the subsectors, the most important trends and technological advancements highlight the level of sustainability that Brazil has already achieved and still pursuits in Agribusiness, outlining challenges and particularities and highlighting the most relevant opportunities for Swiss players in Agritech. To compile this report, the Swiss Business Hub Brazil engaged two experts from the sector and analysed an extensive collection of reports, interviews, market studies and articles issued by business associations, specialiazed research institutes, national and international market intelligence companies, as well as international trade organizations. The first chapter introduces and contextualizes the sector and its particularities. The chapter two aims to further provide figures of the most important subsectors, placing the relevance of the country and its globally forecasted growth and macro challenges identified. Chapter three is dedicated to the R&D ecosystem, whereas chapter four goes deeper in to every segment to outline the opportunities for Swiss players. The last subchapter of chapter four lists niche market opportunities and trends, also arising from Covid-19, not necessarily cross-referenced with Swiss technologies. The final goal of this report is to facilitate the connection between Swiss technical suppliers and the players in Brazil, enhancing the business between the two countries for mutual benefit and growth. AGRITECH IN BRAZIL – REPORT – JANUARY 2021 PAGE 6 OF 58
BRAZIL & AGRICULTURE
Brazil - where Farming is Big Business
The Brazilian agribusiness does not have much in common with Swiss agriculture. In the world’s largest
tropical country, farming is big business. It is the business of feeding the world. Together with the other
agricultural superpowers - USA, China and India - Brazil is leading the production of most food
commodities, such as soya, corn, sugar, coffee, and orange. All these agricultural superpowers unite three
common factors, which make them naturally leading food producers: first, they all have large populations
to feed, which historically gives agriculture a priority in the country’s political agenda. Second, they
belong to the countries with the largest territorial extension on the planet. Third, in large parts of their
geography they enjoy a mild and wet climate, which makes their lands productive (i.e. this being the
reason why the largest and second largest countries, Russia and Canada, are not among the top food
producers).
Zooming into Brazil, it is possible to learn that in the period since 1990, the country has increased its
productivity in cereal’s yield per hectare from 1.76 tons to 4.81 tons per hectare. This increase of
productivity is unmatched among all major countries during the same period. However, this level is still
much lower than other major food producers (compare: USA = 8.69 t/HA, China = 6.08 t/HA,
Switzerland = 6.2 t/HA, Netherlands = 8.32 t/HA). This has enabled the increase of total grain production
by 217%, while the planted area has grown a mere 16% in the same period.
Against popular believe, the primary focus of modern Brazilian agriculture is not the territorial expansion,
but the productivity increase. However, despite this recent success, the importance of Brazilian
Agriculture lies much more in its future potential than in its past performance. Agronomists often use the
concept of Yield Gap to conceptualize how much a country could potentially produce and what are the
limiting factors. Thereby, the climate, the water and the crop genetics define the so-called potential yield
(Yp), i.e. the maximum potential yield per each planted hectare. Different studies show that Brazil has
still a Yield Gap of about 6.6 tons per hectare. In other words, the country can easily double its output
without extending its territory but mostly by adopting new technologies and efficient practices.
Apart from closing that yield gap, Brazil’s favourable tropical climate allows for two to three harvests per
year. In some regions, irrigation systems are needed to produce in the dry season, which is the ‘tropical
winter’, in other regions year-round farming is even possible without irrigation. This means that Brazil
has the potential to produce 3-5 times more than today without cutting a single tree from the Amazon
forest.
One could question why Brazilian farmers are so successful in increasing their productivity, while the rest
of the country’s industry remains largely uncompetitive. The answer is in the absence of government
subsidies and market protection, obliging the Brazilian farmers to adopt an entrepreneurial approach and
to sell their products at the world market price. Brazilian public spending for agriculture has gone mainly
into R&D, namely to EMBRAPA, the Brazilian Agricultural Research Corporation affiliated with the
Ministry of Agriculture. EMBRAPA has developed numerous agronomic innovations paving the path of
success of Brazilian farming.
AGRITECH IN BRAZIL – REPORT – JANUARY 2021 PAGE 7 OF 58
At this point, two important conclusions can be made: first, Brazilian Agriculture has the potential to
increase its food production by factor three or more without accessing a single additional square-meter
of land and it is a matter of technology adoption. Second, local farmers are entrepreneurs and
businesspeople, who consistently seek innovations and productivity increase, while using the natural
advantage of their production site.
The Success Story of Tropical Agriculture
In spite of the favourable climate, farming under tropical climates is not an easy game. There are several
challenges.
Initially, while European soils freeze once per year and thereby interrupt the entire biological cycle, the
same does not happen in the tropics. This also means that pests and diseases can continuously develop.
Freshly seeded and vulnerable plants then encounter an entirely adult and aggressive population of pests
and pathogens. The humid and hot climate is generally favourable to these plagues. For the farmers, this
means a higher demand for chemical pesticides, which represents a cost to both environment and
financial budget. Biological and organic farming practices are generally very difficult under such
conditions. This is the main reason why the big Agrochemical corporations find interesting market
potentials in Brazil.
A second major challenge are the soils. Almost all tropical soils on earth are highly acid (i.e. ph. below
5.5) and nutrient poor due to frequent heavy raining and fast leaching. One of Brazil’s largest regions is
the so-called ‘Cerrado’, which covers a full 21% of the country’s territory. It is a grassland Savana with
unfertile and acid soils, normally ‘worthless’ for agriculture. Until the late 1960’s, Brazil’s food production
was limited to the territorially smaller Southern region. During the 1970’s, EMBRAPA has developed a
series of agronomic techniques and innovations to make the ‘Cerrado’ fertile and cultivable. The main
technique was the soil correction. By adding limestone or gypsum, a cheap prime material found in the
region, the pH value increases, the toxic soluble aluminium neutralizes, and valuable magnesium and
calcium is added to the soil. Through this technic, the entire Brazilian Savana was turned into fertile land.
Another breaking innovation was the Biological Nitrogen Fixation. Nitrogen is the main nutrient for plant
growth and is usually deficient in the soil while it is abundant in our atmosphere. EMBRAPA’s innovation
allowed the addition of specific microbes to the soil so that Gramineae crops (e.g. corn, wheat, rice,
sugarcane etc…) could uptake the Nitrogen of the atmosphere, fix it in the roots and use it for growth.
Hence, it resolved the problem of fertilizing and environmental hazard altogether, apart from an
important cost reduction. Today, about 75% of Brazil’s soya production uses this technique.
Other practices such as the direct planting system, a sustainable farming practice which avoids soil
erosion, and crop rotations, an important contributor to soil health and biological pest combating, are
other important techniques which may explain the ascension of the Brazilian agriculture in the last 40
years.
The growth of the global middle class in Asia and Africa will trigger food demand by more than 70% until
2050. While there is no exact plan for this challenge in place yet, it is certain that the growth must come
from the world’s tropical regions, given that Europe and the USA have no spare land and are close to their
potential yield. Originally, agriculture was a technique, which was developed and cultivated in temperate
climates during many centuries. Consequently, the agronomic techniques, practices and sciences were all
AGRITECH IN BRAZIL – REPORT – JANUARY 2021 PAGE 8 OF 58
developed for these climate and cannot be applied to tropical zones. This lack of an adequate and specific
science of food production is one of the factors that contributes to the underdevelopment and persistent
poverty of the global south. The work of EMBRAPA not only broke down this barrier for its own country,
but could be applied for many other countries in sub-Saharan Africa, Latin America and South-East Asia
that face similar issues like Brazil 40 years ago.
Agriculture, Environmental Sustainability and the Amazon
66% of Brazilian national territory is still covered with legally protected forest, which is by far the highest
number of all major and developed countries. 25.6% of this protected area are on farmers owned land,
10.4% are national parks, 13.8% are lands of indigene people and 16.5% are public lands.
Image 1 - Brazil: the second largest area preserved forests in the world
Source: APEX - Publication on the sustainability of the agriculture – LinkedIn Channel – August 2020
Nevertheless, it is impossible to discuss Brazilian Agriculture without doing a critical evaluation of the
topic of Amazon deforestation. The topic is multifaceted and extremely complex, involving many aspects
like environmental sustainability, crime and law enforcement, internal politics, bureaucratic regulations,
corruption, but also tradition, poverty and social aspects.
AGRITECH IN BRAZIL – REPORT – JANUARY 2021 PAGE 9 OF 58
Apart from the deforestation, the fires that destroy mostly part of the “Cerrado” during the dry season are also regularly pointed out by the international community as a lack of willingness from the Brazilian government to address correctly this topic. Different reasons are at the origin of these fires, like the climatic reasons (dry season), the traditional practices but also illegal deforestation, which happens in remote places. Unfortunately, corruption and an excess in bureaucracy can help these criminals to ‘regularize’ later these territories and turn it into profit. The Brazilian government is defending its point, explaining that this internal issue is receiving the necessary attention from their part. Appropriate measures, like for example the creation of the council “Amazonia Legal” under the lead of Vice-President Mourao, have already been taken, aiming at solving the problem. Nevertheless, the lack of willingness from the government to discuss this issue openly with the international community and the satellite imagery showing an increase of the devastating areas, arouse suspicion about the capacity of the Brazilian government to correctly address this important topic. Recurrent declarations of members of the present government minimizing the problem also does not inspire trust from the international community. Existing strict environmental protection framework has not been changed by the current administration, but this attitude of shadowing the problem could have a negative impact for the country’s trade transactions and some Brazilian agribusiness associations and producers are worried to suffer boycotts in international markets. And in that sense it is worth adding that exporting agro producers are the ones least likely to be connected to fires, as they have to abide to strict current environmental protection framework from both the Brazilian government as well as the private stakeholders in order to maintain their exports. Associations of agro producers (such as the Soya, Beef and Citrus, for instance) already have their own very well adjusted and strict programs in place to monitor deforestation, using georeferencing tools and undertaking a close monitoring of all areas dedicated to production, also as a result from the pressure of the target countries they export to. Tools and guidelines exist and the challenges revolve around monitoring such a vast area as the Amazon, as well as the economic and social sustainability that also weigh heavily in this equation. AGRITECH IN BRAZIL – REPORT – JANUARY 2021 PAGE 10 OF 58
OVERVIEW OF THE BRAZILIAN AGRIBUSINESS
Key Numbers of the Brazilian Agribusiness
Agribusiness is the sector that has protected Brazil from deeper downturn of the economy during the last
recession that hit the country in 2015. Over the past decade, labour productivity declined in the
manufacturing sector, stagnated in the services sector, and increased only in the agriculture. In 2017, this
sector was responsible for 4.5% of the GDP when narrowly defined and 23.5% when considering the
integrated agroindustry, including processed foods and beverages.
With 851 million of hectares, Brazil is the world’s 5th largest country and enjoys favourable conditions for
livestock and agricultural production (intensity of sunlight, availability of land and water resources).
The latest census undertaken by the Brazilian Institute of Geography and Statistics (IBGE) in 2017
identified 51’103 large farming operations with more than 1’000 hectares and 2’543’681 operations with
10 hectares or less. The small farms accounted for 2.2% of the land dedicated to agriculture. At that time,
the sector responded for 15.1 million of workplaces. Since 2017, the country has increased productivity
and, whilst shrinking the areas dedicated to farming, the sector accounted for 6.4% of 2019’s GDP, as
show in image 2, below.
Different studies tend to demonstrate that
when Brazil’s GDP contracts, the agriculture
sector usually grows. This seems to be once
again the case with the Covid-19 crisis, with
the agricultural sector taking advantage of
new market opportunities due to Covid-19,
by supplying foreign markets facing a
situation of product disruption. At the same
time, Brazil has not suffered from an internal
food supply shortage. Currently, the weak
Brazilian Real made the country’s
agricultural exports attractive on the
Image 2 - Importance of Agribusiness in Brazil’s GDP
international market, while the demand for
Compiled by the Swiss Business Hub Brazil with data from SECEA, 2020
imported food products is shrinking.
AGRITECH IN BRAZIL – REPORT – JANUARY 2021 PAGE 11 OF 58As a result, while Brazil’s GDP was
forecasted to contract by at least 9% in
2020 during the same period, the
agricultural sector was expected to
grow by as much as 3% in August. But
it may surpass these expectations. As
per image to the right, up to mid-
November 2020, in spite of the Covid-
19 crisis, the agribusiness sector
accounted for US$ 85.8 billion, almost
46% of the country’s exports, an
increase of 5.7% in comparison to same
period of 2019 as shown below. Image 3 - Brazil Agricultural Exports vs. Total Exports - November 2020
Compiled by the SBH Brazil with data from CNA and SECEA – Period from Jan to Oct 2020
From 2017 to October 2020, Brazil’s agribusiness exports’ main destinations remained China, the
European Union and the United States as per image below. However, the percentages exported to China
increased almost 3%,
while the percentages of
the exports to the other
countries declined.
The agribusiness sector is
also responsible for
generating 102’467 job
openings from January to
October 2020, followed
only by civil construction,
whereas in the same
period, 558’597 job
positions across several
other sectors have been
extinguished.
Image 4- Main Agricultural Products Exported and its destinations
Compiled by the Swiss Business Hub Brazil with data from SECEA from Jan – Nov 2020 * RoW (Rest of the World)
AGRITECH IN BRAZIL – REPORT – JANUARY 2021 PAGE 12 OF 58Currently, 30% of the
national territory is
dedicated to
agriculture, including
cultures mixed in
combination with
planted forests and
native forests, against
41% in 2017, with 2/3
of the territory
remains covered with
native forests, as
shown in image 5, to
the left. Plant crop
areas cover only 7.6%
of the territory.
Farmer groups in
Brazil are either
associations or
cooperatives. While
associations have
greater emphasis on
representativeness,
cooperatives seek
economic advantages
to the participants due
to economies of scale.
Image 5 - Sustainable Agriculture and Livestock Production with Environmental Protection
Source: APEX - Publication on the sustainability of the agriculture – LinkedIn Channel – August 2020
Despite the importance of cooperatives as an organizational tool, that enables small and medium farmers
to compete in a market, these organizations are still facing serious operational difficulties, ranging from
legal/regulatory to financing and management. Overcoming these difficulties, could greatly increase the
productivity of the Brazilian agriculture sector, in particular, the small and middle size farmers.
The expansion strategy of the Brazilian agriculture started during the late 70’s also had its downside.
Small farming lost its place and an enormous inequality was created. This inequality exists in all
dimensions - land ownership, productivity, access to technology, education, infrastructure, financing
services and market. A recent study shows that out of the 5 million landowners – not only agricultural
productive areas - a mere 15,686 people own 25% of the land, the same amount as the poorest 77% (3.847
Mio people). The picture in terms of productive land or farming areas is similar, where 8% of the farms
account for a full 85% of the total output. This is a level of inequality which can safely be declared as
extreme and unsustainable. Farming is a capital intense and risky activity, financing and insurance
services are an essential part of the value chain. Unfortunately, the traditional financial system in Brazil
is set-up in a way which effectively excludes smallholder farmers from these essential services. One simple
AGRITECH IN BRAZIL – REPORT – JANUARY 2021 PAGE 13 OF 58extreme weather event can push farmers to the verge of bankruptcy, and this has certainly been one of
the major factors of inequality and poverty.
Global Leader for the Production of Main Commodities
During the past three decades, Brazil’s agriculture sector has grown at an impressive rate. Brazil has
become the world’s largest producer of sugarcane, coffee, tropical fruits, orange juice, and it supports the
world’s largest commercial cattle herd with 210 million head. Brazil is also an important producer of
soybeans, corn, cotton, cocoa, tobacco, and forest products.
Image 6 - Brazil – A Leader in Global Agribusiness
Image compiled in October 2020 by the Swiss Business Hub with data from ABAG, ABIEC, CNA, APEX and USDA
Cotton
In 2019 Brazil became the 2nd largest world’s cotton producer
and the total production has reached 2.1 million of tons. The
main producing areas are Center West and Northeast of the
Country. 40% of the production supplies the domestic
market meanwhile 60% is exported, mainly to China.
Although shipments to China were significantly higher,
countries such as Vietnam, Indonesia, Bangladesh and
Turkey have also become important export destinations for
Brazilian cotton. Cotton producers are often also large
soybean and corn producers. Consequently, decisions
regarding which crop to plant are based on the expected
profitability for each crop.
The chart to the left is the result of a study elaborated by Image 7 - Cotton Production by Region - Growth from 2019 to 2029
FIESP (Federation of Industries of the State of Sao Paulo) Source: Outlook FIESP – Projections for the Brazilian Agribusiness
showing the outlook of the cotton’s production within the 2029 (July 2020)
next 10 years and the share of each region.
AGRITECH IN BRAZIL – REPORT – JANUARY 2021 PAGE 14 OF 58Coffee
The Brazilian coffee harvested in 2019 was
approximately 44 million bags, resulting in a
decrease of 20% compare to the previous crop.
Generally, the fluctuation in production occurs due
to the biennial cycle of coffee trees with a higher
production within the first year. Brazil is 1st largest
producer and exporter of coffee worldwide. 70% of
the Brazilian production consists of Arabica coffee
and 30 % of Robusta coffee. 50% of the production
is exported, mostly to the European Union. The
main producing areas are located in the Southeast
of Brazil. Minas Gerais State concentrates the
Arabica coffee and Espirito Santo the Robusta
coffee.
Image 8 - Coffee, Production by Region - Growth from 2019 to 2029
Source: Outlook FIESP –Projections for the Brazilian Agribusiness 2029 (July
Soybean 2020)
Soybean is extremely important for the Brazilian economy and for the trade balance. The country is the
2nd largest producer and first largest exporter worldwide and, with 37 million hectares harvested in 2o20,
this will be Brazil’s largest soybean harvest. The biodiesel program plays an important role in soybean
demand. Last year, 5.9 million cubic meters of biodiesel were produced in Brazil, 70% of which used
soybean oil as raw material.
During the past decade, the soybean production has almost doubled and exports growth was the most
important market driver. 58% of the production is exported and almost 80% of the volume is sent to
China. Brazil is taking advantage of the ongoing dispute between USA and China, as China has
significantly increased their purchase of Brazilian soybeans and reduced imports from the USA.
Image 9 - Soybean Production by Region - Growth from 2019 to 2029
Source: Outlook FIESP –Projections for the Brazilian Agribusiness 2029 (July 2020)
AGRITECH IN BRAZIL – REPORT – JANUARY 2021 PAGE 15 OF 58Sugar
As main producer and main exporter worldwide, Brazilian producers are suffering from the low prices of
sugar and many farmers are investing in ethanol production, where prices are more attractive. There are
good reasons to be optimistic about the growth of the ethanol market in Brazil in the coming years, due
to an increased demand for the product on international markets, mainly in Asia. However, the crisis
generated by the Covid-19 pandemic has drastically reduced fuel consumption in the impacted countries
and, consequently, oil prices began to decline in the foreign markets. There is a lot of uncertainty in this
industry, but the devaluation of the Brazilian Real is helping keep the prices at reasonable level.
Currently, 65% of the Brazilian sugarcane production is for ethanol. 71% of the sugar production is
exported.
Image 10 - Sugarcane Production by Region – from 2019 to 2029
Source: Outlook FIESP – Projections for the Brazilian Agribusiness 2029 (July 2020)
Orange Juice
Brazil is the world’s leading producer and exporter of
orange juice. The regions with the highest concentration
of citrus production, the state of São Paulo and southern
Minas Gerais, had an excellent performance in 2019,
reaching 386 million boxes. The 2020-21 orange crop is
estimated at 287 million boxes, a reduction of 25% due
mainly to adverse climatic conditions. Domestically,
prices paid to farmers per box of orange had remained at
profitable levels. The Coronavirus pandemic had a positive
impact on the industry and prices rose by more than 20%
since March 2020. The higher prices may be correlated
with greater global demand for the product, as people have
started seeking vitamin C rich products more intensively
as a way to boost their immune system. 51% of the
production is exported and 70% flows into the European Image 11 - Orange Production by Region - from 2019 to 2029
market. Source: Outlook FIESP –Projections for the Brazilian Agribusiness 2029 (July
2020
AGRITECH IN BRAZIL – REPORT – JANUARY 2021 PAGE 16 OF 58Beef
With more than 210 million head of beef cattle, Brazil is the world’s largest beef exporter and second
largest beef producer worldwide. Since 2018, China has been a significant importer of Brazilian beef and
the outlook is very promising for the next years. While representing just over 20% of national production,
foreign sales have played a decisive role in livestock chain dynamics.
In recent years, the domestic market is decreasing
due to difficult economic situation. Brazil has the
capacity to respond to an increasing global demand,
because of its potential to expand supply, in
particular, by increasing herd productivity.
Beef cattle slaughter continues to expand, although,
since late 2018, it has been supported more heavily
by increased male slaughter and lower female
slaughter. The veal proportion has increased
considerably due to strong demand for this
category. This also indicates the influence of
technology in speeding up the feeder stage, allowing
the earlier slaughter of the animals.
A positive outlook for the Brazilian beef industry
rises from the fact that some of Brazil’s foreign
competitors, such as the United States, Australia, Image 12 - Production of Beef by Region - Growth from 2019 to 2029
Argentina and Uruguay, continued with the Source: Outlook FIESP –Projections for the Brazilian Agribusiness 2029 (July 2020
slaughter of a high proportion of their females in the
last two years. Therefore, this suggests that meat supply is likely to drop in these countries due to veal
shortage. An outlook of the Federation of industries of the State of Sao Paulo shows that Brazilian exports
of meet could increase by 102% until 2029.
Poultry
As 2nd producer and major exporter worldwide, the
poultry industry in Brazil had a more positive
experience in 2019 than in the previous year. Feed
costs remain high and this impacts negatively the
profitability of the business for the farmers. The
increasing demand from international markets -
especially from China - could compensate the lower
economic growth on the domestic market. Apart
from China, Brazilian exports have also increased
in other significant countries where performance
had been weaker in the past year, such as Saudi
Arabia, Japan and Egypt. Sales to the European
Image 13 - Production of Poultry by Region - Growth from 2019 to 2029
Union, however, were even lower than those
Source: Outlook FIESP –Projections for the Brazilian Agribusiness 2029 (July 2020)
observed in 2019.
AGRITECH IN BRAZIL – REPORT – JANUARY 2021 PAGE 17 OF 58Livestock
Brazil is the largest exporter of beef and poultry, and the third largest exporter of pork. Livestock farming
has experienced strong growth and transformation over the last three decades with the prioritization of
capital-intensive technologies. This has resulted in significant productivity gains. Poultry meat
production has increased by 22 times in the last 40 years; pork, 4 times; milk, 4 times; and beef
production, 4 times.
Image 14 - Evolution in Chicken Breeding Performance – Food Conversion X Body Weight X Slaughter
Source: APEX - Publication THE TECHNOLOGICAL INNOVATION PROMOTED BY BRAZILIAN FARMERS
There is a common misperception that the growth path of the Brazilian agricultural has been primarily
based on the expansion of the land area. According to a study by EMBRAPA, Martha, Alves & Contini
(2012), productivity gains explained 79% of the growth in beef production in Brazil from 1950 to 2006.
Between 1990-2019 productivity growth in cattle farming was estimated at 169%, whereas pasture area
has declined by 15.5% (Abimec and APEX).
Increased productivity with less animals, boosting continuous growth: the expectations for production
growth until the end of this decade are +27% in the case of beef, coming along with an increase of the
number of cattle by only 9%. Pork production (+39%) and poultry (+29%) will also grow strongly. A
particularly large increase in productivity is expected in the dairy farming: +39% in the amount of milk
produced with an increase by 5% in the herd.
The cattle industry has traditionally been very important in Brazil. According to the Brazilian
Confederation of Agriculture and Livestock (CNA), the gross value of livestock farming will reach 269
billion BRL (44.67 billion CHF) by end of 2020. Average productivity has increased from 1.6 @/ha/year
in 1990 to 4.3 @/ha/year 2019.
AGRITECH IN BRAZIL – REPORT – JANUARY 2021 PAGE 18 OF 58It is important to emphasize that the
reality in Brazilian farms is marked
by enormous inequality in
production: some produce many
arrobas per hectare and the vast
majority produce very little. Large-
size specialized stocking and
finishing beef farms, typical of the
Cerrado region, exhibit cost
economies and high efficiency levels.
In the reality of many producers,
cattle ranching is still a low-tech
activity, quite extensive and with low
profitability, indeed.
The digital transformation in the
livestock segment began between 10-
20 years ago with a simple task:
replacing paper notes and graphs
built by hand with spreadsheets and
input of cards by direct registration
on cell phones and tablets. Real-time
information, greater variety of
Image 15 - Livestock productivity
graphics and data crossing facilitate
Source: APEX online publication, August 2020
the producer’s daily decisions about
production strategy, while reducing errors and saving physical space. Countless are the software solutions
that aim to offer these technological instruments. The apps have become increasingly accessible and
widespread.
Examples include: JetBov, Procreare, and Bovcontrol. Typical features are financial control, weighing,
purchase and sale control, auctions, evaluation of cost/benefit of nutritional supplements, health or
vaccine control. BovControl also permits the monitoring of pregnant cows, a feature that allows the
farmer or veterinarian to monitor every pregnancy remotely, predict birth and send alerts. Some
softwares allow comparing inputs from different brands and distinguishing interventions on lots or the
individual animal.
Increased productivity in Brazilian livestock farming is the result of decades of investment in technology
and know-how. Around 80% of cattle is pasture-fed only. According to a study by Silva, Barioni et al.
(2017), more than half of Brazilian livestock production is on degraded pastures, what compromises the
profitability. Adequate fertilization of pastures, management and rotation of cattle in pastures and/or
AGRITECH IN BRAZIL – REPORT – JANUARY 2021 PAGE 19 OF 58irrigation of pastures, crop integration, livestock and forests are therefore very important. Image 16 - Results of Embrapa's Study 2018 on the priorities in the Management of Beef Cattle in Brazil Image compiled by the Swiss Business Hub Brazil, October 2020 Furthermore, a series of technologies such as nutritional supplementation, creep-feeding, pasture rotation, semi-confinement and confinement and a more professional farm and livestock management, e.g. in animal breeding, reproductive efficiency, and sanitary controls have helped to increase productivity and will play an increasingly important role in achieving the productivity goals mentioned in the introduction. The predominant driver of the digitalization and automation in livestock farming are cost concerns. According to an EMBRAPA survey with 1630 participants from all states of Brazil in 2018 (results are displayed in image 16 above) production cost turned out to be the main concern of the farmers. It was followed (with a clear gap) by capacitation of its workforce and concerns surrounding the quality maintenance of its means of production (degradation of pasture, conservation and fertility). Efficiency is pushed forward also through genetic research and optimization of the logistics along the entire value chain. Only recently consumer-related certifications such as labels for quality, environmental or animal-friendly productions have gained awareness in Brazil. They are best-established in the production of eggs and poultry. According to EMBRAPA, only around 6% of cattle are currently in quality programs. The market for premium meat is large and the potential therefore enormous. A backlog that is to be closed through closed efforts in this area – also in the declaration of origin. In general, Brazilian livestock is focused on quantity, not quality. But that can change. AGRITECH IN BRAZIL – REPORT – JANUARY 2021 PAGE 20 OF 58
SWOT Analysis of Agritech in Brazil 2020 – 2024
Image 17 - SWOT Matrix of Agritech in Brazil - Macro 2020 – 2024
Source: Image compiled by the Swiss Business Hub Brazil – November 2020
Challenges for the future
By 2050 the world’s population will reach 9 billion and 70% of them will live in urban areas. In order to
feed this larger, urban and richer population, food production must increase by 70%. Brazil intends to
cover 40% of the global demand and therefore the agribusiness will always be one of the most important
drivers of the economy and gain interest and support from the central government.
In order to reach this ambitious goal, Brazil has to solve some challenges that the sector is facing, amongst
which are:
• Investment in transport infrastructure and additional modal options (roads, railways, ports) has
to be undertaken in order to reduce the cost of the freight;
• Increase the capacity of grain storage;
AGRITECH IN BRAZIL – REPORT – JANUARY 2021 PAGE 21 OF 58• Modernize systems for milk production in order to increase the productivity;
• Increase the access to credit lines for new investments aiming at improving production –
especially relevant considering the high level of debt among Brazilian farmers;
• Ensure better access to international markets for Brazilian agribusiness products through
enhanced trade policies;
• Improve internet connectivity across the country and rural areas (in coverage as well as in speed
and stability);
• Enhance and promote the level of sustainability (environmental, economic and socially)
characteristic of the Brazilian Agriculture, contrary to general perception in other markets;
• Avoid any expansion of the agriculture through deforestation in Amazonas, which will have a
strong negative impact for Brazilian products on the international markets;
• High dependency to China has to be leveraged, diversifying export markets.
AGRITECH IN BRAZIL – REPORT – JANUARY 2021 PAGE 22 OF 58DIGITAL AGRICULTURE IN BRAZIL
Open Eco-Systems & R&D for Tropical Agriculture
In the path for a modern and developed agriculture, Brazil will have to invest in R&D and create an
innovation driven ecosystem. In this sense, EMBRAPA will have once again a major role in supporting
these activities in Brazil.
The goal followed by EMBRAPA is to support the technology transfer in the niches and segments left out
by the commercial companies and service providers. EMBRAPA has an enormous stock of scientific
papers and patents focused on agronomic, biological and technical problems specific to Brazilian
agriculture and actively seeks partnerships with commercial companies (national or foreign), to develop
joint offers for the market. A typical project can be a shared IP and joint venture, where the company
brings in its IoT hardware and cloud-based computing platform, while EMBRAPA develops the biological
algorithms to forecast a certain local disease and helps with market access.
If the reader now hoped to find a vast and technologically underdeveloped market, the expectations will
probably be disappointed. Digitization, of course, did not pass unnoticed by one of the world’s leading
food suppliers. The state of Sao Paulo, most notably the city of Piracicaba - about 150 from the city of São
Paulo - is in process of becoming one of the world’s major hubs for Agri-Tech ventures. Currently, the
Brazilian AgTech market map counts approximately 593 startups in the sector.
Image 18 - AGTech Valley Hub Piracicaba
Source: AG Tech Valley Piracicaba Website
AGRITECH IN BRAZIL – REPORT – JANUARY 2021 PAGE 23 OF 58These dynamics have multiple reasons. The most important is certainly the institutional and cultural
commitment to make Brazil an Agriculture powerhouse. The vital role of Embrapa was already discussed.
Apart from Embrapa, the University of Sao Paulo’s ESALQ (Escola Superior de Agricultura "Luiz de
Queiroz") is a unit of the University of São Paulo (USP – one of the world’s most renowned Universities
in Agronomic Science) and is another expression of this public compromise to foster R&D in Agritech.
Esalq was born in 1901, in Piracicaba, from the dream of the visionary Luiz Vicente de Souza Queiroz,
donor of Fazenda São João da Montanha to the government of the State of São Paulo, to create an
agricultural school. Until 1934, the Institution was part of the Department of Agriculture of the State of
São Paulo. From then on, it became part of USP, as one of its founding units. Since its creation, Esalq/USP
has constantly evolved, expanding its performance based on the teaching, research and extension pillars.
The strong inclination that Esalq has for differentiated teaching and quality research is contemplated in
130 laboratories installed in 12 departments, in a structure that employs more than 750 professionals
among teachers and technical-administrative servers.
Piracicaba has become an important hub for the generation of agricultural knowledge and technology in
Brazil, creating the basis for the birth of many AgTechs and boosting incubation initiatives (EsalqTec
incubator), acceleration, hubs and co-workings (PulseHub and AgTechGarage). This environment has
become very attractive for venture capitalists: from angel investors and accelerators to many others.
The Artificial Intelligence Hub Londrina was inaugurated in 2019 in order to foster big data, cloud
computing and machine learning solutions in different productive sectors, including agribusiness.
Lab analysis
Biological Control
Shared economy
Fertilizers, nutrients
Genomics and biotech
Animal Nutrition
Seeds
Finance services
Image 19 - Number of Startups in AGTech "before the farm"
Source AG Tech Survey 2020
The Londrina AI Hub project is an investment of Senai Nacional and partners such as the Fiep System
(Federation of Industries of Paraná). Some other partners such as institutions and companies in other
sectors also include IBM, Google and Microsoft, as well as MIT Computer Science & Artificial Intelligence
Lab (United States), Fraunhofer Institute for Industrial Engineering (Germany) and Vector Institute
(Canada), as well as ventures and angel investors.
AGRITECH IN BRAZIL – REPORT – JANUARY 2021 PAGE 24 OF 58The Agri Hub Space - Mato Grosso is the first agroecosystem in the Middle west of Brazil. Main focus is
open innovation, startups’ programmes and business attraction.
Ag Tech Survey: Inside the Farm
Precision Land Management
Agriculture
Content, Education and social media
Images
Water and Residue management
Iot
Equipment
Irrigation
Image 20 - Number of Startups in AGTech "inside the farm"
Source AG Tech Survey 2020 Monitoring
Remote sensoring
Management
Telemetry
Drones
While the innovation in Agritech is booming, we also observe a typical phenomenon in the Brazilian
economy. Recently, the country went through economically difficult times with a recession, negative
economic outlook and the chronic problems of its institutions and industrial sector surfaced.
Agribusiness, which in the last years already accounted for a significant share of the Brazilian GDP, seems
to be immune against such problems. As a consequence, professionals and investors sought shelter in it,
causing a massive inflow of human and financial capital into the sector. Hence, we have financial capital,
human capital, a large domestic market and scientific support – all ingredients needed for a successful
innovation hub.
Despite these highlights, the general market climate can be characterized as ‘overheated’. There are many
startups on the market without a technically viable product (or even products at all), focusing more on
the marketing aspect than on the R&D. Given the availability of capital, many of these companies are well
financed, but struggle to find market acceptance as they fail to demonstrate technical benefits. It is not
uncommon to give customers a 12 months free trial for the services, only to learn later that the
subscription rate hoovers around 5%. Many of these ventures certainly may disappear in the mid-term.
Another group with challenges ahead are the startups that indeed bring breaking new technologies
solving real problems, but did not find a viable business model. This can happen if applying the
technology is so complex or technically demanding that end-users, i.e. farmers, are unable to handle it by
AGRITECH IN BRAZIL – REPORT – JANUARY 2021 PAGE 25 OF 58themselves and automation is not possible. This is typically the case for many technologies in the area of
laboratories, biotechnologies and fertilizers, but can be equally true for IoT companies and their
maintenance. In a country of continental proportions such as Brazil, it is hard to build up nationwide
business model, which requires physical presence of qualified labour. The reality of such startups is often
that they focus business in a few large sugarcane or soya producers around their hub in Piracicaba. A
working pilot in a sugar refinery next to the ESALQ is one thing. How to profitably serve a large farmer
in the south of Maranhao is a different challenge altogether.
Such models can indeed be very interesting for Swiss core technology. Despite all the efforts, investments
and innovation hubs, Brazilian industry continue showing some severe weak points. Fortunately, these
areas of expertise tend to be exactly the areas where the Swiss industry excels. Examples are sensor
technology, robotics and precision mechanics, electronics, camera and imaging technology, high-
performance computing and, of course, the entire field of data science and artificial intelligence. On the
other hand, Brazil counts on an excellent expertise in agronomics, especially tropical agriculture,
hydrology, biology and chemical engineering. Furthermore, Brazilian entrepreneurs usually know their
market very well, understand the particularities of their customers and are competent in dealing with
complexity, risks and social aspects, a crucial aspect of any successful business.
Given that off-shelf product sales are difficult, a partnership with a local company with complementary
technology and skills can be a promising alternative. If the focus is right, i.e. on the left-out market niches,
chances are that the venture may become part of a Public-Private Partnerships with EMBRAPA and
eligible for a financing support from the development bank (BNDES).
Brazilian Agri-Tech Market
Evaluating the entire Agri-Tech market would go beyond the scope of this paper, but it is worth
mentioning some innovative companies present in Brazil:
Strider www.strider.ag Metos Brazil www.metos.com.br
Strider is probably the most successful Metos Brasil is the local subsidiary of Austria-based
technology company inside the sector. IoT weather station manufacturer Pessl Instruments.
Strider is a digital agriculture platform, The company’s big strength is its market experience
whose objective is the improvement of the of 35 years, its robust quality hardware and its global
efficiency of pest and disease control. The innovation leadership in field sensor technology.
app includes a scouting function, which Recently, under the brand Data by Metos, the
uses photo recognition technology to company started its localization strategy, where it
detect and identify different pests and crop proactively seeks R&D collaboration with local
diseases. The company was acquired by players, such as EMBRAPA and Strider, in order to
Syngenta. adapt the technology to the needs of tropical farmers.
Irriger www.irriger.com.br InCeres www.inceres.com.br
Owned by the US company Valmont, InCeres is a soil fertility cloud processing firm, with
Irriger is an irrigation management over five million hectares in primary data, evolved to
platform. It connects climate data, soil lead a data science revolution integrating the fertilizer
sensor data and satellite images to create supply chain. The system provides a data science
daily irrigation decision support, aiming at assistance for consultants in the field.
AGRITECH IN BRAZIL – REPORT – JANUARY 2021 PAGE 26 OF 58a more sustainable and cost-efficient
agriculture.
Solinftec www.solinftec.com Agrotools www.agrotools.com.br
Solinftec is the dominating IoT platform in Agrotools is a platform system combining
the sugarcane industry, integrating and geomonitoring, data bases, competitive intelligence
digitalizing all aspects of the farming and strategic tools for better management of the
operation. Its main focus is on the territory. The algorithms analyze the complexity of
automation of farm equipment, the productive and preserved territory and create
application control and the integration of meaningful insights.
different third party information, such as
weather.
Systech Feeder www.systechfeeder.com.br Mobimilk ajagro.agr.br/mobimilk-ordenha-movel
Systech is a Brazilian startup company that Mobimilk is also the name of their first solution, a
won the Ideas for milk contest in 2017 for container which works as a ‘mobile milking room’.
the feed. Feeder supplies feed and Simply connect water and energy to start milking
monitors, in real time, intake and weight cows, without civil works. Moreover, the tool
gain of lactating calves. The remote device monitors somatic cell counting and animal’s
emits visual alerts during sudden change temperature, issuing alerts. The system can be
of consumption and time for weaning. operational within a few hours.
Agromarra www.agromarra.com.br BovControl www.bovcontrol.com
manages production in real time through
With an integrated platform that allows for the data
app or web interface, tracking each animal
collection and analysis, provides recommendations to
indexes and profitability operations. It is
farmers on how to enhance their performance in the
ready to connect to devices such as barcode
production of meat, milk and genetics. The Brazilian
earring, drone, scale and automatic
startup internationalized to the U.S. and is rapidly
milking solutions.
expanding to many other countries.
AGRITECH IN BRAZIL – REPORT – JANUARY 2021 PAGE 27 OF 58TECHNOLOGY OPPORTUNITIES FOR SWISS
INDUSTRY IN DIGITAL AGRICULTURE
Meteorology & Risk Management
Weather and climate are the first and most important risk factors of any farming activity. Most fields in
Brazil are rainfed, hence, obtaining enough and regular rain is critical. Furthermore, temperature and
humidity are variables that play an important role for the general growth climate, as well as for the disease
pressure. Most farming operations, such as pesticide spraying, tilling, field accessing, and planting can
only be executed under certain weather conditions. It is therefore clear that reliable weather data for past,
present and future are the farmer’s most important basis for operational decision taking. Note that under
tropical conditions, weather tends to be a more important factor, as it can change rapidly and it is difficult
to forecast.
Weather Stations
Weather stations are still very sparse in
Brazil. The public network from Inmet
(Instituto Nacional de Meteorologia) has
around 500 weather stations, which is by far
not enough, given the enormous size of Brazil.
In average, each station covers around 17’000
km2 and is 130km distant from the next. This
is about 10 times less than the ideal
distribution, which depends on the spatial
autocorrelation. It is typical that farmers buy
their own weather stations, which typically
come along with agrometeorological services,
such as weather forecast specific to each
Image 21 - IoT based field weather station in an irrigated corn field
agronomic task or crop disease modelling.
Source: Drawdown Labs Library
Weather Forecasts
Weather forecasts are available in Brazil. However, their precision is far from North American or
European standards. There are multiple reasons for that. Initially, while meteorology in Europe and
North America looks back on a long, scientific history, along with significant investments from both the
public and private sector, the same is not true for Brazil. There is only a hand full of local weather services
and most, if not all, do not have the precision required for farming. Second, there are very few good
weather models available. While the world’s leading Meteorological Institutions like NOAA, Deutscher
Wetterdienst and UK Met run very precise models for the Northern Hemisphere, Brazil is only covered
by their global models, which are usually much less precise. The third factor is the lack of accurate ground
data, which is crucial for the precision of weather models. The Swiss Precision Meteorological Institution
AGRITECH IN BRAZIL – REPORT – JANUARY 2021 PAGE 28 OF 58Meteoblue is one of the few exceptions, which runs two own, precise weather models for Brazil and use
weather data from farmers own weather stations to calibrate the models. The result is a much higher level
of accuracy and a highly successful market product, called ‘Hyper-localized Agrometeorological Weather
Forecast’. Meteoblue is currently extending this service to the so-called virtual weather station concept,
where the same service can be offered without the need of a physical weather station.
Microclimate monitoring
Microclimate monitoring is another challenge. Today’s weather models’ resolutions are not sufficient to
capture these microclimates. They need to be measured and, in fact, they are hardly understood
scientifically, but they can affect crops substantially. Ordinary weather stations are usually too expensive
to place on such a high density, even though recent communication technologies have brought new cost
drops. However, there is still a vast territory to be explored in how to measure, analyse, model and adapt
farming operations to microclimates.
Climate Risk Modelling
Climate risk modelling is another activity which is still largely underdeveloped. Given the lack of ground
data and precision weather models, it is very difficult to figure out the climate history of a certain field or
farm. This, however, is decisive for real estate valuation, crop insurance policy pricing and long-term crop
decisions. What is needed here is not clear. Some approach including weather data modelling, machine
learning approach and using the few ground data available could be one approach to recover a climate
history of the last few decades. Once this data is available, statistical techniques can help to understand
climate risks, make better decisions in real estate, crop insurance and crop decisions.
IoT, Sensor Technology & Platforms
The concept of the Internet of Things (henceforth IoT) has also been introduced in Brazilian Agriculture.
Indeed, the use of sensors in farming activities is nothing new. Be it tractors, sprayers, tanks, insect traps,
silos or soil moisture, rain gauges or thermometers, measuring has always been part of the farmer’s daily
routine. However, these sensors have usually been manual readings or, at best, island systems. It is not
unusual that larger farms still have entire teams of qualified people to go daily around the fields, gather
sensor readings and fill in Excel sheets.
The IoT is bringing a real revolution to this. Meanwhile, there is a complete eco-system of startups,
manufacturers and platforms that build, install and connect all kind of sensors on the farm. Most of these
companies unite hardware, connectivity and software platforms and are focused on a certain domain.
There are successful examples of companies providing systems that come with a large range of sensors, a
proprietary communication system and an intelligent platform, creating optimization recommendations
for farm management. There are also companies offering intelligent field stations connecting any kind of
climate sensors, soil moisture sensors and plant sensors, whose data all come together in a platform.
Further ahead, applications that integrate machine management, labour, inventory and production
control, logistics, financial management and climate data will set the trend. Treating farming as a
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