Commodities Shuttle: Soybean oil and ethanol are opportunities for Brazil in India, says ambassador

Brazil needs to look more towards a large market. In addition to his potential, Brazilians could greatly increase exports of value-added products.

This market is India’s, and the statements are made by Suresh Reddy, the Indian ambassador in Brazil. In his opinion, agribusiness, one of the pillars of the Brazilian economy, would have much to gain, especially in partnerships in the ethanol and digital agricultural technology sectors.

In addition, Brazilians have an open field in the area of ​​soy oil exports, an important product for India, which is the main world importer of the product, with an average of 3.5 million tons per year.

Data from Secex (Secretary of Foreign Trade) indicate that, despite the size and annual growth of the Indian economy, the total trade flow between India and Brazil was only US$ 10.6 billion from January to November this year.

This financial volume is very small compared to the US$ 125.1 billion with China in the same period.

While the Indians represent only 4% of Brazilian exports, the Chinese keep a share of 49%. And one of the products that most interest the two Asian countries is soy. In the Chinese case, it goes in grain. The demand from the Indians, on the other hand, demands the product with greater added value, through soy oil.

For Reddy, Brazil has a large space with this product in India. The largest producer of the oilseed in the world, Brazilians exported the equivalent to US$ 531 million up to October this year in soy oil to India, according to Secex. Already the Argentines obtained foreign exchange of US$ 2.5 billion in the same period selling to India, according to Indec (Argentine statistics institute).

Brazil, the world leader in soy production, should produce 144 million tons in the 2021/22 harvest. Argentina, the third largest producer in the world, will harvest 50 million tonnes.

In the ambassador’s view, Brazil needs to see new business models and add value to its products. The Brazilian industry must take into account the potential of the Indian market.

The Indian economy has been growing at high rates in recent years and should have an evolution of 9.5% in GDP (Gross Domestic Product) in fiscal year 2021/22.

With the evolution of the economy, the country currently has a middle class estimated at 315 million consumers.

Brazil and India also need to increase partnerships in the sugar-alcohol sector, both in the private and government areas, mainly in the production and use of ethanol as fuel.

The Indians have strong interests in this area, as ethanol could provide more income to its 50 million producers in this sector, in addition to improving the environmental issue.

Brazil dominates this technology and can bring knowledge to India in the implementation of a production and industrialization model.

The Indians, who have a 10% mix, want to raise this percentage to 20% by 2025. An agreement between Indian producers and distributors will guarantee this increase, according to the ambassador.

This partnership would also be important for Brazil, since the increased use of ethanol as a fuel in India would bring more stability to the world sugar chain. India would no longer produce 5 million tons.

The expansion of Indian participation in the use of ethanol as a fuel will increase global demand for flex-fuel cars, opening the way even for the adoption of this model by other countries in the region, says Reddy.

On the Brazilian side, there would be an expansion of partnerships with the Indian industry, from the assembly of the industrial ethanol model to the automobile industry.

On the Indian side, in addition to improving producer income, the country would import less oil and increase the share of renewable energy in its transport model.

The ambassador also said that trade disputes between the countries, such as the case of entry into the WTO (World Trade Organization) by Brazil, Guatemala and Australia against India, would not be necessary.

The three countries challenged India’s subsidy policy on sugar. The WTO decision came out on Tuesday (14) and indicated that India had violated the terms of the Agreement on Agriculture in the amount of subsidies provided to its domestic producers. The interview with the ambassador took place before the WTO decision.