News

Source: VALOR ECONÔMICO (SP) • AGRONEGÓCIOS - 24/3/2010

Scenario: Real improvement, however, only after government regulations 

Last year was not one of the best for the Brazilian organic products industry, but the prospects for 2010 are encouraging and business is showing sings of recovery. With a drop in the international demand and the devaluation of the dollar that led to less competitiveness in the main consumer markets, exports shrunk by 23% and although amounting to US$ 44.3 in 2009, it was still the second best result in 5 years.

As for 2010, in the industry’s first two trade shows of the year – Nuremberg, and California – exports have reached US$ 8 million, showing that the market is picking up. The industry’s expectations, however, are centered on government regulation issued by the Ministry of Agriculture on organic products that will come into effect starting in December 2010.

“Certification agencies admit that they may not be able to cope with the increased demand that will result from the new organics regulation. Brazil is geographically huge and the production of organics is not concentrated in just one region”, says Ming Chao Liu, manager of Organics Brasil Project.

He acknowledges that large corporations, especially in the food industry, which are the large consumers of Brazilian products are not going to enter the market head on before the country’s regulations are well defined and in place. Today, 80% of all Brazilian products traded are from the food and beverage industries, 15% from the cosmetics industry, and 5% from the textile industry.

In addition to the first two trade shows, other two indicators provide information about the sector. The first are inquiries by foreign buyers about Brazilian products in international events. The second is the fact that new companies are joining the Project, showing that there is an interest on the part of domestic producers and companies in this market.

The Project started its activities in 2005, with just a dozen member companies. Already in the following year, this number increased two fold and, by 2009, there were 74 member companies, even in a year that proved difficult for this kind of product in a retracted market.

That interest is not unjustified. Besides the stronger appeal of sustainability in recent years, the revenues exhibited by this market have called the attention of many investors. Even with relatively low volumes, organic products account for a US$ 50 billion market worldwide. In the lack of more accurate data, it is estimated by Organics Brasil that in Brazil the industry will trade approximately R$ 400 million. “There is still a huge potential, considering that 70% of what we sell is exported as raw materials without much value added”, adds Liu.