Today was a very informative day. We were in sessions all day that contained a breadth of information. We started our day with a briefing from the CME/BM&F. BM&F is a vertically integrated multi-action class exchange. The CME in Brazil trades about 200,000 contracts per day and are currently working with BM&F to create a new exchange. Brazil ahs moved away from open cry pits and are now fully electronic. BM&F – the third largest exchange in the world and the largest in Latin America has implemented strategic actions to enhance agri-business competiveness.
Marco Antonio Siveste Leite of BNDES (Banco Nacion de Desenvestment Economical e Social) took time to discuss the new programs that are being developed. Since BNDES’ mission is to finance small and medium sized companies they feel working with agriculture is a good fit for them. One interesting comment was that BNDES gives preferential treatment to loans being sought for Brazilian manufacture equipment (at least 60 percent need to be manufactured in Brazil).
Tome White, US Consulate General in Brazil provided me with our fun facts for this Wednesday:
• Sao Paulo state contributes to a third of the Brazilian Gross Domestic Product.
• Brazil houses the Largest Japanese population (outside Japan)
• They have the 3rd largest Italian population
• The 3rd largest Lebanese population
• The largest German industrial population in the world (yes – that even includes Germany)
• Sao Paulo’s population is 11 million within the city limits and 18 million around the city limits.
Our afternoon session kicked off with Domingo Lestra with ADM Brazil. He explored various aspects of ADM’s operations in Brazil. For example there are between 64 and 70 mmt of soybeans and about 50 percent of that is crushed for meal and oil. Amazingly, Brazil’s government established the Biodiesel program to promote social inclusion creating rural jobs and income. Now, the biodiesel market is controlled by the government which mandates the blend of biofuels in diesel. One last thing – for every penny the Real loses on the dollar it is equivalent to ten cents on the Board of Trade in Chicago.
Marius Pratini de Moraes from JBS Swift & Co shared some of JBS’ history and strategy for the future. JBS began 57 years ago with one slaughter per week in the middle of a field. The company expanded to ten slaughters a day and when Brasilia was built fifty years ago and 25,000 people needed to eat – JBS was there and took their production to another level. Today JBS is acquiring companies that are in distress and now slaughter 65,000 cows a day; 50,000 pigs per day and over 7 million chickens on a daily basis.
One of the interesting things about Brazil is the education system. Public Schools in the elementary and high school levels are pretty much part time whereas the private schools are full time (and a much higher quality education). Most of the students in the public schools do not finish their education. JBS has recognized this problem and has built a school in Sao Paulo. JBS covers all of the expenses (that is building costs, clothes, books, etc). Their request is that the parents pay a nominal registration fee of one to two dollars per registration. JBS recognized the problem and has a goal to combat the lack of education in Sao Paulo (and eventually other areas of the country).
Another day full of amazing information is in the books. Our next stop is the harbor at Santos and then off to Argentina.