Laalitha Hunt, The Star 30 May 09;
SUBANG: Netherlands-based Rabobank, a leading financial specialist in food and agribusiness, sees palm oil as an emerging industry in Brazil with growth and investment potential for Malaysian companies.
Rabobank International Brazil head of corporate finance Gustavo Barreiro said there were good production fundamentals along with available arable land.
“The industry is dominated by a single large local player, Agropalma,” he told StarBizWeek in an interview. Agropalma is a leading oil palm producer in Brazil with 43,000ha, or 62%, of the country’s total planted area.
Last year, Brazil produced 186,000 tonnes of palm oil compared with Indonesia (22 million tonnes) and Malaysia (17.75 million tonnes).
Barreiro said besides favourable temperature, rainfall as well as soil conditions, Brazil offered cheaper transportation to international markets such as Europe and the United States.
“There are also strong fundamentals for large scale farming such as high water reserves, fertilisers and machinery,” he said.
He added that although the main production region for palm oil was within the Amazon forest, there were also pasture or deforested areas in the vicinity that could be used to expand the industry.
“Rabobank in Brazil has a strong corporate social and environmental responsibility policy in place applicable to all its commercial activities,” Barreiro said.
Besides palm oil, Brazil also offers businesses the opportunity to invest in the animal protein sector such as poultry and beef.
“If Malaysian companies venture to Brazil, local chicken prices could come down as the cost of rearing chickens is much lower there due to the cheap cost of grain,” he said.
Barreiro said Malaysian businesses could also benefit by entering new markets such as the Middle East, which widely imports animal protein from Brazil.
Brazil, which is one of the world’s top producers and exporters of agriculture commodities such as soybean, sugar, coffee and corn, recorded a gross domestic product growth of 5% in 2008 despite the global economic slowdown.
