On June 23, Insper, in partnership with Cebri (Brazilian Center for International Relations), released the policy paper “Public policies for the competitive and sustainable insertion of Brazilian agribusiness in the world”, with recommendations for Brazil’s foreign policy in agribusiness. It is an integral part of a compendium of more comprehensive recommendations for Brazilian foreign policy. Organized by Cebri, the document “Foreign Policy of Tomorrow” will be delivered to candidates running for president in Brazil. In the following editions of the InsperAgroGlobal newsletter, we will continue the discuss the main points addressed and the policies suggested in the document prepared by Insper’s Agro Global Center. We begin, in this issue, by presenting the topic of governance in agribusiness.

 

The results of the COVID-19 pandemic and the consequences of the war in Ukraine have affected trade between countries. Much of the world began to look more closely at production/manufacture chains, seeking to strengthen the production and offer of inputs. Many countries are working to ensure self-sufficiency in food production, which could impact Brazil, depending on how the country reacts to these changes.

 

Unlike in the past, exporting agriproducts has become more complex, and the changes observed in the last two decades bring the need for a reinterpretation of the positioning of Brazilian agribusiness, considering new productive areas and new competitors. In this context, an increasingly strategic positioning of Brazilian agribusiness in the world is essential, which can be pursued through the orchestration of a national strategy, with the identification of strategic partners, the definition of priorities for commercial negotiations and the attraction of investments, in addition to technical cooperation with other countries.

 

One of Brazil’s bottlenecks in the negotiating process is the lack of clear governance that allows a broad understanding of the national position – proven to be, on several occasions, fragmented into the different spheres of the public and private sectors, class entities and other actors. To sustain the negotiations, it is essential that the different actors related to the national agricultural sector and their relations be harmonized before presenting themselves to the international community.

 

In Brazil, there is a gap in communication between spheres, and this weak governance between agents is reflected, in many ways, in the low capacity of Brazilian political systems to act effectively and decisively to solve the sector’s challenges in the international context. Currently, this inefficient coordination prevents the development of effective negotiations that could benefit the trade of Brazilian products and contribute to the consolidation of the country’s image as an important player for world food security.

 

A geopolitical approach and good governance, when it comes to Brazil position and role within international organizations, for example, are fundamental to unlocking opportunities in agri-food forums, bringing about Brazil’s influence and new opportunities for commercial cooperation with certain regions of the world.

 

The crisis of multilateralism and the tension in the agribusiness markets have been dragging on since the end of the last century. There has been a radical change in the world arrangement in the last 20 years, which has made the Agreement on Agriculture of the World Trade Organization (WTO) incapable of solving the current challenges that permeate agricultural markets. Furthermore, with the weakening of the WTO’s Appellate Body, international trade is strongly influenced by voluntary standards and bilateral and regional agreements, which requires greater proactiveness in terms of government actions and drives the need for a uniform narrative between the different governmental spheres that approach international negotiations.

 

Brazil, as one of the major players in agribusiness and, at the same time, home to the largest tropical forest in the world, is more and more demanded transparency at origin. The end consumer is increasingly interested in knowing not only what they are consuming, but also how it was produced, that is, there is greater environmental awareness and an increasingly politicized consumption. And this is not just a concern of consumers in higher-income, developed countries — it is also a concern of young people in general and companies increasingly engaged in enforcing ESG standards across the entire value chain. In other words, a reality that truly imposes itself and that requires the construction of a unison and frank narrative by the agents that somehow represent Brazil externally. This means to show the country’s strengths with competence, without shying away from admitting that there are problems to be solved. In this case, it is important that the different bodies are aligned and committed to finding solutions in a mutual way.

 

To improve governance, it is necessary to create or strengthen coordination mechanisms, ensuring their implementation and operationalization through institutionalized processes and competences, which protect strategic issues from sectoral pressures and occasional fluctuations, reducing the effects of political or conjunctural cycles on the projects and long-term partnerships. The world asks for clearer and more accurate communication, access to quick responses, with official databases, and reliability of information and control of results. Investments in skilled people and systems are necessary.

 

Going more specifically into the particularities of Agribusiness, the necessary governance involves, in addition to improving coordination, a profound modernization of the normative framework for animal and plant health, which dates back to the 1950s. Beyond making regulatory frameworks simpler, modernizing them allows for better guarantees for national production and greater credibility of Brazilian products abroad. Along the same lines, the incorporation of the One Health principle — associative relationship between human, animal, and environment health — is fundamental for the construction of a new position of Brazil.

Finally, it is paramount to mention the need for an effective adoption of processes that improve accountability in handling public resources, including performance and results, especially considering the Brazil’s recently opened process to accede to the Organization for Economic Cooperation and Development (OECD). Transparency, the fight against corruption and the recovery of the country’s reputation are fundamental elements for its integration in international negotiations.