Bolsonaro in Moscow

Bolsonaro in Moscow: Russia accounts for 0.6 of Brazil’s total exports

Feb, 14, 2022 Posted by Gabriel Malheiros

Week 202207

President Jair Bolsonaro and his entourage will travel to Moscow on Monday (14) to meet with Vladimir Putin and hold bilateral meetings that had been planned since mid-last year, well before the recent escalation of tensions on Ukraine’s borders, according to the Ministry of Foreign Affairs.

With Russian President Vladimir Putin’s eye on Ukraine, diplomats and experts believe that the rapprochement between the two countries sends a negative message to the Western world. These experts are particularly concerned about the United States, Brazil’s second-largest trading partner, as well as the European powers that comprise the North Atlantic Treaty Organization (NATO), both of which are in tension with Russia.

“Russia is a significant market with a population of 140 million people. Brazil is interested in increasing its exports, primarily of food. Besides,  there is the chance of organization some cooperation initiative within the BRICS”, said former Foreign Trade Secretary Welber Barral, a partner at BMJ Consultores Associados.

There are good enough reasons for the presidential visit, although the moment is not the best,” claims him.

0.6% of exports

Russia was Brazil’s largest meat buyer two decades ago, particularly pork. The post, however, was dwindling as Russians worked toward self-sufficiency and producers in Brazil began to focus on other destinations, such as China.

Brazil sold a total of US$1.7 billion in products to Russia in 2021, accounting for 0.6 percent of total exports, the lowest share in at least two decades. This ranked the country as the 36th among the top destinations for Brazilian exports.

The figure barely compares to the $88 billion shipped to China and the $31 billion purchased by the United States last year. Even smaller, poorer, and more distant nations, such as Malaysia (US$ 4.7 billion), Vietnam (US$ 2.6 billion), or Iran (US$ 1.9 billion),  buy more from Brazil than Russia does today.

The food items most sold to the Russians are soybeans, poultry meat, beef, coffee, sugar, and peanuts, which makes the country an especially strategic partner for Brazilian agribusiness.

Check below the track record of Brazilian exports to Russia, with emphasis on the exports of peanuts (HS 1202), the most commercialized commodity between the two countries in the years 2020 and 2021. The data are from DataLiner.

Brazilian exports to Russia | Jan to Dec 2020 – 2021 | TEU

Source: DataLiner (click here to request a demo)

Conversely, fertilizers dominate Russia’s exports to Brazil, accounting for roughly 60% (R$3.5 billion) of the R$5.6 billion spent in Russian imports to Brazil in 2021, according to official data on the Brazilian trade balance.

The financial worth of the imports more than doubled last year, thus consolidating once and for all a bilateral relationship that was once favorable for Brazil but now operates in deficit.

“Even if [the share of exports] is less than 1%, we are talking about two of the world’s largest economies that have little interaction,” said the chief economist at the Fundação Centro de Estudos do Comércio Exterior (Funcex), Mario Lamb.

He mentions that the presence of Brazilian products in Eastern European countries is minimal and not very bold compared to the potential consumption there.

However, according to Gilberto Ramos, president of the Brazil-Russia Chamber, the opportunities to be explored between the two countries go far beyond agriculture-bound trade, including attracting investments from Russian companies, both state and private, to Brazil.

“Trade can easily return to US$8 billion or US$9 billion. Also, we project a potential investment worth  US$40 billion between the two countries over the next five years,” said Ramos, who is also vice president of BRICS Alliance, an international integration organization comprised of the bloc’s five members.

“Russia has a wealth of experience in fields such as oil, energy, infrastructure, ports, and railways. For example, the new legal railway framework [ProTrilhos], approved last year, will prompt investments in the R$70 billion to R$80 billion range. It is known that Russia has very favorable conditions to be a partner,” Ramos said, referring to RZD, the state rail network, and the long rail supply chain that surrounds it.

Source: CNN Brasil

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