3. BRAZIL

3.1 Overview of the economy

Possessing large and well-developed agricultural, mining, manufacturing and service sectors, Brazil's economy outweighs that of all other South American countries and is expanding its presence in world markets. In the late 1980s and early 1990s, high inflation hindered economic activity and investment. The Real Plan, instituted in the spring of 1994, sought to break inflationary expectations by pegging the Brazilian real to the USA dollar. Inflation was brought down to single-digit annual levels, but not fast enough to avoid substantial real exchange rate appreciation during the transition phase of the Real Plan. This appreciation meant that Brazilian goods were now more expensive relative to goods from other countries, which contributed to large current account deficits. However, no shortage of foreign currency occurred because of the financial community’s renewed interest in Brazilian markets as inflation rates stabilized and the debt crisis of the 1980s faded from memory. The maintenance of large current account deficits via capital account surpluses became problematic as investors became more risk averse to emerging market exposure as a consequence of the Asian financial crisis in 1997 and the Russian bond default in August 1998. After crafting a fiscal adjustment programme and pledging progress on structural reform, Brazil received a US$ 41 500 million IMF-led international support programme in November 1998. In January 1999, the Brazilian Central Bank announced that the real would no longer be pegged to the USA dollar. This devaluation helped moderate the downturn in economic growth in 1999 over which investors had expressed concerns during the summer of 1998. Brazil's debt-to-GDP ratio of 48% for 1999 beat the IMF target and helped reassure investors that Brazil would maintain tight fiscal and monetary policy, even with a floating currency. The economy was expected to push growth up to 3% in 2000.

3.2 Trade policies

In 1997, Brazil’s tariffs on seafood products were 13% for unprocessed products and 19% for processed products.

For Brazil and its MERCOSUR partners - Argentina, Paraguay and Uruguay - the MERCOSUR Common External Tariff (CET) came into effect on 1 January 1995. As of mid-2000, virtually all imports from MERCOSUR entered Brazil duty free.

Complete information on requirements for importing into Brazil is available only through SISCOMEX, and such information is only available to registered importers.

3.3 Production

Brazilian production of seafood products has fluctuated over the whole decade (Table 8). In 1993, it hit its nadir at 747 000 t. A peak was reached in 1997, with 832 000 t. In 1999, production ended at 774 000 t.

Table 8. Total seafood production in Brazil, 1990-1999 (quantity)

The biggest increase came from farmed species such as carp, salmon and other freshwater species. For details, see Appendix.

3.4 Exports

In 1998, Brazil was the 62nd-largest exporter of fish and fish products, when ranked by value, with total exports of 34 611 t, worth US$ 122 million. The pattern of Brazilian exports shows two phases: increasing from 36 269 t in 1990 to a peak of 54 760 t in 1993. It then declined to a low of 26 494 t in 1996, and then recovered until Brazil’s exports in 1998 were at about the same level as 1990. The value of exports followed the same cycle, except that the value did not improve, as it continued to fall even after 1996.

Figure 4. Total seafood exports from Brazil, 1990-1998

Brazilian exports have gone most to countries outside the region, with, in value terms, 52% to the USA alone, followed by 27% to Japan, 6% to the EU, 11% within South America and 6% to other countries.

3.5 Imports

The figures for import show a different pattern. In 1990 the imported quantity was 172 763 t, worth US$ 194 million. In the early part of the decade there was a decline in imports, but from 1993 onwards there was an increase, which peaked in 1996 at a value of US$ 482 million for 297 890 t. In 1998, the quantity fell but value was similar at US$ 455 million. This could indicate that the imports consist of more highly valued products than before. Thus there had been increased production and imports, while exports declined.

Figure 5. Brazil’s overall seafood imports, 1990-1998

3.5.1 Trade partners

The most distinct pattern in Brazilian trade in 1995-1997 was that it imported from South American countries while it exported to countries outside South America. Two trade partners distinguished themselves as more important: Argentina was the single most important supplier of fish products to Brazil, with 52%, while the USA was the most important importer of fish products from Brazil, with 52% of the export value.

3.6 Trade by commodity group

3.6.1 Exports

The development in the Brazilian trade in regards to commodity groups is that there has been a decline in the quantity exported of fresh and frozen fish, and of fresh and chilled crustaceans and molluscs, while there has been a small increase in the export of fish meal and fish oil, etc. There has since 1992 also been a small but steady increase in the export of prepared fish products.

The quite palpable decline in quantity from 1994 to 1995 did not appear as a similar decline in the exported value. This is probably because the decline in quantity was mostly in fresh and frozen fish, while exports of crustaceans remained much the same. As crustaceans and molluscs are usually more valuable, this maintained the income. When the export of fresh and frozen fish recovered and the export of prepared fish and meals increased, the export of crustaceans and molluscs continued to decline. So even if the total quantity improved, the values seem to follow the developments in the export of crustaceans and molluscs.

3.6.2 Imports

In quantity terms, Brazilian imports consist mostly of fresh and frozen fish, while it is the dried, salted and smoked fish that have the highest relative value. Since 1990, the increase in quantity came from the fresh and frozen fish, although the quantity of dried salted and smoked fish increased in the latter half of the decade. The prices have probably gone up for these products, as they had the largest increase in value, although fresh and frozen fish also saw an increase in value.

Figure 6. Overview of seafood exports from Brazil, by commodity, 1990-1998

Brazil export commodity groups 1990 - 1998 - a

Brazil export commodity groups 1990 - 1998 - b

Figure 7. Overview of imports of seafood into Brazil, by commodity, 1990-1998

Brazil import commodity groups 1990 - 1998 - a

Brazil import commodity groups 1990 - 1998 - b