Saturday, September 25, 2010

Brazil adds one more superlative....

Brazil,the largest market of Latin America is on a roll these days adding one superlative after another. Here is the latest one. Petrobras raised $70 billion in the world’s largest share sale last week. With this, Petrobras has become the fourth-biggest company in the world, behind Exxon Mobil , Apple and PetroChina . Petrobras now has a market value of $214 billion, which is more than that of Microsoft and Wal-Mart.

Sao Paulo which has been the financial capital of Latin America, has now become a super capital with this deal. It was with justifiable pride that President Lula said ¨It wasn’t in Frankfurt, it wasn’t in New York, it was in our Sao Paulo exchange that we carried out the biggest capitalization in the history of capitalism,”

Petrobras has budgetted $224 billion of spending over the next five years in exploration and production. This is the largest corporate investment plan in the world at this moment.

With this investment, Brazil aims to increase its production to 5.38 million barrels a day and overtake Venezuela and Mexico. Brazil will add the most oil production of any country outside of the Organization of Petroleum Exporting Countries ( OPEC) over the next 25 years

Petroleum is only one part of the story. Brazil is all set to become an agricultural superpower too. It has the largest surplus land that can be brought under cultivation to feed the growing population of the world. It can add atleast 130 million hectares of land which is equal to the total area cultivated by India to feed its one billion population.

Here is the leadership position of Brazil in the global food sector:
Chickens: 1st in the world, 41% of export market share

Coffee: 1st in the world, 27% of export market

Orange juice: 1st in the world, 82% of export market

Soybeans: 1st in the world, 38% of export market

Beef: 1st in the world, 26% of export market

Sugar: 1st in the world, 39% of export market

Ethanol: 1st in the world, 52% of export market

Tobacco: 2nd in the world, 17% of export market

Bananas: 2nd in the world, behind India

Pork: 3rd in the world, 15% of export market

Corn: 3rd in the world (behind USA and Argentina)

Black pepper: 3rd in the world (behind Vietnam and Indonesia)

Cotton: 5th in the world (USA is the leader)

Brazil is a pioneer and global leader in fuel ethanol. Most of the cars produced in Brazil have flexifuel engines which can use etahnol or/and petrol. Brazil is thus straddling the two worlds of conventional fuels and biofuels. Brazil has a secure and enviable position in the world which is increasingly concerned with food and energy security.

Brazil has plenty of water resources and the largest forest cover in the world. It is not prone to natural disasters. It has a agreeable climate and does not suffer from extreme heat or cold.

Brazil is embarking on massive investment to prepare for the World Cup football in 2014 and Olympics in 2016.

Brazil which used to be an IMF case is now a net creditor to IMF. Brazilian market now has Investment Grade rating.

Here are the other factors which distinguishes it from the other members of BRIC.

- Democracy has been instituitionalised irreversibly and strongly

- free from terrorism .. no ethnic , linguistic or religious conflicts. One language, religion and one skin colour of cafe con leite ( coffee with milk- some have more milk ...others have less..)

- free from unstable and evil neighbours who can pull it down and hurt.

Skeptics used to say Brazil was always a country with a future and will remain as a country with future. It was also called as a sleeping giant. But now Brazil has become a country of the ¨present¨and a giant who has woken up. What makes the Brazil story different this time is the paradigm shift in the politics and mindset of the Brazilians. Brazil follows a new pragmatic policy which pleases the Wall Street and at the same time has brought hope and smiles in the Favelas ( slums) with its Inclusive Agenda and market- friendly policies. This is what makes Brazil as the moral leader and role model for Latin America. Brazilians now have a strong conviction that their time has come…..

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