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Brazil's Northeast: Backwater No More
By Robert Hoff
It's almost under our
nose--Brazil's nine-state Northeast region that claims some of
that nation's most beautiful beaches. For U.S. producers
interested in Latin American markets, this region might prove to
be an export haven for U.S. consumer-oriented products.
To provide a little perspective: if this region were a separate country, its 45 million citizens would make up the third largest country in Latin America, after Brazil and Mexico. Its gross domestic product would be the fourth largest in Latin America.
The area has historically been considered a backwater when compared with the more prosperous Central-South portion of Brazil. Per capita yearly income amounts to just over $2,500, about half that of the Center-South.
But there are signs of change. The region's 4.1-percent growth rate in 1996 overshadowed the 2.9 percent for Brazil as a whole. Public and private investment over the past two decades plus the success of the Real Plan, Brazil's vaunted economic stabilization plan, have contributed to a growth rate that outstrips that of its southern neighbors.
Prospects for continued expansion, stimulated by low labor costs and improvements in infrastructure, further enhance the economic outlook.
Of interest to U.S. exporters: the
Northeast does not grow enough food to support its own needs. But
plan to move fast, while market share's still up for grabs.
Although in the past the area has been taken for granted by the
Brazilian food industries concentrated in the Center-South,
domestic producers are starting to respond to the lure of sales
potential. Already they've begun to install processing units in
the Northeast.
Imported food and beverages, too, are a recent phenomenon. In the major supermarkets of the Northeast's principal cities, shoppers with full wallets can buy imported fresh and dried fruits, nuts, meat and fish, wines and liquor and a few processed food products.
Access Hinges on Port Development
So far, principal suppliers to this market include Argentina, Chile and the European Union (EU). The irony here for U.S. producers is that few U.S. products are available in a seemingly nearby market.
The major impediment to imports in the area is logistics. Almost all imported food products must be landed in a major southern city, such as São Paulo, then be trucked another 1,200 to 2,500 miles. But help appears to be on the way; the ports of Salvador, Recife and Fortaleza on the Northeast coast are undergoing privatization and modernization.
Already an eastern U.S. shipping company is negotiating with port authorities for access to Salvador and Recife.
Two other constraints have hindered the growth of imports here--lower purchasing power and lack of knowledge about imported products.
Despite these obstacles, the Brazilian business community is confident that rapidly growing regional incomes, the continuing influx of investments, privatization and modernization of their ports and the development of tourism will soon provide a cozy climate for imported products.
Best prospects: fresh fruits, frozen foods, variety meats, low-priced soft drinks and beer and snack foods.
Tourism Is Moneymaker
The tourist industry is a predictable outgrowth of the Northeast sector's advantageous locale, as well as being a proven market for exporters of consumer-oriented foods.
Most tourists to the region come from the Center-South, Argentina and the EU. Beach cities with flourishing hotel and restaurant (HRI) businesses are Fortaleza, Salvador, Natal and Maceio.
Thus far, hotel managers have
been plagued by high food prices due to extensive shipping costs.
As the Northeast section's port facilities become able to support
oceangoing ships and the food market grows large enough to
attract exporters, the cost of imported foods and beverages to
consumers will drop.
Best imported food prospects for the HRI sector: wine, fruit, beer, some canned and frozen products and premium-cut meats.
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The author is the agricultural officer at FAS' Office of
Agricultural Affairs at the American Consulate General in São
Paulo, Brazil. Tel.: 282-3528; Fax: 883-7535.
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