Industry in Central-West Brazil: Industry Sector in Mato Grosso

Interview with Jandir Milan, President of FIEMT (Mato Grosso Federation of Industries)

What is the image that people have of Mato Grosso in Brazil and abroad?

Well, starting with Brazil, I believe the world is becoming quite familiar with Brazil. I have travelled most of the world; everyone is excited about Brazil’s potential in terms of its natural resources and production. Brazil is very well positioned; we are now the 7th world economy. Brazil is living its international dreams and the people are enthusiastic. It is one of the countries with the most foreign investment.

Mato Grosso is very well positioned within Brazil. It generates 40% of Brazil’s food surplus. The state produces a large quantity of food products: meat, soya, maize and cotton, principally for export. Mato Grosso’s potential is huge in agriculture and cattle breeding as well as in minerals. The state covers 900,000 km2. It is a huge area. We have more or less 50 million hectares of natural reserves that are protected. That is about 50% of the state’s area. We have 9 million hectares that are for agriculture, 27 million hectares for cattle breeding and about 50 million hectares that are protected. There is great potential because the cattle breeding grounds will begin to be used for agriculture as cattle breeding will become more intensive and confined using less area, following the examples of North America and Europe. This leaves more land for agricultural development.

In terms of agricultural products such as soya and maize, there are great opportunities to industrialise the products to add value. Mato Grosso has good logistics and they are improving. Next year we are planning to inaugurate a highway that will go from Mato Grosso to the port of Santarém. Not all of our agricultural production will be exported but we hope for a minimum of 50%. It will bring great opportunities for us. Our greatest buyer is China and so we will be able to export from Santarém to Shanghai. Obviously this will mean a reduction in freight costs by about 40% making Mato Grosso very viable. As it is currently, freight is very expensive so it costs a lot to get a product to China. This highway will change this.

Industry is not totally developed here, Mato Grosso is known for being an agricultural and cattle breeding area.

Mato Grosso has a small population of 3 million people. It has a small industrial market and a small foreign market. The ideal would be for an industry to sell a minimum of 50% of their products to the internal market and the rest to the foreign market. As it stands currently, this is very difficult due to the freight costs. When the costs of freight are reduced, the industrialisation of Mato Grosso will be able to begin properly.

Can you tell us what sectors have great potential?

The mineralization sector has great potential but it needs to have cheaper freight, if it doesn’t have this it will not be viable. The property sector is a product that has large value. All the sectors dealing with merchandise are really going to benefit from a reduction in freight costs.

Let’s talk about other products such as meat and wood.

In terms of meat, we have the largest livestock of cows in Brazil. There is great potential in installing fridges in Mato Grosso to increase our slaughterhouse capacity. There are great investment opportunities here so that we can have the slaughterhouses to compliment the largest cow livestock in the country, which is 3 times the current fridge capacity.

On the other hand the industries that are already here are ready to be capitalised on. Which countries are interested in pushing the industries that you have here?

In reality we have to find buyers. I would say the Asian countries and China are the biggest buyers currently. It’s just that at the moment freight is a big issue and limitation.

The industry needs improved technology. Mato Grosso doesn’t have the industrial technology yet. We are producing products of low value. We need to industrialize so we can not only produce soya but produce oil as well for example.

But Mato Grosso has the luxury of a well preserved environment, which is something the whole world is looking for. Mato Grosso has the image of being a green state. There must be many industries that are looking for this profile which is very popular at the moment in Europe and USA.

Mato Grosso has the strictest environmental legislation in Brazil. The Federation of Industries encourages sustainable industry. When an industry has an ISO 14000 it is much easier to sell to Europe and other countries that demand such environmental standards. Mato Grosso fulfils this profile and this really helps our industry.

So in terms of environmental development there are sectors such as fisheries and aviculture, but perhaps there is a niche for industry.

Yes, Sebrae (the Brazilian Service of Support to Micro and Small Companies) does a lot of work for the environment. It has a program “O Sonho Meu” in the Pantanal which promotes activities that don’t use any chemical products that could damage the environment and which have a place on the market even potentially on the foreign market. The state is so big that the opportunities are also very large. The state has to improve the logistics and infrastructure. We have to find a solution to the freight costs problem. As we are far from the ports in Brazil it means freight is very expensive. It affects the travel of our merchandise. We have to reduce this to be able to increase the product range we have to sell.

Mato Grosso has a positive image in terms of tourism. Many foreigners come to discover the Pantanal, they want to enjoy this special environment. It seems Mato Grosso has great potential that is already being capitalised on in terms of agriculture and tourism but not yet in terms of industry. I’m sure places like Europe would be willing to pay high costs to develop in this kind of area.

Yes, Mato Grosso has great potential, there are many opportunities. The government is looking at what can be done to develop productive chains. We need to look at Europe’s consumption for example the demand for ecologically friendly meat, i.e. not confined cattle breeding. The state government has a team that is investigating what markets there are available to then facilitate the productive chain. The Sebrae is working to help small producers to diversify. I believe that there are great opportunities here. It’s a huge area of 900,000 km2; it’s the size of 10 European countries, so the potential is amazing.

It’s important that we look for foreign demand and identify exactly what products are in demand. Mato Grosso has energy now. In less than 20 years we have developed the energy necessary for the industry. Mato Grosso can be very viable and will be even more so when we are connected to the ports and we improve our infrastructure. Soya, maize, meat and chicken, all these products that Mato Grosso supplies on a large scale will be able to travel through the Amazon, which will reduce freight costs for sending merchandise to the USA as it will create more direct routes.