The IBGE released, this Wednesday (4/3), data on Brazilian Gross Domestic Product (GDP) growth for the fourth half of 2019. In the agricultural sector, the increase was 1.3%, a lower result than in 2018, where the increase was 1.4%.
In 2017, the sector grew by a significant 14.2%. For the Brazilian Agriculture and Livestock Confederation (CNA), however, the result was within expectations.
The entity's technical advisor, Paulo Camuri, stated that the agricultural sector's results were above the Brazilian GDP average. "The agriculture still grows at a faster rate than Brazil's GDP. In the case of agriculture, we believe that 1.3% was in line with our projections. We know that Brazilian GDP expectations were for a 2.5% increase, and it ended at 1.1%. This is associated with the delay in approving the reforms."
Exceptional productivity
Although Camuri argues that comparing 2019 to 2018 is like comparing one excellent year to another. According to him, despite the difference, last year had good production.
"2019 production was 4 million tons lower than 2018. But that doesn't mean it was a bad year. It's just that we compare 2019 with 2018, which was exceptional in terms of productivity and daily production," explains the advisor.
Regarding livestock, Camuri reveals that production may increase and prices may rise in the beef and pork sectors. "While last year saw an increase in production and prices, this year we're only seeing that for beef and pork. When it comes to chicken, milk, and eggs, we're seeing an increase in production, but prices are expected to fall. In these first months of the year, prices are already lower than last year."
Agriculture and soybeans
Thus, the agricultural sector's share of Brazil's GDP has historically been 5%. Currently, it stands at 4.5%. A major factor influencing agricultural GDP is soybeans. Still, according to Camuri, soybean prices in the first half of 2019 rose due to the US-China trade war. "China was favoring non-US soybeans. This has been happening since 2018."
According to the advisor, soybeans are the flagship crop of Brazilian agriculture. "R$ 1 in every R$ 4 of the Brazilian agricultural harvest is soybean. For this year, 2020, we forecast R$ 700 billion in the total harvest.
Of this, R$170 billion is soybeans. Our highlights are soybeans and corn. Coffee also has a positive outlook, but prices are trending downward." Low coffee prices could be detrimental to producers, he said.
Therefore, José Carlos Hausknecht, partner at MB Agro, explains that weather issues were a determining factor in last year's soybean production. "Last year, there was a weather issue with soybeans, and soybean production was lower than in 2018.
This ended up reducing GDP growth. Although this decline was offset by the supply of corn and meat, it could have been much better. But this is normal in agriculture. We have bad years and good years," explains Hausknecht.
He also reveals that the industry's forecast for this year is positive. However, producers are appreciating the weather conditions favorably. "Everything indicates a good harvest this year. The increase in planting area is contributing, but the weather is more favorable. It's raining a lot," adds José.