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Agro, the locomotive that moves Brazil

Brazil does not stop breaking records of production and exports in agribusiness and feeds more and more people in the world. Privileged by extensive and good land, the country advances mainly in productivity, which increases the volume of grain production, especially, and animal protein. I recently saw a picture prepared by Marcelo Zakseski, from the Agronomic Knowledge website, comparing agriculture to the Olympics, which had just ended in Japan. And in this Agro Olympics, Brazil is tied in production with the world’s superpowers, the United States and China, and the largest exporter of food is by far. The table shows the countries that lead the production and export of grains, such as corn, soy, rice, wheat, plus coffee, cotton and beef, pork and chicken.

Conab’s latest projection, now in 2021, is for a harvest with 252 million tons of grain, slightly lower than the previous harvest, due to the drought in some regions of the country that affected crops.
Rio Grande do Sul explodes to a super-harvest, of 38.4 million tons, compared to 26.3 million tons in the last crop, when the drought punished the countryside. It is a growth of 45% estimated by the last Conab bulletin. Rio Grande do Sul surpasses Paraná and is the second largest grain producer in the country, with 15% of the total, behind only Mato Grosso, with 72 million tons (28.5%), almost a third of the country’s total. .
Venâncio, who had tobacco production as a monoculture for a long time, in recent decades has advanced in diversification and with a second crop, planting corn and/or soybeans in the tobacco residue. In addition, it increases the grain production area in the harvest, due to the attractive price of soybeans and corn in the market.

Foreign trade of agribusiness: balance of 2021 and perspectives for 2022

Despite adverse weather phenomena, which significantly affected Brazilian agriculture, agribusiness exports grew 19.7% in value, reaching US$ 120.6 billion in 2021, a new national record. Imports also increased by 18.9%. Even so, agribusiness ended the year with a positive balance of US$ 105.1 billion. The rise in international commodity prices played a relevant role in this result. Among the fifteen main products in the export basket – which accounted for 89.5% in 2021 – all showed an increase in average prices, some above 20%, breaking the downward trend of previous years. In terms of quantity, six products fell. Beef (-8.3%), as a result of Chinese sanctions, stands out, for coffee (-3.6%), a performance already expected due to the negative biennial period, and for corn (-40.7%). consequence of the fall in the Brazilian crop. As for imports, in addition to products traditionally imported by Brazil, such as wheat, olive oil and fish, in 2021 Brazil increased its imports of soybeans and corn. The note presents the ranking of the main producers, consumers, exporters and importers in the world, highlighting the importance of Brazil in the supply of various commodities, such as sugar, soy, meat and coffee. In terms of consumption, China is highlighted, which is currently the main Brazilian commercial destination and which, despite being also a producer, is dependent on imports. Finally, the text brings the sector’s perspectives for 2022, which are based on positive estimates in relation to production, but which will depend mainly on weather conditions.

Agribusiness trade balance

The agribusiness trade balance ended 2021 with a surplus of US$ 105.01 billion, 19.8% higher than in 2020 (table 1).1 The other sectors of the economy ended 2021 with a deficit of US$ 43.8 billion, US $6.6 billion higher compared to the previous year. The agribusiness result was a consequence of the historic record in exports – US$ 120.5 billion in the last twelve months (Graph 1), which represents growth of 19.7% compared to 2020 and 19.1% compared to 2018, the former Brazilian record. The sector’s good performance in terms of value was mainly driven by the recovery in international prices of the main products exported by Brazil.

Brazilian agribusiness imports also increased by 18.9% compared to 2020, ending 2021 with US$ 15.5 billion. Despite the increase, the total imported last year was below the one presented between 2011 and 2014 – a period of boom in agricultural commodities that led to a large increase in imports of inputs for the sector.

Trade balance: total and agribusiness (2020 and 2021)

In 2021, the peak period for exports was, as usual, between March and June, mainly driven by soybeans. The maintenance of exports at levels above those of 2020 from July onwards reflects the availability of the product and favorable international prices. It is worth remembering that even the period of sanctions imposed by China on beef – which lasted almost three months – was not enough to reduce this growth trend from September onwards. Products such as soy, pork and chicken made up for this fall until November. However, the resumption of beef shipments to China – the main commercial destination – in December contributed positively to the result of exports.
The same effect of increased sales as of May was also observed for imports, which showed higher levels in terms of exported value than in 2019 and 2020. Two factors contributed to this: the lower supply of some products, as in the case of corn, and the high price of some commodities in the domestic market, such as soybeans.

Agribusiness Exports

For Brazilian exports, 2021 was a year of price recovery. All fifteen commodities monitored by Dimac/Ipea (Table 2) showed an increase in average prices compared to last year, eleven above 15%, six above 20% and two above 50%. The sector had been following consecutive increases in the international prices of several commodities since January 2020, however, these increases were not perceived in equal magnitude by the Brazilian exporter until 2021.

Soybeans:

Soybean in grains, the main product on the agribusiness export agenda, showed an increase of 3.8% in quantity in 2021 and 35.2% in value compared to 2020. The average price per ton increased by 30.3% compared to 2020. compared to the previous year, reaching the levels seen in 2014. With the heated international demand, the producer increased the planted area by 4.3% in the 2020-2021 harvest, and also had a productivity gain of 4.4%, which contributed to the country breaking a new record, with the production of 135.9 million tons in 2021. also for maintaining high levels of grain exports after the peak, which usually occurs in the middle of the year. If, on the one hand, the heating up of the international soybean market boosted prices and created a window of opportunity for the exporter, on the other hand, it directed a good part of the production outside the country, impacting the grain supply and its respective prices in the market. domestic.

Average value and exported quantity of soybeans (2019-2021)

(Value in US$/tn and quantity in thousand tn)

Beef:

In 2021, beef presented an increase of 8.5% in the total value exported and a drop of 8.3% in the quantity compared to 2020. As a result, the average price obtained by the exporter of this protein increased by 18.3%. In 2020, the sector had already been impacted by the temporary closure of some export-enabled plants. However, the sanctions imposed by China in the second half of September 2021 impacted aggregate exports more sharply than in the previous year. During the almost three months in which the sanctions were in force, the sector showed a 32.5% drop in the total amount exported compared to 2020 – and precisely between October and December, the seasonal period of greatest increase in exports of the product of the year. The temporary departure of Brazil as a supplier during this period pressured the fall in international prices, and brought another aggravating factor to the sector, which, since 2020, has been going through a cycle of herd recomposition. In December, beef exports resumed growth, still below the levels seen in 2019 and 2020, but indicating a recovery.

Average export value and exported quantities of beef (2019-2021)

(Value in US$/tn and quantity in thousand tn)

Sugar:

In 2021, Brazilian sugar production was compromised by the 4.1% drop in sugarcane planted area, which lost ground mainly to crops such as soybeans and corn, and by climatic adversities, especially low rainfall and frosts in the Center-South region, which contributed to a 9.5% drop in productivity.3 With a 13.2% drop in production, the amount exported also dropped by 11.0%. However, those who managed to export sugar had an increase of 18.0% in the average price in 2021, driven by the rise in international prices. The world sugar market had already been heavily impacted by the 43.1% drop in production in Thailand in the 2019-2020 harvest – the second largest exporter of this commodity.
In the 2020-2021 harvest, the country presented a new 8.5% drop in production compared to the previous harvest, which gave the opportunity to other countries, such as India, to increase exports.

Average export value and exported quantities of Sugar (2019-2021)

(Value in US$/tn and quantity in thousand tn)

Chicken meat:

Chicken meat exports ended 2021 with a positive balance. The sector saw a record in the amount exported – growth of 8.3% compared to 2020 – and appreciation of the product – an increase of 15.4% in the average price, returning to levels that had not been reached since 2014. The three main importers of this protein – Japan, Mexico and China – in 2021 they maintained their 2020 sales levels.

Average export value and exported quantities of Chicken meat: (2019-2021)

(Value in US$/tn and quantity in thousand tn)

Cellulose:

After consecutive declines in the average exported cellulose price at the end of 2020, 2021 was marked by a recovery in these prices, closing the year up 12.1%. The amount exported remained (0.3%); in terms of value, the sector showed an increase of 12.4% in the year.

Average export value and exported quantities of Cellulose: (2019-2021)

(Value in US$/tn and quantity in thousand tn)

Coffee:

A safra de bienalidade21, que já bienalidade pela negativa21, os efeitos estéticos já foram apresentados dois fatores que acentuaram ainda mais a queda na produção. O primeiro foi a base de comparação, já que 2020 foi um ano de produção recorde (63,1 milhões de sacas beneficiadas). E o segundo foram as adversidades climáticas ao longo do ciclo, como geadas, a segunda distribuição de chuvas nas regiões produtoras. O café acabou fechando o ano com queda de 24,4% na produção e queda de 21,2% na produtividade diante de 2020.
Como o efeito da bienalidade no potencial de produção nacional do café é conhecido pelo setor, em especial na produção do arábica, que representa 65,9% da produção em 2021, na exportação do grão verde, a queda foi de apenas 3,6% frente a 2020. Outro fator que beneficiou o setor foi a demanda internacional melhorada o início da pandemia, que contribuiu diretamente para a valorização do produto brasileiro, e fechou o ano com alta preço diante de 19,6% no preço médio diante de 2020.

Average export value and exported quantities of Coffee: (2019-2021)

(Value in US$/tn and quantity in thousand tn)

Corn:

Despite Brazil being one of the main players in the international corn market, the 15.1% drop in production resulting from adverse weather conditions in the second corn crop in the country did not impact the world market. On the contrary, world production has remained stable – a growth of only 0.3% compared to 2020.
Casualties in Brazil and the United States were offset by smaller countries. In terms of trade, Brazil showed a drop of 40.7% in the amount exported. As the fall in value was of lesser magnitude, 28.5%, in the accumulated of the year the average price received by the exporter increased by 20.6%.

Average export value and exported quantities of Corn: (2019-2021)

(Value in US$/tn and quantity in thousand tn)

Cotton:

The delay in harvesting soybeans in the 2020-2021 harvest and the uncertainties created by the pandemic reduced the cotton planted area from 1.63 to 1.37 million hectares in Brazil, with a consequent reduction of 22.0% in the volume harvested compared to to the previous crop. The drop in production impacted the amount exported in 2021, which closed the year down by 5.1%. As with the other commodities monitored by the Grupo de Conjuntura, as international prices were favorable, in the accumulated of the year there was an increase of 11.3% in the average price.

Average export value and exported quantities of Cotton: (2019-2021)

(Value in US$/tn and quantity in thousand tn)

Pork Meat

Pork meat ended 2021 with record shipments abroad – up 10.7% in quantity and 16.1% in value compared to the previous year. Average prices also increased by 4.9% in the year, but at lower levels compared to other commodities. The trajectory of pork exports was affected mainly in the last months of the year by the resumption of Chinese domestic production, which, in addition to impacting Brazilian exports, contributed to the drop in international prices.

Average export value and exported quantities of Pork Meat: (2019-2021)

(Value in US$/tn and quantity in thousand tn)

Gross Value of Agricultural Production in 2022 is estimated at R$ 1.2 trillion

The estimate of the Gross Value of Agricultural Production (GVP) for 2022, based on information from January, is R$ 1.204 trillion, 4.3% higher than last year (R$ 1.154 trillion). The growth in the value of crops was 10.3% and livestock had a retraction of 8.6%. The contribution of crops to the VBP is 72%, and livestock, 28%.

A wide range of products shows a favorable contribution to the growth of agriculture this year. Production expectations are generally good, and prices are favorable for many products, such as cotton, coffee, peanuts, sugarcane, oranges and corn. The highlights are cotton with a real GVP growth of 35.1%, peanuts 14.2%, bananas 16.9%, coffee 64.1%, sugarcane 31.6%, oranges 7.0%, corn 21 .9%, and tomato, 21.4%. These results, even exceptional for some products, put this group in great prominence, as responsible for driving growth this year.

Negative contributions, however, have been observed in rice, potatoes, cocoa, soybeans and grapes, which have been experiencing a reduction in quantities produced and prices. Some of these, such as rice and soybeans, were directly influenced by droughts in the South.

With less favorable results, livestock has a retraction in growth, observed in beef, chicken, swine and eggs. The strongest retractions occur in pork and chicken, with prices at a lower level than in 2021.