AGRICULTURE-BRAZIL: Smaller Soy Harvest, But Bigger Revenues

By Mario Osava Reprint | | Print |

Mario Osava

RIO DE JANEIRO, Apr 1 2004 (IPS) - Brazilian agriculture this year will not be repeating the spectacular growth of previous years, but its farm export revenues could see an increase, reflecting the ups and downs typical of this sector.

Price hikes, especially for soybeans – Brazil’s main agricultural export -, more than compensate for the "physical losses" caused by drought in the south and excessive rainfall in other areas, says Flavio Turra, expert from OCEPAR, an organisation of cooperatives based in the southern state of Paraná.

The initial forecast of 11.8 million tonnes of soybeans for this year’s harvest in Paraná has been scaled back by 1.8 million tonnes, largely because of the drought, Turra told IPS.

Nationwide, losses could top 6.1 million tonnes in a harvest originally predicted to reach 57.6 million, according to the Brazilian Confederation of Agriculture and Livestock (CNA), an agribusiness association. If the shortfall bears out, total soybean production would be the same as it was in 2003.

But frustration on the harvest side has pushed international prices up. Whatever happens to soy in Brazil, second only to the United States in producing this crop, has a strong impact on international prices. Furthermore, number-three Argentina also faced drought problems this year.

As a result, Brazilian soy exports, which brought in 8.1 billion dollars last year, this year could reach 10 billion dollars, predicts CNA, despite the reduced harvest.

Prices jumped more than 20 percent, while the state of Paraná will see 15 percent less soy output this year, said Turra. In other words, Brazil comes out on top, but only in terms of averages, because there are individual farms that lost 60 percent of their soybean crop, he stressed.

Rio Grande do Sul, Brazil’s southernmost state, bordering Uruguay, was hit even harder by the drought. Its soy harvest this year is expected to be 6.05 million tonnes, representing a loss of 29 percent, says the state government’s extension service.

The higher prices will particularly benefit farmers along Brazil’s "soy frontier", the new areas where this crop is being grown, especially in the west-central region. They are prospering despite their distance from the Atlantic ports and the associated transport costs.

That region was affected by too much rain, but not as severely as the south was by drought. It also faces a new threat, Asian soy rust, an aggressive disease that has plant health authorities and research centres worried.

In any case, says Turra, this year’s disappointments "should not discourage soy cultivation." For the past five years, Brazilian soy farmers have enjoyed healthy harvests and prices that have offered "a profit margin of at least 40 percent" and the perspective of a "long favourable period, despite this year’s inclemency."

Soy, which practically was not grown in Brazil 40 years ago, today represent nearly half the country’s output of cereals and oilseeds, which totalled 132.2 million tonnes in 2003, and was initially expected to reach 132.9 million tonnes this year, according to figures from the governmental Institute of Geography and Statistics.

Agricultural research, conducted primarily by the state-run enterprise Embrapa, adapted the temperate-climate soybean to Brazil’s more tropical climes and also increased yields.

Soy is the main factor behind the euphoria that Brazil’s farm sector has experienced in recent years. Agriculture was given credit for most of the country’s trade surplus of 24.8 billion dollars in 2003.

Agribusiness today represents a third of Brazil’s gross domestic product (GDP) and 44 percent of exports, according to Agriculture Minister Roberto Rodrigues, one of the country’s leading agricultural entrepreneurs.

Grain production has more than doubled since 1990, while the total cultivated area grew 24.3 percent, and Brazil still has available more than twice the land being farmed today, which stands at just over 40 million hectares.

But the lack of logistical infrastructure is becoming an obstacle for continued rapid growth. The urgent investment needed in this area is paralysed by the government’s fiscal adjustment policies. Long queues at the ports, crumbling highways and insufficient warehouse space are the already visible symptoms.

And there are other problems, like a precarious sanitation control system, which could also endanger Brazilian agribusiness growth, warns Antonio Buainain, economist and professor at the University of Campinas, near Sao Paulo.

In recent times, pests and diseases – like mad cow disease – in other countries have favoured Brazil’s farm exports, but this South American giant has few resources available to prevent contamination here, said Buainain.