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Brazilian grain production expected to increase 30% in 10 yearsqrcode

Aug. 16, 2018

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Aug. 16, 2018

While U.S. farmers are rightly concerned about short-term trade policies, Brazilian farmers have a long term optimistic view of Brazilian agriculture. This optimism is reflected in a recent study titled "Agribusiness Projections, Brazil 2017/18 to 2027/18" released from the Agricultural Policy Secretary of the Ministry of Agriculture along with Embrapa, which is the Brazilian Agriculture and Livestock Research Company.
The main takeaway from the study is that crop acreage in Brazil will increase 14.5% over the next ten years, while grain production will increase 30% and meat production will increase 27%. The key for the increased grain production will be improved productivity. The study utilized data from Conab, Embrapa, the Brazilian Institute of Geography and Statistics (IBGE), the Institute of Applied Economic Research (IPEA), the Food and Agricultural Policy Research Institute (FAPRI) and the USDA.
The crops in the study included: soybeans, corn, rice, dry beans, wheat, oats, barley, rye, sunflowers, canola, sorghum, castor bean, triticale, tobacco, cotton, peanuts, coffee, sugarcane, bananas, potatoes, coco, oranges, apples, melons, papayas, mangos, apples, manioc, and grapes.
They estimated that the Brazilian crop acreage will increase 10 million hectares or 13.3% going from 75 million hectares in 2018 to 85 million hectares in 2028. The majority of the increased acreage will come from the clearing of natural pastures, which is cerrado vegetation, and the conversion of degraded pastures into row crop production. Of the total increase in grain acreage, 28% will come from the center-west region of Brazil, 23% from northern Brazil, and 24% from southern Brazil. Grain production is expected to increase 34% in the enter-west, up 34% in the north, and up 24% in the south.
While the grain acreage will increase 14.5%, the total grain production will increase 30% driven mainly by improved productivity. Crops that should see a significant increase in acreage include: soybeans, corn, and sugarcane. Crops that may see a decrease in acreage include: rice, dry beans, manioc, and oranges. Even though the acreage of these crops may decline, improved productivity will compensate for the smaller area, thus keeping production relatively stable. The coffee acreage may decline a little, but the productivity will improve.
Meat production is projected to increase 27% over the next ten years from 27 million tons in 2018 to 34 million tons in 2028. Poultry production is projected to increase 4 million tons to 17 million, beef production is expected to increase 2 million tons to 12 million, and pork production is expected to increase 1 million tons to 5 million.
As production increases, so too will exports. Grain exports are projected to increase 37 million tons from 102 million in 2018 to 139 million in 2028. Soybean exports are expected to be 96.5 million tons and corn exports 42.8 million. An estimated 70% of the soybean exports will be destined for China. Sugar exports should hit 37.2 million tons and coffee exports will be 34 million sacks.
Poultry exports are projected at 5.2 million tons, beef exports 2.8 million tons, and pork exports 900,000 tons. Major importers of Brazilian poultry are expected to be Sub-Sahara Africa and the Middle East accounting for 39% of the total. China, the United States, Africa, and the Middle East are expected to import 44% of Brazil's beef exports. Mexico, China, and Japan are expected to import 57% of Brazil's exports. In addition to increased exports of grains and meat, exports of fruits are also expected to increase.


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