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Higher dollar increases input costs for Brazilian farmers but final consequences uncertained
Mar. 26, 2015
The issue was discussed during debates at a traditional farm show held in Rio Grande do Sul,Brazil. Economist Carlos Cogo highlights that even if farmers want to anticipate input purchases now, they would have difficulties because companies do not inform prices currently. Fertilizers and agrochemicals are the main items to impact on the costs.
Among soybean producers, the high dollar helps to compensate a price drop. But is already seen with worry for the next season. The president of the Association of Soybean Growers of Rio Grande do Sul, Décio Teixiera, says that compost costs increased from R$ 1,200 to R$ 1,600/ton - a jump of 33%.
In the case of rice, the higher dollar helps to increase the value in up to 15%. The rice planted in Rio Grande do Sul has the international market as main destination. "A strong dollar brings us competitiveness. However, we are very apprehensive with costs," explains the president of the Association of Rice Growers, Henrique Dornelles. He estimated that inputs indexed by the dollar value will have an increase of 30%.
The trend is a maintenance of the current currency levels. "We probably are going to see a hike on U.S. interest rates. The Brazilian Real will be maintained devalued or will be devalued even more," highlighted Alexandre Mendonça de Barros, MB Agro consultant during his presence at the 26th National Forum of Soybeans.
The consequences of this increase can be even more severe if the dollar value drops after farmers acquire inputs by July. A fall would impact on the exports value. "If the dollar goes lower, it would be a tragedy for us," affirms the chief economist of the Federation of Agriculture and Livestock of Rio Grande do Sul, Antônio da Luz.
Source: AgroNews
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