AgroPages-Super Harvest in Brazil-Agricultural news

Flavio Hirata

Partner

2016/2017 shall be the Brazilian grain harvest record ever, over 210 million tons. It is an estimated growth of 14% compared to the 2015/2016 season. The harvest record is not only for grains, but also for almost all planted crops.

Despite of the economic and the political crises in Brazil, agriculture is expanding its frontiers and gaining higher yields year after year. This goes back to the 70s, when the federal government invested in agriculture research to develop economically valuable crops with the purpose to increase export and minimize the negative trade balance.

Research on soybean followed by coffee were the two focused by the official research institution (EMBRAPA), as both represented export, i.e., sales in dollars. Brazil was highly dependent on import of wheat and oil that was the reason to develop engines powered by alcohol from sugar cane – locally planted. On the other hand, food crops, such as rice and dry beans, did not receive the same investments.

Except in citrus crops, whose planted area was reduced by 6%, all other main crops have increased yields due to bigger planted area and/or higher productivity, although in the last years, draught and excess of rainfall harmed harvests. It was the case with coffee, where the draught in 2014 was so drastic that the recovery now shows the yield increase of almost 20%.

This estimation of harvest record is explained by good weather conditions in the state of Mato Grosso, and lower pest infestations, such as the fungi soybean Asian rust and the Helicoverpa caterpillar. Considering that soybean represents more than 50% of planted area, lower fungi infestation together with more efficient products and mixtures with copper and mancozeb have contributed to minimize the spread of the disease. In case of Helicoverpa, exotic species, the pressure of the infestation has been naturally decreased. Even so, the use of pesticides against this pest continues also with smuggled products, particularly, emamectin benzoate.

Super harvest does not mean super revenues. Many factors shall still influence the crop sales:

- Dollar exchange rate: unpredictable. From the USA, the new economic policy of the elected president shall increase interest rates; recent price increase of oil is forcing dollar devaluation, not only in Brazil but almost all over the world; local political instability has already been causing ups and down in the dollar rate fluctuation.

- International commodity stocks: higher stocks, lower prices. With a few exceptions, there are almost high stock levels of grains and cereals for 2016/2017 and there is no expectation for price increase.

- Weather conditions: in most of the main technified agriculture producers, such as the USA, Brazil, Argentina, Australia, there is no prediction of climatic disasters to the point of influencing agriculture negatively.

While crops for export foresee an optimistic scenario, the perspectives for beans and rice, which are very important in the Brazilian basket of staples but not for export, are not favorable. After two years of the worst recession in the country, the consumption is going down and as a consequence, there is no room for price increase.

In 2017, a positive balance is expected for the farmers, as well as for the Brazilian economy. Nevertheless, it does not mean pesticide market would recover so fast at the same levels from 2 to 3 years ago, when annual sales reached US$ 12.2 billion.

Among the world's leading agricultural producers, Brazil is the only country that still has arable areas to expand; it is able to have two harvests per year, as there are no long winters like in the North Hemisphere; farms with the objective to export are managed as a company; and there is a high level of technology employed. However, there is still a lot to be developed and investments are needed not only by the government, but also by the private companies, as well as in infrastructure, transportation, logistics, storage facilities, credit, irrigation, precision agriculture and local distribution.