Brazil’s agribusiness to suffer from worst drought season

. Jul 24, 2018
south minas drought brazil northeast agribusiness coffee soybeans sugarcane
drought brazil agribusiness coffee soybeans sugarcane

Droughts menace Brazil’s agribusiness. Photo: ABr

As one of the world’s biggest agricultural producers, Brazil will be pivotal for global food security, according to the United Nations Food and Agriculture Organization (FAO). During a conference on July 23, a representative of the agency stated that Brazil will have up to 70 percent of the world’s arable land growth by 2050. Of the 69 million hectares or new arable land on earth, 49 million will be in Brazil. Severe droughts, however, pose severe threats to the agribusiness sector, the country’s main economic powerhouse.

During the 2012-2017 period, the already poor Brazilian Northeast experienced its longest and most intense and widespread drought since 1980. Over 50 percent of the region’s territory was affected, as the dry season spanned portions of all nine northeastern states. Between 2011 and 2015, the federal government decreed a state of “public calamity” in the region’s municipalities 6,295 times, as a direct result of droughts.

Large water reservoirs in the Northeast – which can store up to 10 billion liters of water – are operating at an average of 16 percent of their capacity. Six years ago, that rate was way up, at 46 percent. Dozens of creeks and ponds have dried out, leading cattle breeders in more peripheral areas to lose many of their animals. Since 2012, the region has lost BRL 104 billion owing to droughts.

</span></p> <p><span style="font-weight: 400;">In 2018, the droughts in the Northeast have eased, as you can see in the map below, elaborated by the Brazilian National Center of Natural Disasters Monitoring and Alert (Cemaden). However, the problem has </span><a href=""><span style="font-weight: 400;">started to affect</span></a><span style="font-weight: 400;">, more and more, the </span><a href=""><span style="font-weight: 400;">Center-West</span></a><span style="font-weight: 400;"> and Southeast &#8211; the most important regions for Brazil&#8217;s agribusiness sector.</span></p> <hr /> <p><img loading="lazy" class="size-full wp-image-6234 aligncenter" src="" alt="drought brazil northeast agribusiness coffee soybeans sugarcane" width="261" height="360" /></p> <hr /> <h2>Brazil&#8217;s agribusiness: problems ahead</h2> <p><span style="font-weight: 400;">Cemaden&#8217;s Rain Monitoring System shows that severe droughts have been observed mainly in the states of Mato Grosso (the largest soybean producer), Mato Grosso do Sul (fourth-largest beef producer), São Paulo (Brazil&#8217;s industrial heart), and Acre (largest rubber and nuts producer). &#8220;These droughts will affect the next harvest, cattle ranching and water reservoirs both for water supply and energy production,&#8221; says Cemaden in its latest publication.</span></p> <p><span style="font-weight: 400;">Coffee and sugarcane producers could be among the worst affected, as these crops reach the humid season &#8211; which starts in September &#8211; without much margin for below-average precipitation. Many producers hastened their harvest to minimize losses. Since January, six sugarcane-based ethanol producers have filed for </span><a href=""><span style="font-weight: 400;">judicial recovery</span></a><span style="font-weight: 400;">, one step away from bankruptcy. </span></p> <hr /> <p><img loading="lazy" class="alignnone size-full wp-image-6236" src="" alt="drought brazil northeast agribusiness coffee soybeans sugarcane" width="869" height="755" srcset=" 869w, 300w, 768w, 610w" sizes="(max-width: 869px) 100vw, 869px" /></p> <hr /> <p><span style="font-weight: 400;">According to Thomson Reuters Agriculture Weather Dashboard, rains in Ribeirão Preto, Brazil&#8217;s leading sugarcane producer, were 157 millimeters below the average over the past 120 days. </span></p> <p><span style="font-weight: 400;">Coffee producers have also raised red flags, especially after 2018&#8217;s record-breaking harvest of 58 million 60-kilo bags. Arabica coffee is harvested in Brazil twice a year and, as Brazil has had </span><a href=""><span style="font-weight: 400;">big harvest</span></a><span style="font-weight: 400;"> after big harvest, the soil is already expected to become somewhat scarce of nutrients. Which is why having a more intense volume of rain is essential.</span></p> <p><span style="font-weight: 400;">&#8220;If the situation remains the same until September, October, we&#8217;ll have problems. Producers must be on alert, but there&#8217;s nothing much to do right now,&#8221; </span><a href=""><span style="font-weight: 400;">said</span></a><span style="font-weight: 400;"> Lucas Bartelega, a researcher at the Procafé Foundation, to </span><i><span style="font-weight: 400;">Folha</span></i><span style="font-weight: 400;">. Coffee plantations in the south of Minas Gerais are those worst-affected by the droughts.</span></p> <hr /> <p><img loading="lazy" class="alignnone size-full wp-image-6238" src="" alt="south minas drought brazil northeast agribusiness coffee soybeans sugarcane" width="799" height="743" srcset=" 799w, 300w, 768w, 610w" sizes="(max-width: 799px) 100vw, 799px" /></p> <hr /> <h2>Contingency plan?</h2> <p><span style="font-weight: 400;">While the scarcity of rains has advanced across the Brazilian territory, 59 percent of municipalities still don&#8217;t have any instrument whatsoever for the prevention of natural disasters. In only 15 percent of them, there was a contingency plan specific for fighting the effects of droughts, according to the Brazilian Institute of Geography and Statistics (IBGE).</span></p> <p><span style="font-weight: 400;">This number is more staggering after finding out that since 2013, some form of drought has been registered in 49 percent of Brazil&#8217;s 5,570 municipalities. &#8220;In Brazil, we have the classic image of dead cattle in arid land when we think about droughts. But their consequence is much more present than that in urban centers, like the recent </span><a href=""><span style="font-weight: 400;">São Paulo water crisis</span></a><span style="font-weight: 400;">,&#8221; said IBGE&#8217;s Vânia Pacheco.</span></p> <p><span style="font-weight: 400;">Until last month, the federal government had placed 184 municipalities under &#8220;emergency status&#8221; in Minas Gerais, Bahia, Paraíba, Piauí, Ceará, Goiás, and Pará &#8211; plus the entire state of Rio Grande do Norte. </span></p> <p><span style="font-weight: 400;">Even the </span><a href=""><span style="font-weight: 400;">Amazon rainforest</span></a><span style="font-weight: 400;"> has been hit by drought. &#8220;In the Amazon, droughts used to happen once every 15 years. Over the past decade, however, there were already three such episodes, in 2005, 2010, and 2015-2016,&#8221; </span><a href=""><span style="font-weight: 400;">said</span></a><span style="font-weight: 400;"> Carlos Nobre, a climatologist at the University of São Paulo, to </span><i><span style="font-weight: 400;">Hoje em Dia</span></i><span style="font-weight: 400;">.</span></p> <p><span style="font-weight: 400;">According to a group of researchers connected to Brazil’s National Institute for Space Research (Inpe), the 2015 drought alone led drought-induced fires to increase by 36 percent when compared to averages for the previous 12 years. These fires could generate emissions of up to one billion tons of carbon dioxide (CO<sub>2</sub></span><span style="font-weight: 400;">), which contributes to the greenhouse effect as well as the increase in global temperatures.

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