Agriculture has always been a massive contributor to the Brazilian economy, a dependent relationship that became even stronger since the economic recession. In 2019, however, the industry appears to have slowed down, highlighting the sluggish scenario of the overall Brazilian economy. But, according to researchers from the Institute for Applied Economic Research (Ipea) this scenario is more of a phase than any structural change. 

Per IBGE data, agricultural GDP fell 0.1 percent in Q1 2019, breaking a streak of three consecutive quarters of growth.

Alongside the steep 1.1 percent fall in industry as a whole, it helped slow overall growth to a mere 0.5 percent for the period. </p> <div class="flourish-embed" data-src="visualisation/614440"></div><script src="https://public.flourish.studio/resources/embed.js"></script> <p>But according to Ipea, it is more of a stumble then a steep fall. The institute forecasts 0.5 percent growth for agricultural GDP in 2019, as the fall on <a href="https://brazilian.report/money/2019/08/01/chinese-demand-heats-brazil-ethanol-industry/">sugarcane</a>, coffee and soy crops offset the 2 percentual points added by corn.&nbsp;</p> <p>Production of corn increased 21.4 percent in 2019, driven by the significant growth of 31 percent in the second harvest, researchers explained. Consultancy INTL FCStone stated that Brazil’s second corn harvest for 2018–2019 may break the record of 72.4 million tonnes, boosted by better productivity in the states of &nbsp;Mato Grosso do Sul and Goiás, early sowing and favorable weather. The consultancy also predicted the first Brazilian corn harvest at 28 million tonnes.&nbsp;</p> <p>The increase in corn production came in handy, as all items of livestock—especially beef, milk,&nbsp;and pork—are set to grow this year, boosted by international demand for Brazilian products. Since Q2, exports and meatpacker’s stocks have surged due to Chinese demand, with the <a href="https://brazilian.report/money/2019/04/20/china-swine-fever-brazil-beef/">African swine fever outbreak</a> slashing the country’s hog supplies.&nbsp;&nbsp;&nbsp;</p> <hr class="wp-block-separator"/> <h4 style="text-align:center">Brazil&#8217;s crop calendar</h4> <div class="wp-block-image"><figure class="aligncenter"><img src="https://brazilian.report/wp-content/uploads/2019/08/agribusiness-agriculture-brazil-1.png" alt="" class="wp-image-22737" srcset="https://brazilian.report/wp-content/uploads/2019/08/agribusiness-agriculture-brazil-1.png 473w, https://brazilian.report/wp-content/uploads/2019/08/agribusiness-agriculture-brazil-1-230x300.png 230w" sizes="(max-width: 473px) 100vw, 473px" /></figure></div> <hr class="wp-block-separator"/> <p>With regard to corn, Ipea researchers also highlight that exports may reach 34.5 million tonnes, breaking new records. “What has favored this dynamic in demand is the drop in U.S. corn crops and the consequent increase in corn prices on the Chicago Stock Exchange. Uncertainties about the size of the North American crop may enable record exports of Brazilian corn, even though 67 percent of corn sales—which corresponds to 48 million tons—are well advanced,” they explain.&nbsp;</p> <h2>How will Brazil&#8217;s agriculture perform in 2020?</h2> <p>For next year, Ipea sees agricultural GDP rising 2.0 percent, as farming is expected to grow 2.8 percent. Livestock may rise 2.2 percent, driven by a 2 percent increase in cattle production. The game-changer will probably be a projected growth of 6, 6.1, and 6 percent for soybeans, rice, and cotton production, respectively, while corn production should remain at the same level as in 2019.&nbsp;</p> <div class="flourish-embed" data-src="visualisation/611452"></div><script src="https://public.flourish.studio/resources/embed.js"></script> <p>

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MoneyAug 22, 2019

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BY Natália Tomé Scalzaretto

Natália Scalzaretto has worked for companies such as Santander Brasil and Reuters, where she covered news ranging from commodities to technology. Most recently, worked as an Editor for Trading News, the information division from TradersClub investor community.