Agro points out legal and financial insecurity in the field – 03/29/2023 – Market

Costs for the agricultural sector have improved a year after the outbreak of the war between Russia and Ukraine, but they remain high and jeopardizing production, which is also affected by the weather and the price of diesel oil.

In addition, Brazilian farmers claim to face legal insecurity in the countryside with recent invasions by movements such as the MST (Movement of Landless Rural Workers).

The assessments are by specialists and industry associations, who also call for greater predictability in the release of agricultural financing, a reduction in the price of diesel and government action in mediating agrarian conflicts.

According to Plínio Nastari, president of consultancy Datagro, the prices of the main fertilizers have dropped by up to 70% compared to the levels of June last year, a period in which values ​​skyrocketed due to the conflict in Ukraine.

With that, cost reduction, depending on the crop, will be between 7% and 12% this year. “There was a certain retreat in the prices of some commodities, but the margin for the producer has remained positive due to this reduction in costs”, said Nastari.

For the expert, the decline in prices should reach the final consumer of grains and animal protein as commodity prices retreat. “Protein inputs represent the highest cost of animal protein production.”

It was not just the war, however, that caused problems in prices, but also the impacts of Covid-19. Otto Schumacher, director of MCassab Nutrição e Saúde Animal, which operates in China, recalled that production costs are higher in the world. “The question that is asked is how the factories will absorb this increase.”

“From our customer’s point of view, it’s a more stable environment. Despite the drought in Rio Grande do Sul and Argentina, the [Conab Companhia Nacional de Abastecimento] and research shows that we will have a good crop this year again, which brings a little less pressure on the cost of animal protein production.”

Schumacher also said that, in the domestic market, credit has been a problem. “The cost of working capital, interest rates, put a lot of pressure on producers.”

Rancher Maurício Velloso, president of Assocon (National Association of Intensive Livestock), said that the policy of restrictions adopted in the Covid-19 pandemic caused disorganization of primary production worldwide, which caused production costs to explode.

“The margin of the livestock business has become negative in this scenario. However, the inversion of the cycle is already visible, the external demand is growing and consistent, and the prices of meat to the consumer are competitive.”

Land invasions by the MST this year have also been questioned by agribusiness. In March, when visiting Rondonópolis (MT), President Luiz Inácio Lula da Silva (PT) met with an institution that represents agro entities in the state and was asked about the performance of the landless.

BLOCKING RAISES COST

The economic blockade against Russia made production costs rise a lot in livestock, according to Alcides Torres, agronomist and market analyst at Scot Consultoria, but not only in products such as herbicides and insecticides. “For reasons of climate, the prices of flour, bran and everything that the ox consumes went up.”

For Marcos Fava Neves, a professor at USP (University of São Paulo), the outbreak of war forced countries to look for new suppliers and change daily practices to optimize the cost of fertilizers, pesticides and medicines.

“Today you see China working very well, India as a very important alternative for the inputs and active ingredients market and the fertilizer sector also working. products.”

“The scenario was very complex last year, with very high input costs, [e agora] things have turned and are on the side of the producer, with a drop in the prices of inputs. I also have an expectation of a reduction in the value of diesel due to this drop in oil.”

In the last week, the price of diesel at refineries fell by R$ 0.18 per liter, but the average value at pumps was only R$ 0.03 lower compared to the previous period.

There is an expectation in the sector that the reduction of fuel in the refineries will reach the stations in full, which would directly benefit the agro, since the machines are driven mostly by fuel.

Wheat, which saw its price soar in March last year and reach the highest value in 14 years due to the war, does not cause the same problem today in the Brazilian market, according to Rubens Barbosa, president of Abitrigo (Associação Brasileira das Indústrias de Trigo ).

“The international price of wheat is back to the levels at the beginning of the war. Russia and Ukraine closed an agreement with the UN, so that was also positive. From an international point of view, the price in Russia is competitive, below that practiced in Argentina and the United States. U.S.”

The cost, however, remains high for Brazilian mills, said Barbosa. The scenario is no longer worrying because the sector obtained the extension of the Import Tax exemption until the 31st of July. Ukraine and Russia export about 30% of the world’s wheat.