Climate causes the agricultural sector to lose space in Brazil’s GDP – 02/03/2023 – Market

Agriculture loses strength in the national economy. For the second time in ten years, the sector registers a negative GDP (Gross Domestic Product). In 2022, according to data from this Thursday (2) from the IBGE (Brazilian Institute of Geography and Statistics), agriculture fell by 1.7%, compared to 2021.

The sector has been adding technology in several areas, mainly those aimed at exports, but has lost strength in the cultivation of basic products, which are often the most dispersed in the economy.

In 2017, the GDP of agriculture and livestock grew by 14.2%, but from that year onwards, rates have always been at low levels, with the exception of 2020, when there was an increase of 4.2%.

Many of these reduced rates are due to factors unrelated to the sector, since the production volume has been growing, but always below the initial perspectives, due to serious climatic factors that have affected the country.

In 2021, the production of corn, the second most important product in the country, had a drop of 20 million tons of bags, in relation to the productive potential.

Last year, it was the turn of soybeans, the main crop in the country, which also had a reduction similar to that of corn due to drought, mainly in the South.

As a result, the share of agriculture in the total economy, which went from 4.9% in 2019 to up to 8.8% in 2021, dropped to 7.9% last year, informs the IBGE.

Livestock, another important component of GDP, also lost strength in the last quarter of 2022, compared to the third, with lower production of beef and pork, but with an increase in chicken.

This weak performance of the sector helped in the 2.9% drop in the rate of evolution of the agriculture GDP, when comparing the data from October to December 2022 with the same period of 2021.

Livestock numbers for the fourth quarter of 2022, still provisional, however, register a better performance than those of 2021.

In crops, the loss of productivity of important products in the sector justifies the average drop in GDP. The main one, soybeans, had an 11% retraction in 2022 production, with a 15.5% loss in productivity.

Rice, the third main item in the national production of grains, had a decrease of 8.2% in the harvest and a reduction of 5.2% in productivity. The percentage of drop in production was greater than that of productivity because the cereal has been losing area to soybean year after year.

With the evolution it has been obtaining in terms of area and productivity, wheat will be able to take over from rice in the national ranking.

In 2022, the wheat crop was a record and was above ten million tons. Productivity rose 9.4%.

Tobacco and cassava crops, predominantly among small and medium-sized producers, also lost strength in 2022 and helped to reduce the sector’s GDP.

Among the positive points were corn, sugar cane, coffee and oranges, all with production growth.

Corn, the main one, after the strong loss of production in 2021, achieved a 26% increase in production in 2022 and 15% in productivity. The coffee harvest was 6.5% higher than in 2021, while orange and sugarcane harvests were 4.4% and 2.9%, respectively, higher.

For 2023, the scenario, based on current perspectives, could be better. The grain harvest indicates a volume of more than 300 million tons, if the weather helps.

In the livestock sector, China’s response time for the return of beef imports from Brazil will be important. The Chinese decision ends up also influencing the performance of other proteins.