Mato Grosso is the fastest growing state in the country, triple the national average

The economy of Mato Grosso is the one that grew the most in the country since the beginning of the century. The state’s Gross Domestic Product (GDP) increased at a rate of 5.42% per year from 2002 to 2020, according to the most up-to-date data from the IBGE. It is almost triple the speed of the Brazilian economy, which in this period advanced 1.96% per year, on average.

In the same period, the second and third states that grew the most were Pará (4.65% per year) and Tocantins (4.6%).

Mato Grosso, which was the 15th largest economy in the country at the beginning of the century, now occupies the 12th position, according to the 2020 statistics of the IBGE. And there are reasons to believe that the rise should not stop there.

Tendências consultancy estimates that, in 2021, Mato Grosso’s GDP increased by 2.4%, just under half of the national growth of 5%. In 2022, however, the state grew again well above the average: 10.3%, according to an estimate by Banco do Brasil, more than triple the national GDP (2.9%). And, for 2023, BB foresees an expansion of 3.4% in Mato Grosso – for the whole country, the median expectation of the financial market is an increase of only 1%.

Much of the explanation for this performance lies in agribusiness, the flagship of the local economy. The sector represents 56.6% of the state’s GDP, according to the Mato Grosso Institute of Agricultural Economics (Imea).

But it is not only in terms of GDP growth that the state’s economy stands out. Another IBGE survey shows that Mato Grosso has the fourth lowest unemployment rate among the Federation Units. According to the most recent data, unemployment was 3.5% on average for the last quarter of 2022 – less than the average rate for the G7 countries (Germany, Canada, USA, France, Italy, Japan and the United Kingdom), which was from 3.9% in December.

Agriculture of Mato Grosso gains more space in the country

The main factor responsible for the advancement of Mato Grosso’s economy on the national scene, according to Luiz Antônio do Nascimento de Sá, IBGE’s regional accounts technician, was agriculture. The state’s share in this area more than doubled between 2002 and 2020, rising from 5% of the national total to 10.6%.

The grain harvest in Mato Grosso was multiplied by six since the 2002 harvest, going from 15.9 million tons in that season to 94.1 million tons this year, according to projections by the National Supply Company (Conab).

Crop productivity in 2023 should reach 4,551 kilograms per hectare, the third highest in the country, behind only Santa Catarina and the Federal District. In 2002, the yield was 2,909 kg/ha.

The Imea estimates that soybeans will reach record productivity this year, of 61.59 bags (almost 3.7 thousand kilograms) per hectare, with emphasis on the mid-north and southeastern regions of the state. A large part of agricultural production is exported. The forecast of the Imea is that 61.2% of the soy be destined to other countries.

“Here we have good conditions: a very flat topography, which favors the use of large machinery, regular rainfall and ample light, which facilitates plant photosynthesis”, says the president of the Rural Union of Sinop and vice-president of the Federation of Agriculture of Mato Grosso (Famato), Ilson José Redivo.

According to IMEA, corn production should grow by almost 4% over the previous season, reaching 46.4 million tons, in a scenario of increased demand and lower supply of corn on the international market, due to the crop failure in Argentina and in the United States, in addition to the war in Ukraine, which reduced production in that country. The equivalent of 62.5% of the corn harvested in Mato Grosso must be exported.

According to figures from the Foreign Trade Secretariat (Secex), last year total revenue from exports was US$ 32.5 billion, which makes Mato Grosso the fourth exporting state in the country, behind São Paulo, Rio de Janeiro and Minas Gerais. Twenty years earlier, in 2002, it was the 10th exporter.

Growth in Mato Grosso also occurs outside the gate

But the state’s growth did not just happen from the gate to the inside. “Although agriculture had the greatest influence on the performance of Mato Grosso, we can observe that the performance of industry and services also contributed to the relative advance, in comparison with Brazil and other states of the federation”, says Nascimento de Sá, from IBGE.

According to him, between 2002 and 2020 Mato Grosso performed better than the national average in all activities. Among the highlights are:

• electricity and gas, water, sewage, waste management and decontamination activities;
• financial, insurance and related service activities; It is,
• professional, scientific and technical, administrative activities and complementary services.

In energy, one of the highlights in the last 20 years is the installation of new plants. Among them is the Teles Pires, on the river of the same name, inaugurated in 2015 and which received investments of R$ 3.9 billion. The venture has a capacity of 1,800 MW, enough to serve 13.5 million inhabitants – 3.5 times the population of Mato Grosso.

Industrial production, meanwhile, grew 19.4% in 2022, compared to the previous year, driven by the food and biofuel segments. According to Camila Saito, a partner at Tendências Consultoria, some food production units resumed production and a biodiesel plant started operating in the period.

The BR-163, which connects Cuiabá (MT) to Santarém (PA), is becoming a production hub for ethanol from corn. “Cereal started to have added value here in Mato Grosso”, says Redivo, from the Sinop Rural Union. Waste is used in the livestock chain, which is also relevant in the state.

The expansion of ethanol plants should contribute to an increase of almost 8% in corn consumption in the state this year, according to IMEA. Local soy consumption is also increasing. The forecast for this harvest is for growth of 14.1%, thanks to new crushers and expansion of storage capacity.

The president of the Federation of Industries of the State of Mato Grosso (Fiemt), Sílvio Rangel, assessed in a publication released in early March that the scenario is very promising for manufacturing activity and there is potential to expand production.

The field has everything to continue driving the industry. Imea’s expectation is that by 2032 there will be a growth of 71.3% in grain production. The increase in agricultural areas should occur mainly over livestock production areas.

Commerce in Mato Grosso gains more momentum

Another sector that is benefiting from the expansion of agriculture and livestock is trade. From 2004, when the IBGE started the sales survey in Mato Grosso, to 2022 the volume of sales in expanded retail (which also includes construction, vehicles and parts) more than doubled, recording accumulated growth of 134%. In the whole country, the expansion was 87% in the same interval.

The performance of trade in Mato Grosso continues to show resilience even with interest rates at high levels. In the 12 months ended in January, the volume of sales in expanded retail grew 6.2%, compared to a retraction of 0.5% in Brazil.

A warning sign is default, which exceeds the national average. According to Serasa Experian, 49.9% of the state’s adult population is “negative”. In Brazil as a whole, the index is 43.3%.

Service sector attracts companies from other states

A promising sector is the service sector, according to IBGE data. One of the segments that grew the most since the beginning of the century was transport and logistics, driven by the needs of agribusiness.

This scenario is leading more companies to seek opportunities in the region. “Agribusiness is very thriving. It’s a very promising market”, says Diego Pettinazzi Rodrigues, new business director at Ascensus Group, a group from Santa Catarina that works with customized solutions for foreign trade, logistics, finance and taxes and which is looking for opportunities in the state.

It is a path that has already been taken by one of the largest law firms in the country, Nelson Wilians Advogados, from São Paulo, which opened a unit in the state 15 years ago. According to Marcel Daltro, managing partner and head of the office in Mato Grosso, agribusiness is increasingly professionalizing and demanding more services.

“A new generation is taking over the reins of the business and increasingly seeking better advice”, he says. Demands that are on the rise, according to him, are linked to corporate issues, ESG (environmental, social and governance), compliance (integrity and transparency controls) and access to credit.

2023 is another year of good expectations for Mato Grosso

According to Bradesco, in 2023 the good performance of agribusiness should once again boost Mato Grosso and the other states in the Midwest. “In addition to the increase in production, the region also benefits from the high participation of the sector in the local economy: agriculture alone accounts for almost 15% of activities”, says the bank’s report. In Mato Grosso, this share is even greater, at 29%, according to 2020 data from the IBGE.

“The transport sector and the food and input industries tend to be the most benefited by the positive agricultural scenario”, says Bradesco. According to the Central Bank, the record grain harvest should cushion the impacts of the slowdown in other sectors.

“Mato Grosso will continue to stand out among the states in terms of GDP performance this year”, says Saito, from Tendências. The consultancy’s projection is for an expansion of 2.9% in Mato Grosso’s GDP in 2023, with good prospects for agriculture and the continuation of the good performances of the food and biofuel industries.

Logistics is a big challenge in Mato Grosso

Amidst a series of positive indicators, Mato Grosso faces an important challenge to continue growing: logistics to transport agricultural production.

Railroads only reach Rondonopolis, in the south of the state. Important soy producing areas are distant. This is the case of Sinop, 700 kilometers to the north. One of the main ports for transporting the crop in the region is Paranaguá (PR), 2,300 kilometers away.

Camila Saito, from Tendências, highlights the improvements in recent years, with the development of ports in Arco Norte, as is the case of Miritituba (PA), and the paving of the BR-163. “This represented a gain in efficiency in the transport of grains, making freight costs cheaper”, she says. The Arco Norte terminals already carry more grains from the Mato Grosso harvest than the port of Santos.

But there is still much to be done to improve the flow of the crop. An alternative for the region would be the construction of Ferrogrão, connecting Sinop to the river port of Miritituba, on the Tapajós River. The railroad project, 933 kilometers long and valued at R$ 8.3 billion, according to the National Land Transport Agency (ANTT), aims to consolidate a new corridor for exports.

The project’s processing, however, has been suspended since March 2021, when the Minister of the Federal Supreme Court (STF) Alexandre de Moraes responded to a PSOL injunction. The party argues that the railroad’s route would cut through the Jamanxim National Park, in Pará, causing damage to the environment.

An alternative that is emerging is the construction of a 730-kilometer railway, by Rumo Logística, which will link Rondonópolis to Lucas do Rio Verde, 150 kilometers from Sinop. Another branch will connect Rondonópolis to Cuiabá.

The works began in November and the forecast is that the first stretch, with 211 kilometers, connecting Rondonópolis to Campo Verde, will be concluded in three years. The investment in the work could reach R$ 15 billion.

Another railroad that is under construction and that will help facilitate the flow of agricultural production from Mato Grosso is the Ferrovia de Integração do Centro-Oeste (Fico), which, in its first stage, will connect the cities of Mara Rosa (GO) and Água Boa (MT), in a length of 383 kilometers. The works are being carried out by Vale. It is expected to be completed by 2029.