March 20, 2008

Brazil agriculture to be driven by soy and corn, unlikely to be hit by US recession

Brazil's agricultural sector gross domestic product would not be badly hit by a recession in the US, a technical specialist at the National Agriculture Confederation, or CNA, said Wednesday.

Although a US recession could impact agricultural commodity prices, it would not have a large impact on Brazil's agricultural GDP due to the sector's solid supply and demand fundamentals, CNA technical manager Ricardo Cotta told Dow Jones Newswires.

Brazil's agricultural GDP should grow 5.8 percent in 2008 from BRL611.8 billion (US$354 billion) in 2007, according to CNA.

Cotta expects the agricultural GDP to be driven by record grain harvests, especially soy and corn, in 2008.

Brazil's agricultural GDP rose 7.8 percent to BRL611.8 billion in 2007, compared to 2006.

The increase in quantity and price of agricultural projects last year, along with good sales in the fertilizer and machine equipment market helped to push up the country's agricultural GDP, Cotta said.

However, Cotta warned the increase in overall revenue for the sector has not led to higher incomes for farmers.

Higher costs, in particular, fertilizer costs, along with poor infrastructure and the strengthening of the Brazilian real against the US dollar, are cutting into farmer profits, he said.