December 7, 2004

 

 

Brazil Hits Record Surplus Driven by Soybeans, Meat

 

Brazil's agribusiness trade balance registered a record surplus of US$ 29.01 billion for the first 10 months of this year. This figure is 34.7% higher than last year's agribusiness trade surplus over the same period.

 

Agribusiness accounted for 41.8% of the country's exports through October, according to the Brazilian Confederation of Agriculture and Livestock Raising (CNA).

 

The value of agricultural imports for the January-October period was only slightly higher (1.3%) this year than last year (US$ 4.02 billion versus US$ 3.97 billion).

 

According to the CNA, soybeans and meat were the driving forces behind this year's positive results.

 

Exports in the soybean complex (soybeans, meal, and oil) totaled US$ 9.29 billion, rising somewhat more than US$ 2 billion or 29.1% compared with the same period last year.

 

According to the CNA, this result mainly reflects the 27% price rise that occurred during the period.

 

The head of the CNA's Foreign Trade Department, Antonio Donizeti Beraldo, observed that this year's encouraging performance may not recur in 2005, because there is a set of factors working in the opposite direction.

 

According to Beraldo, the first of these is the "appreciation of the real vis-a-vis the dollar" and the second is "the tendency for an overall decline in the principal commodities traded on world markets, especially soybeans, the driving force behind agribusiness exports."

 

The third negative factor is the increase in the prices of inputs.

 

The head of the CNA's Economic Department, Getulio Pernambuco, explained that the output of the agribusiness sector grew only 3.2% this year, considered low in comparison with last year.

 

"Nevertheless, this indicates that the sector is still making a contribution to the country's economic development, most of all to exports," he observed.

 

Pernambuco said that producers' worries mainly proceed "from the increase in the production costs of Brazil's most important crops and the downward price trend on the world market, as a result of the record harvest in North America."

 

To counter the tendency for agribusiness earnings to decline, due to falling agricultural prices, Pernambuco thinks that corrective policies to support commercialization should be adopted.

 

There should be a "budget supplement to support and guarantee prices for the sale of agricultural products, as well as a reversal in the exchange rate," Pernambuco affirmed.

 

In his view, this should be accompanied by a devaluation of the real, the Brazilian currency.