Brazil Sets Up For Record Soybean Crop

Brazil Sets Up For Record Soybean Crop

Brazilian Minister of Ag says a harvest of 90 million tons of soybeans is expected, eclipsing USDA's U.S. production estimates of 89.5 million tons

Brazil is expected to harvest more than 90 million tons of soybeans this year, overthrowing the U.S. as the leading soy-producing country, Brazilian President Dilma Rousseff and Ag Minister Antonio Andrade announced during a harvest-opening event Tuesday in Mato Grosso.

Rousseff and Andrade released agricultural and economic information during the event, noting that Brazilian farmers will harvest approximately 196.3 million tons of grain in total this season.

In addition to a big harvest, Brazil's agribusiness GDP expected to grow 4% in 2014 and achieve its highest-ever gross value of production.

BIG CROP: Brazilian Minister of Ag says a harvest of 90 million tons of soybeans is expected, eclipsing USDA's U.S. production estimates of 89.5 million tons

"We celebrate today the victory of agribusiness in Mato Grosso, Lucas do Rio Verde, and in Brazil," Rousseff said. "We also celebrate the so-called vertical integration, which has produced, transformed, and created a large hub for agribusiness in our country. We know it has made a large difference for Brazilian agriculture, which makes us proud. These are the increasing gains of productivity, which we cannot abandon."

Related: South America Begins Soybean Harvest

World Agricultural Outlook Chair Gerry Bange on Tuesday suggested that Brazil's projection is in line; Latest USDA crop estimates released Feb. 10 also suggest that Brazil's soybean crop will be larger than the U.S. crop.

"It appears to us that Brazil will, for the 13-14 year, produce 90 million tons (of soybeans)," Bange said, compared to the 89.5 million tons that the U.S. is expected to produce.

"One doesn't have to go back too many years to see when Brazil and Argentina in combination still didn't produce as much as the U.S. Now we have one country alone, i.e., Brazil, out producing the U.S.," Bange told USDA Radio's Rod Bain.

Brazil's GDP gains
Also Tuesday, survey data released by the Strategic Management Advisory Board of the Ministry of Agriculture, Livestock and Food Supply finds that the agribusiness Gross Domestic Product of Brazil is expected to be 4% higher than last year.

If the anticipated results are met, the sector's GDP will have expanded by 34% in ten years, the Brazilian government noted in a press statement.

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The survey also predicts that as crop production grows, the gross value of production is also expected to be10% higher than 2013. The combined GVP of crop production and livestock breeding is expected to be up 7.5% from last year's result.

Shift to growth promotion
According to the Brazilian ag ministry, Brazil's agricultural and livestock plan for the coming year is the "largest and most comprehensive in history," representing an investment of $136 billion. Of this total, 67% was dedicated to the harvest between July and December 2013, representing an increase of 50% over the same period during 2012, the Brazilian government said.

"Do you know how much agricultural credit totaled for the 2002-03 season? It was $27 billion (Real)," Rousseff said. "Today, R$27 billion is incompatible with the needs of agriculture in this country. For this season, we have committed R$136 billion, saying: if we spend more, we´ll have more."

Brazil's agribusiness sector has additional growth prospects, particularly as international markets for products such as maize and meat opened in 2013. Last year the sector exported 40% of all Brazilian products to other countries. In 2014, Brazil's agribusiness industry is expected to surpass $100 billion in exports, the Brazilian government reports.

ECONOMIC HIGHLIGHTS
The Midwest Region

The Midwest region of Brazil was chosen to host Tuesday's official opening of the harvest because it is the main producer of grain in the country, accounting for 40% of national production, a statement from the Brazilian government said.

They add that the "Midwest" has become increasingly arable and important to the Brazilian agriculture sector due to the work of researchers from the Brazilian Agricultural Research Company – Embrapa – who in the 1970s developed technologies to correct soil acidity in the Brazilian Cerrado and adapt plants from other biomes to the Midwest environment.

In less than four decades, while grain production increased by about 1,400%, the actual area used for grain cultivation only increased by 400%. The country's largest producer is Mato Grosso state, accounting for a quarter of the harvested grains in Brazil, and is also the country's lead producer of soybean and maize, the statement added.

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Agribusiness exports thriving
Brazil's agribusiness exports reached $99.97 billion in 2013, an increase of 4.3% over 2012.  Imports grew by 4%, reaching $17.06 billion. Thus, the balance of trade for agribusiness was positive at $82.91 billion, the statement said. Brazil exported $30.96 billion in soy complex in 2013, which was the primary export sector for the year.  Meat exports reached $16.80 billion, while maize exports totaled $6.25 billion in 2013.

One of the reasons for growth in the agriculture sector is expansion into new markets that now purchase Brazilian agricultural products, the Brazilian government said.

For example, in 2013, Chinese and Brazilian governments signed a protocol allowing export of Brazilian maize to China. The negotiations are part of the Brazilian federal government's strategy to open new markets, providing for even greater access and opportunities for Brazilian agribusiness exports.

Meat production in Brazil for 2014 is expected to reach approximately 26 million tons of poultry, beef and pork. This number is 1.8% higher than 2013 figures, when 25.5 million tons of these meats were produced. 

Increases in both domestic and international demand are central factors boosting the country's production. Poultry is most prominent in the national portfolio, representing 48.8% of Brazilian meat produced, followed by beef at 37.5% and pork at 13.7%.

Agribusiness and the Brazilian economy
Agribusiness contributes significantly to the Brazilian trade balance – the sector comprises a total of 41% of the country's exports; 23% of the country's GDP formation; and generates 30% of all jobs in Brazil. Brazilian food is currently sold in more than 170 countries on the global market, the government says.

Read more about Brazilian Ag on the South American Crop Watch blog

TAGS: USDA
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