Brazil Expecting a 2.5% Decline in Agricultural Production

Brazilian corn field Data released this Wednesday, December 17, by the IBGE (Brazilian Institute of Geography and Statistics), concerning the year of 2007, show that agricultural production occupied an area of 62.3 million hectares in Brazil, with revenues of 116.6 billion reais (US$ 49.4 billion).

The figure represents growth of 17.7%, or 17.6 billion reais (US$ 7.4 billion), over the number recorded in 2006.

The IBGE researched the 64 main products of temporary and permanent crops in different municipalities. The products selected are of great economic relevance, and the prices for many of them are set either by the global market (commodities) or the social market, as they are part of Brazilians' basic food baskets, or are the engines of local economies.

According to the institute, the growth in production value recorded in 2007 is mainly due to the expansion of soy, sugarcane and corn. Soy generated revenues 25.8 billion reais (US$ 10.9 billion), sugarcane, 19 billion reais (US$ 8 billion), and corn, 15.6 billion reais (US$ 6.6 billion), representing growth of 39.7%, 7.8% and 56.9% compared with the previous year, respectively.

With good prices for their products in the international market, Brazilian farmers improved their technological standards, investing more in inputs. The opposite applies to the current crop, due to the steep rise in fertilizer prices and the lack of credit stemming from the world economic crisis. Another contributing factor to the agricultural performance in 2007 was the weather, which harmed the sector in previous years.

Currently, farmers are facing problems maintaining the record-high output of the last crop due to scarce credit from banks, and also because many companies did not purchase the production beforehand.

The government is already contemplating a new modality of agricultural financing, in which it should have greater participation. Presently, financing is divided into three virtually equal parts: funds from the farmers themselves, financing from the Bank of Brazil, and financing from foreign companies.

In its last grain crop survey, the National Food Supply Company (Conab), estimated a decrease 2.5% in harvested volume for the 2008/2009 crop compared with the previous one.

ABr

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