In the Black, Brazil’s Agribusiness Fears World’s Neoprotectionism

Brazilian cattle Brazil's International Relations secretary at the ministry of Agriculture, Livestock and Supply, Célio Porto, said this Monday, February 2, that the first results of the trade balance for this year are positive, as agricultural prices and the volumes traded, which fell expressively last year, have returned to growth.

Porto said that exports should drop 11% this year – the first reduction in ten years. "However, in Brazilian reais, estimating exchange rates of 2.30 reais to a dollar, we would have growth in revenues," said the secretary, after a meeting of the Higher Agribusiness Council of the Federation of Industries of the State of São Paulo (Fiesp).

The secretary pointed out that, despite the recession, the world is not reducing its demand for food. For this reason, there is no possibility of lower consumption and purchases.

However, if there is reduction of consumption and purchases, this should only take place with suppliers that sell at higher prices, which is not the case with Brazil.

"We estimate that, except for a few sectors, the quantities exported should remain and the prices should not reach the same levels as in 2008."

Beef is the product that generates the greatest concern for the government, as it has registered a reduction of 20% in exports when compared to the previous year and the figures for January show a reduction of 35%. "There is also the effect of weaker offer, as there was lower offer of herds and that is affecting it, as well as lower prices."

Porto stressed that the neoprotectionism is another concern, as Brazil is a great agricultural exporter. The secretary also mentioned figures supplied by the Central Bank showing that the liberation of credit is still registering lower figures, when compared to figures for the same period last year.

The president of the Higher Agribusiness Council at the Fiesp, Roberto Rodrigues, said that the scenery for Brazilian agribusiness is one of heated demand and that offer is not accompanying this demand, which would result in reasonably positive prices for agribusiness.

"But the effect of a recession on emerging nations and the effect it may have on neoprotectionist mechanisms, which may inhibit market formation, is not being considered."

Rodrigues pointed out that credit offered for exports is not yet adequate with regard to demand. According to Rodrigues, if there is a global scenery in which all countries but one create protectionist barriers, that one country becomes exposed to predatory competition." "So Brazil has to enter the neoprotectionism game."

Former minister of Agriculture, economist and professor at the University of São Paulo (USP), Roberto Rodrigues also commented on the current crisis that, according to him, should be lighter for the agricultural sector than for others. "You lose a little in dollars, in volume, but when you adjust the exchange rate, you see that there should be no negative impact on the agricultural sector."

He explained that forecasts are made estimating that no country will adopt protectionist measures for its agricultural products, which is caused by groups of countries that have common interests.

Rodrigues said that it is possible for some Asian countries with agricultural surpluses to make agreements with China, and added that, in that case, Brazil's complaints would be of little political expression in those countries.

"We must be aware so that this kind of relation does not take place and must trade with countries with which our policies may be of compensation," he concluded.

ABr

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  • Show Comments (5)

  • ch.c.

    “You lose a little in dollars, in volume, but when you adjust the exchange rate, you see that there should be no negative impact on the agricultural sector.”
    But…but…but…Joao….this was my WHOLE THESIS FOR WELL OVER A YEAR !

    That is also why I criticized time and again for years, that Brazil (also other emerging nations) that they CONSTANTLY
    publish their trade exports (surplus) in US$ and not in their local currency.
    Because the trick is obvious as I said : when the US$ is weak…YOUR EXPORTS OR SURPLUS JUMP TO THE SKY…BUT ONLY WHEN MEASURED AGAINST A WEAKENING CURRENCY ! SMILES !
    Traditional populism that works..ALL THE TIME…. TO GET APPLAUSES !
    But when the wind reverses…IT IS ANOTHER STORY OF COURSE. SUDDENLY THE EXPORTS COLLAPSE…BUT BECAUSE MEASURED IN
    A FOREIGN CURRENCY GOING UP.
    Conclusion : WHEN ALL BRAZILIANS, JOAO DA SILVA INCLUDED, applauded loudly FOR 5 YEARS your SUPER PERFORMANCE OF HIGH EXPORTS GROWTH WAS MORE A MIRAGE THAN A MIRACLE !
    YOU DONT TRUST ME ? No problem.
    Just re-read your OWN HISTORICAL YEARLY OFFICIAL STATS, that I already provided more than once, measured in Brazilian currency on your agro business sector :
    And you can see it was/is certainly NOT the miracle that YOU ALL SWALLOWED…by having read for years Your famous Disinformation & Propaganda Dept at the Planalto Palacio, working 24/7, occupying the full floor, right next to Robbing Hook office !

    Smiles

    Also when I said just a few weeks ago Your Coffee Farmers Tears are crocodiles tears.
    Coffee price is not much down ON AVERAGE…IN US$. Meaning prices are UP IN BRAZILIAN CURRENCY FROM LAST YEAR !
    Production quantity is another story. Especially when your farmers dont get financing for fertilzers. But that is a
    LOCAL PROBLEM.

    Our BBC farm is doing very very very well…in Brl Currency.Just somewhat less if and when expressed in US$ !
    But that is not such a big problem. Our production growth will easily makes up the difference anyway…even in US$ !
    And remember what I also said time and again since last October-November-December…..I am BULLISH on the BOVESPA…but
    remain bearish on the Brl. And that is the only reason I dont put a HIGH weigthing on my Brazil investments…for the time being !

    A weak currency is good for more exports, negative for imports. But as long as your currency doesnt COLLAPSE at a fast speed….
    NO MAJOR PROBLEM….ON THAT SIDE !

    On 2 differents things, not involving Brazil at all :
    – Have you seen today that Russia had its rating DOWNGRADED…….despite they still have close to US$ 400 billion in foreign currency reserves ?????? Russia economy is about the same size as…BRAZIL ! Hopefully you understand what I mean ! smiles.
    – This next Sunday and following days, you should pay attention to my country ! smiles
    This week end we have an important votation ! If We The People say….Nooooo….the consequences will be that by the
    end of May ALL OUR AGREEMENTS WITH THE EU…ARE TERMINATED !!!!!
    Will see ! Some say that a Nooo would have dire consequences for our economy, others say that such dire consequences were already pretended in a 1992 votation when the Nooo prevailed…and really nothing happened !
    Time will tell.
    My own view is that a Nooo could possibly have dire consequences… but especially NOW due to the World Economic Meltdown !
    Anyway I am bullish the US DOLLAR…as you should know by now ! Laugh..if you understand my thinkings !
    My exposure to the Swiss stock market is anyway not higher than my exposure to the Brazilian market…in the fund I manage !

    😉 😀 😉 😀 😉 😀 😉 😀 😉 😀 😉 😀 😉 😉 😀

  • falupa

    Brazilian Beef
    The Brazilian Beef market is phenomenal. In fact they have some of the highest rated beef in the world. I don’t know about neoprotectionism, however because it is becoming more difficult to pay for the beef market because of grain prices and so on. I think the added costs to beef are creating this stigma against Brazilian beef.

  • ch.c.

    Anderson
    why dont you read the official stats on Brazilian Agro sector ?

    In the meantime…..Anderson F……….the G……!

  • anderson

    CHC
    CHC go……..

  • João da Silva

    [quote]Former minister of Agriculture, economist and professor at the University of SÀƒ£o Paulo (USP), Roberto Rodrigues also commented on the current crisis that, according to him, should be lighter for the agricultural sector than for others. “You lose a little in dollars, in volume, but when you adjust the exchange rate, you see that there should be no negative impact on the agricultural sector.”[/quote]

    The Illustrious Professor of USP is absolutely correct and I wholeheartedly agree with him. LetÀ‚´s not make a big issue of this “light crisis”, which is is certainly [i]not [/i]going to affect the Brasilian people.

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