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.



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