Grain Production Grows 4% in Brazil While Revenues Fall 15%

A cornfield in Brazil Brazilian grain production grew by 4.1% in 2006 compared with the previous year. A total of 117.3 million tons were harvested, 4.6 million tons more than in the previous year. The result was achieved despite a decrease of 2.5 million hectares, or 5.2%, in planted area, which had been increasing since 2001.

The data were obtained from the Municipal Agricultural Survey of Cereals, Leguminous Plants and Oleaginous Plants, disclosed July 19 by the IBGE (Brazilian Institute of Geography and Statistics), which brings together information about the performance of 15 different grain cultures in the country.

Despite the increase in production, grain crop revenues decreased by 15.1% compared with the previous year, totaling 7.3 billion Brazilian reais (US$ 3.9 billion) less than in 2005. In comparison with 2004, the reduction was even greater (35.4%), or 22 billion reais (US$ 11.8 billion) less in the amount traded.

According to Alfredo Guedes, agricultural analyst at the IBGE, the production increase represents a recovery from 2005, when the grain crop was severely affected by the weather, especially in the South of the country.

"The year of 2005 was marked by much drought, therefore 2006 was a year for recovering productivity. There was a reduction in planted area, but weather conditions were better, allowing for greater production," he explained.

According to Alfredo Guedes, retraction in planted area and decreased revenue from grain production are consequences of low soy and cotton prices in the international market. Nevertheless, he highlighted the fact that, upon reducing planted area in order to reduce risks, producers select the best lands, thus concentrating more investment and attaining greater productivity, as was the case with soy.

The positive grain crop performance was mostly driven by the recovery in corn culture (42.6 million tons), whose production grew by 21.5% over 2005. Another determining factor was the record high result in soy production, at approximately 52 million tons, an amount 2.5% greater than in 2005, and 1% greater than in the 2003 crop, which had been the largest ever.

Soy and corn remain as the flagships of grain production in the country, accounting for respectively 44.3% and 36.1% of the total crop.

The IBGE survey also showed a reduction in wheat (47.1%) and rice production (12%). To Guedes, the negative performance of those two cultures is a result of the commodities' low market price, which led farmers to plant less.

The southern Brazilian state of Paraná returned to the first position in the Brazilian grain production ranking, having accounted for 19.8% of total production in the country, leading the production of beans, corn, wheat, triticale, oat, and barley, in addition to being the country's second largest soy producer.

Mato Grosso, in the Midwest, was the second largest grain producer state, at 18.9% of total production, and the leading producer of soy, having accounted for 30% of the grain's crop.

The state of Rio Grande do Sul, in the South, recovered from its performance in 2005, having recorded a 70% increase in crop yield, and ranked third in the national ranking, having accounted for 17% of total grain production in Brazilian territory.

The municipality of Sorriso, in Mato Grosso state, was the country's leading producer of grains in 2006, as it harvested more than 2 million tons, and led soy production.

Machinery Exports

The Brazilian machinery industry increased its exports by 21% in the first half of this year, compared with the same period of 2006. Foreign sales stood at US$ 4.7 billion between January and June, according to data disclosed today by the Abimaq (Brazilian Machinery Manufacturers Association).

For the president of Abimaq, Newton Mello, the growth could have been greater if it were not for the exchange rate – depreciation of the dollar.

The main foreign buyers of Brazilian machinery were the United States, followed by Argentina, Singapore, Mexico, and Germany. The sector's revenues have also increased, by 10%, during the period, to reach 28.9 billion Brazilian reais (US$ 15.5 billion).

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