The breadbasket of the world, as Brazil likes to be called, is being defeated by the climate. Agricultural GDP (Gross Domestic Product) fell by 8% in the first quarter of this year, compared to the same period last year.
In the last two harvests, the country saw soybean and corn production, the two main national products, fall 47 million tons below production potential due to climatic variations. Last year, drought and frost affected the corn crop. This year, it was the soybean crops.
With the fall in this first quarter, agriculture, which had been sustaining the national economy in recent years, accumulates a 4.8% retraction in the accumulated GDP of the last four quarters.
The first quarter is very important for Brazilian grain production, due to the crops of rice, summer corn, soybeans, cassava, beans, tobacco and grapes. All were affected by the weather and had productivity losses.
The South region, one of the most developed in agriculture and which represents 25% of the national production of grains, is largely responsible for the slowdown in GDP at the beginning of the year.
All these early-year crops are practically concentrated in the South, which led the region to produce only 66 million tons of grain in the period, 15% less than in 2021.
The climate made Paraná return to the level of soybean productivity of three decades ago. As a result, the production of the oilseed in the state had a drop of 40%. In Rio Grande do Sul, where the reduction in soybean production was 55%, the situation was even more serious.
The performance of these crops determines the rhythm of the Brazilian crop. Soybeans and corn represent 88% of the national grain production. Adding rice to this account, the share of the three rises to 92%.
The list of products that were affected by the climate and lost productivity, in relation to their potential, was long. Soybeans, the national leader in production, had a 16% retraction in productivity this year. Summer corn fell by 8%; rice, 7%; tobacco, 5%; and edible beans first crop, 4%.
The climatic effects that mainly affected the crops of the South brought great losses to the country, due to the participation of the region in the national production.
According to IBGE data, the South concentrates 82% of the national production of rice; 20% of soy; 32% of the second crop of corn; 26% for beans and 95% for tobacco.
This fall in agricultural GDP comes at a delicate moment for the sector. International commodity prices remain at high levels, but costs have reached record levels, especially for inputs such as fertilizers.
The high cost of production from the next harvest should lead some producers to reduce the technology used in production. The profit margins have shortened a lot, turning, in the case of crops such as rice, into losses.
If that happens, production problems would come not only from possible new weather phenomena, but also from reduced production, due to lower productivity in crops. The sector’s GDP would continue to slide.
Brazil expected to reach 290 million tons of grain this year, but with the drop in soy production, the volume should be close to 262 million.
Soy production, initially estimated at up to 145 million tons by some consultancies, should reach 118.5 million, according to the most recent estimates by the IBGE.
A boost for the agricultural GDP could be the second crop of corn, which, unlike last year, will have a positive evolution. Planting was carried out in the right period, and production is expected to reach 87 million tons, 39% more than in the same period in 2021. The weather, however, needs to help, especially in crops in the South, where the threat of frost is constant.
If this volume is confirmed in the off-season, the country’s total corn production will reach a record 112 million tons. Initial estimates, before the summer break in the South, indicated a volume exceeding 120 million tons.
The agricultural GDP should receive favorable numbers in the coming months of cotton and coffee crops, which are forecast to rise by 12%, compared to 2021.
Even so, the blow in the first quarter was big. The retraction of 0.2% last year and the accumulated fall of 4.8% in the last four quarters will weigh until the end of the year in the variation of the sector’s GDP.
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