Commodities Shuttle: Cassava loses space to soybeans, supply falls and prices rise

The greater insertion of Brazil in the international food market makes low-income Brazilian consumers have more difficulties in accessing food.

There is a constant increase in productivity, especially for products aimed at the foreign market, but not enough to guarantee adequate supply and prices for products used in the domestic market.

There is a priority for commodities with international liquidity, and which bring greater income to the producer, as occurs with soybeans. In the last decade, the oilseed area has advanced over all other crops, including pastures.

The soybean area was 39 million hectares in the harvest that ended and will surpass 40 million in the one that is being sown. This area indicates an evolution of 63% in relation to the one destined for the product ten years ago.
During this same period, staple foods, and practically aimed at the domestic market, such as rice and beans, lost space to legumes.

Now it’s time for cassava. This crop has been losing cultivation area, which has increased in recent crops due to the lack of profitability in the sector. The result was that part of this area was abandoned for the cultivation of soybeans and pastures. Pulses and cattle reached record prices.

In the last decade, the growing space for rice has been reduced by 40%. The gauchos alone transferred at least 200,000 hectares of cereal to soybeans.

Beans lost 27% of the area, and cassava, 41%. The reduction in area reduces supply and raises domestic prices for these basic foods, the most accessible to the low-income class.

A ton of cassava was worth R$ 398 in November 2018 in northwestern Paraná, one of the leaders in production. The current price reaches R$ 697, with an evolution of 75% in the period, according to data from Cepea (Center for Advanced Studies in Applied Economics).

The rise of this product makes it even more difficult for consumers to choose food, since, in the same period, other basic products also followed an upward trend in the field. This price evolution quickly arrives at fairs and supermarket shelves.

Data from Cepea show that basic products had a jump in prices in the last three years in rural properties.

Consumer choice is difficult, since the increase that comes from the countryside includes rice, eggs, chicken, beans, cassava, milk and wheat, in addition to products with greater added value such as pork and beef. These increases range from 60% to 115% over three years.

Cassava is another new component of inflation. This year, the product was up 10% in São Paulo retail and accumulates 20% in 12 months, according to data from Fipe (Foundation Institute of Economic Research).

Fábio Isaías Felipe, a researcher at Cepea, says that the loss of profitability of the cassava crop in recent harvests was the driving force for the farmer to change this product for the cultivation of grains and livestock.
In addition, there was a perfect storm this year, with frost and drought, which resulted in a loss of starch content, essential in this activity.

Large crops, such as soybeans, corn and cotton, are accompanied by intense investments in technologies. They are profitable, have liquidity and bear these costs.

This is not the case with the cassava crop. It is an expensive activity and is outdated in terms of production technologies, according to the Cepea researcher.

Basically aimed at the domestic market, the production of cassava does not benefit from the exchange rate, which irrigates products destined for the foreign market.

The crop suffers, however, from the effects of the strong depreciation of the dollar, since it uses fertilizers and imported chemical products, which increases the costs of the sector, says Felipe.

Area and production are constantly falling, according to the researcher. From the world’s second largest producer, Brazil dropped to eighth place currently. This year, production should reach 18.6 million tonnes, according to a projection by the IBGE (Brazilian Institute of Geography and Statistics).

The rise in prices slowed the domestic market, which allowed the sector to place 28,800 tonnes of starch abroad until October. Last year, there were 13,800 from January to December. The high dollar made the Brazilian product more competitive.