Shuttle: The glow of agribusiness begins to lose light

Agricultural producers have lived golden times in recent years. In Brazil, the sector’s GDP for 2020 and 2021 showed an evolution not achieved until then.

The VBP (Gross Production Value) surpassed R$ 1 trillion for the first time, showing strong acceleration.

In the United States, the USDA (Department of Agriculture) has just disclosed that the agricultural sector is experiencing a strong recovery. This year’s net revenues are expected to hit $161 billion, the highest, after adjusting for inflation, since the early 1970s.

This new cycle, however, begins to lose its luster. In Brazil, the GDP of agribusiness fell 4.28% until September, according to Cepea (Center for Advanced Studies in Applied Economics), after two years of excellent performance.

In the United States, as well as in Brazil, the sector should feel even more the new level of costs, high interest rates, more expensive equipment, valued land, heated inflation and the pressure of fuels and energy.

On the price side, the perspectives are not the same as those of the last three years.

The sector’s accelerated gains came from greater demand, the occurrence of the pandemic, the war between Russia and Ukraine and the consequent rise in prices. Costs also came with intensity, but revenues are still high.

In 2019, spending by Americans accounted for 75% of revenue. This year, due to high commodity prices, they reached 69%, according to data from the USDA.

In the same period, producers’ net revenues increased by 104% in the United States. In 2022, however, they have an evolution of 14%, while expenses are already up 19%.

The Gross Value of Production in Brazil —revenues within the gate— should reach R$ 1.2 trillion this year, up 30% compared to 2019. Compared to 2021, it already shows stability.

Brazil and the United States differ in revenue sharing. Brazilians had a 1% increase in GPV for crops and a 2% drop for livestock. The North Americans obtained a rise of 19% in revenues from crops and 31% from livestock.

Soy and corn are the highlights in both countries. In the United States, average corn revenues, which reached US$ 55 billion annually from 2012 to 2021, rose to US$ 90 billion in this one. Soybean prices went from an average of US$ 40 billion to a record US$ 60 billion.

The VBP for soy in Brazil will be BRL 338 billion, and that for corn, BRL 149 billion, according to forecasts by the Ministry of Agriculture.

The reduction in the sector’s performance began earlier in Brazil. The GDP, after the successive records of the last two years, fell 4.28% until September of this year. The fall reflects the weight of high inputs on the sector.