The agribusiness of 2022 will provoke a dichotomy between the South and the other regions of the country. The 2021/22 summer crop was characterized by heavy cost increases for all, but revenues will be located in a few regions.
The intense drop in agricultural production in the South once again raised commodity prices, which had already been on the rise since last year.
Those who produce well will benefit from this elevation. For others, the account does not close. The financial damage will be greater in the South region, made up of smaller land properties. The Midwest, which concentrates large producers, will have better revenues this year.
Soybeans and corn practically dominate crops in the South, and they were among the most affected this summer crop.
The South region had a drop of 23% in corn productivity, according to data from Conab (National Supply Company). The reduction was 34% in Rio Grande do Sul and 24% in Paraná.
The regions of the Center-West and Northeast, with less importance in the production of the cereal in this first harvest, obtained increases of 7% and 9%, respectively.
The scenario for soy is not much different. According to Conab’s accounts, the South should have a drop of 42% in the productivity of the current harvest, while the other regions practically maintain the volume of the previous one.
Producers in Paraná will obtain only 2,065 kg per hectare, the lowest volume in the last 30 years; and the Gauchos, 1,767 kg, the lowest in ten years. The producers of Mato Grosso will achieve record productivity of 3,592 kg, informs Conab.
The drought changes the configuration of revenues this year, which go to Mato Grosso. In 2020, the people of Mato Grosso held 16% of the national GVP (Gross Value of Production) — the volume produced within the gate, multiplied by the price of the products.
This year, in view of the disastrous result of the first crop in the South, Mato Grosso should retain 18% of the country’s agricultural income. The estimate is that the VBP will reach R$ 1.21 trillion, according to data released by the Ministry of Agriculture on Monday (14).
São Paulo and Minas Gerais also have a larger share, but the big losers are Paraná and Rio Grande do Sul.
Last year, the people of Paraná held 14% of the national VBP; and the gauchos, 10.5%. This year, they will be 11% and 8%, respectively. The region’s total drops to 23%, after reaching 29% in 2021.
“It’s a ranking outside the curve and it’s part of the game”, says Antônio da Luz, chief economist at Farsul (Federation of Agriculture of the State of Rio Grande do Sul). As happened in the southern states this year, the drought may occur in the Midwest in another, he says.
The losses, however, are of great relevance to the region’s economy. The important thing now is to have a consistent agenda for finding solutions and making decisions. It’s not just the field that will lose. Of the 67 segments of the economy, according to IBGE data, 63 are impacted by the growth or decline of agriculture, according to Luz.
The economy is circular. Before reaching the field, the machines leave the industries, pass through resellers and require a service area. Agribusiness involves trading companies, cooperatives and agro-services.
For every BRL 1 that agriculture fails to collect, BRL 3.2 ceases to circulate in industries, in the service sector and in tax payments. This should be the drought with the greatest effects on the state’s economy, calculates the Farsul economist.
The projection of a positive GDP (Gross Domestic Product) of 0.58% for this year has turned into a perspective of a fall of 8% in the state, he says.
The drop in harvest has a ripple effect on the economy. Less grain means fewer trucks driving and less activity at storage, grain processing, gas stations and the service sector.
The countryside and the city complement each other. Industries use a lot of labor in production, while agriculture produces with high technology and capital employment, says Luz.
Data from Cepea (Center for Advanced Studies in Applied Economics) show that corn prices exceeded R$ 100 per bag, and soybean prices are above R$ 200.
In addition to the drought, foreign demand and Russia’s war with Ukraine are driving the rise.
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