At annual press conference CNA assesses 2019 and forecasts for agriculture in 2020

Balanço e Perspectivas

Brasilia (04/12/2019) – The Brazilian Confederation of Agriculture and Livestock (CNA) forecasts an increase in Gross Value of Agricultural Production (GVP), growth of agribusiness Gross Domestic Product (GDP), more private financing for the sector, more work and interest by producers in international trade.

The estimates were presented on Wednesday, December 4th, during the annual press conference “Balance and Perspectives” in Brasilia. The conference discloses an analysis for 2019 and the outlook for agriculture in 2020.

Mr. João Martins, CNA’s President speaks to the press

According to CNA, the expectation for the GVP, which measures the revenue of the sector “within the gate”, is a rise of 9.8% in 2020 compared to 2019. Thus, the income of the sector can reach R$ 669.7 billion.

Livestock will be one of the main drivers of this result, which should grow 14.1% and reach the amount of R$ 265.8 billion. This indicates that 2020 will be a good year for the sector, with prospects for increased production. For beef, the estimate is for expansion of 22.2% in next year’s GVP compared to 2019, reaching revenues of R$ 129.1 billion. The GVP of other animal protein should also grow, such as pork (9.8%), dairy farming (7.5%), and chicken (7.1%).

Agriculture, in turn, which fell in 2019, will recover in 2020 and the VBP should rise 7.2%, reaching R$ 403 billion. The main highlights of agricultural GVP will be soybeans, with a rise of 14.1%. The oilseed should end 2020 with revenues of R$ 165.2 billion, driven by rising prices and production. Corn will also grow (3.3%), due to price appreciation, as will sugarcane (7.1%).

For 2019, the expectation is for stability in the VBP, which should end the year at R$ 609.7 billion, with growing livestock (7%) and agriculture with a forecast of 4% fall.

GDP

Bruno Lucchi, CNA’s head of the Technical Department

Agribusiness Gross Domestic Product should grow 3% in 2020 compared to 2019. Despite the higher estimate of agricultural production next year, there is a tendency for production costs to rise, which may impact farmers’ income by 2020.

Soybean production costs, for example, are expected to rise record-high in the 2019/2020 crop, among other reasons, because most fertilizers were traded at higher prices than in previous crops. By 2019, GDP is expected to grow by 1% over 2018.

Harvest Growth

The expectation of CNA for the 2019/2020 crop is to hit a record in grains and fibers production. Climatic conditions will be normal, without the incidence of El Niño and La Niña phenomena. This factor encourages farmers because there should be fewer production losses caused by drought or excessive rainfall.

Meat Prices

Prices paid per kilogram of bovine peaked in November, reaching a level of R$ 15.33 per kg (or R$ 230 per ‘arroba’) on average. One reason for this rise was the increase in exports to China, which had domestic problems with African Swine Fever (ASF) and had to import animal proteins from other countries. The Asian country has the largest swine herd in the world, and the disease has affected most of the animals.

On the other hand, domestic consumption in Brazil showed signs of recovery due to the improved economy and the proximity of the holidays.

Credit and Agricultural Policy

Expectations for improved macroeconomic indicators by 2020 could leverage private financing for agriculture. The behavior of the Selic rate and inflation can create a favorable environment for the sector and stimulate greater competition between credit institutions.

In this context, in 2020 CNA will present a proposal for a multi-annual Agricultural Plan to help the government build a medium-term planning strategy for the Brazilian agricultural policy. The idea is to make the conditions more predictable to farmers, improve risk management tools (such as rural insurance) and provide more legal certainty. This will also improve the business environment and increment farmers’ income.

Trade Balance

Ligia Dutra, CNA’s head of International Relations

China, the European Union, the United States, Japan, and Iran were the main destinations for Brazilian agribusiness exports in 2019. These five markets accounted for 63% of the sector’s total foreign sales.

China is already the primary importer of chicken, beef, and pork meat from Brazil. In 2019, the country increased its imports of these three types of Brazilian meat. The most significant increase in sales observed was to Japan. Between January and October 2019, the country imported US$ 913.9 million more than in the same period of 2018. There was an increase in sales of corn, fresh chicken, soybean meal, green coffee, and other less traditional products such as peanuts, lobsters, and beeswax.

In 2020, Asia will continue to be an important partner of Brazilian agriculture, with increased exports and the inclusion of new products on the trade agenda, such as fruits, dairy products, bee products, specialty coffee, and fish. In 2019, soybeans led the ranking of Brazilian exports to the world, with US$ 23.2 billion in sales. Next came pulp (US$ 6.56 billion), corn (US$ 5.92 billion), fresh chicken (US$ 5.5 billion), and fresh beef (US$ 4 billion).

Market Access

CNA will intensify its international operations with offices in China. The new offices will be in Shanghai and Singapore, and will help farmers to expand its sales to Asian markets. The project aims at including new products in the trade flow, such as fish, honey, dairy products, coffee, fresh and processed fruits, nuts, flowers and vegetables.

There is also the prospect of increased agricultural exports under the Mercosur-European Union and Mercosur-EFTA (Switzerland, Liechtenstein, Norway, and Iceland) agreements, signed in 2019. By 2020, CNA expects to conclude the negotiations of a free trade agreement with Canada and South Korea. The Confederation also advocates expanding the trade agreement with Mexico and starting negotiations with Japan.

In addition, CNA will open four new regional agro-trade promotion offices. The offices will be part of the Agricultural Trade Network Initiative (InterAgro), and will work in partnership with CNA offices in Asia. The initiative is a partnership with Apex-Brasil that aims to insert more small and median scale farmers in the export process.

From Rural to Table Program

Brazilian vegetable farmer from Goiás who is part of the From Rural to Table program

Another highlight of 2019 is the “From Rural to Table” program. It came from a partnership between National Rural Learning Service (Senar) and National Commercial Learning Service (Senac). The project brings Technical and Managerial Assistance (ATeG) to farms to diversify production, improve productivity and income. It also provides direct product marketing channels.

“From Rural to Table” has already benefited producers from the Federal District and Goiás. 220 tons of food are sold to Senac’s 17 school restaurants in the DF. This moved more than R$ 1.3 million. The goal for 2020 is to include 6 states of the country.

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