FAO and OECD provide outlook on Brazilian agriculture

The Agricultural Outlook 2015-2024 report, released Wednesday (July 15) by the Food and Agriculture Organization (FAO) and the Organization for Economic Cooperation and Development (OECD), brings perspectives on Brazil's agricultural production, despite lower growth trends compared to recent years.

The report is an annual publication on agricultural prospects worldwide. This year's edition includes a full chapter focusing on Brazil and the challenges facing the sector for the next decade.

According to Holger Matthey from FAO, the outlook for Brazilian agriculture remains positive, despite a slowing national and international growth trend and declining real prices for most agricultural commodities on a global level. Producers, however, expect to benefit from increased productivity and the depreciation of the real. Current projections suggest that there will be significant changes in the political and agricultural environment in the coming years.

According to the document, in 2013, Brazil's agricultural and agro-food industry products accounted for 36% of the total world exports, highlighting the role of the sector as a foreign currency earner for the country. Brazil is currently the second top agricultural exporter and the leading supplier of sugar, orange juice, and coffee.

Jonathan Brooks from OECD noted that in 2012 the agricultural sector employed about 13% of Brazil's population. And although Brazil is relatively urbanized, with only 15% rural population, poverty levels in rural areas, where agriculture is the main activity, is more than twice as high as in urban areas. However, the report points out, one outstanding achievement of Brazil's economy has been poverty and hunger reduction. The model adopted in the country improved food availability and increased productivity, leading to the inclusion of vulnerable populations, he went on.

Regarding soybeans, Brazil's most important agricultural export, the FAO/OECD report pointed out Brazil will continue to be the second top soybean producer behind the United States, and soy should remain the most lucrative export, with more than half the domestic production targeted at world markets. Brazil's grain exports, the report says, should exceed $27 billion in 2024, with China as the largest destination. In 2014, about 71% of oilseed exports – 35% of Brazil's total production – went to the Asian country.

Because Brazil's agricultural exports are impacted by China's economic performance, the document projects two scenarios for 2024. If China's economic growth improves, imports will push global prices up, causing Brazil's production and prices to rise, with reduced domestic consumption. This scenario would be positive for Brazil. However, if Chinese growth fails to reach this level, not only oilseed exports to China will fall, but also Brazil's exports to other countries.

Translated by Mayra Borges