São Paulo – The international financial crisis has not yet impacted Brazilian agribusiness exports. According to figures disclosed this week by the Ministry of Agriculture, foreign sales generated US$ 6.81 billion in September, a record for the month. The increase in comparison with the same period in 2007 was 38.5%, over the average growth registered in the year (29.2%).
Possible effects, caused by lower demand, lack of credit and lower commodity prices, should be felt in the medium term, though still smaller than in the durable goods industry.
Although agricultural prices have already left the foreign market, deliveries up to September are related to contracts signed in the past, when prices were still high. Figures supplied by the Ministry of Agriculture show that the growth in export revenues was greater than the growth of the volume shipped, making it clear that the values paid were much greater than those paid in the same period last year.
Apart from that, the demand for food should be the last affected by the recession, after all, people can stop buying cars or televisions, but they cannot stop eating. "Food is the last item that consumers cut," stated the director of the International Promotion Department at the Ministry, Eduardo Sampaio Marques.
According to Eugênio Stefanello, a professor at the Federal University of Paraná and technician at the National Food Supply Company (Conab), the crisis should affect the rhythm of growth of exports in a gradual manner, partly due to the reduction of lines of credit for foreign trade and to greater interest on existing contracts and partly due to the greater demand. He does not expect an abrupt reduction in sales.
This logic seems to be put in practice by farmers. The first crop estimate for the 2008/2009 crop, disclosed by the Conab yesterday (08), forecasts a crop of 142.03 million tonnes to 144.55 million tonnes of grain, whereas the previous crop, which was record, reached 143.8 million tonnes. That is, the initial forecast is for stability in production.
"Despite the greater demand, the reduction of the rhythm of exports should not be that significant," stated the technical superintendent at the National Confederation of Agriculture and Livestock (CNA), Ricardo Cota. "After all, our offer is not so great that it cannot be absorbed. There will not be food to spare," he added.
Care
Stefanello pointed out, however, that within the figures presented by the Conab, some figures show care by producers. The main bets are in soy and bean crops, preferred to maize, for example. "This is coherent, as soy is cheaper to produce and has greater liquidity, whereas maize is more expensive and in the last crop there was excessive production," he pointed out.
More than in consumption, the effects of the crisis should be more evident in prices paid in American dollars for products. Stefanello pointed out that during this year, from the price peaks to date, the price of soy has dropped 45% on the international market, maize, 48.7%, and wheat, 53.8%. "Before the crisis, prices were established 50% to 60% considering demand and 40% to 50% due to speculation. With the crisis the prices started reflecting greater relations between offer and demand," he pointed out.
In the same line, Cota added that a good share of the speculative capital that boosted prices has been removed from the stock markets and transferred to more conservative investment. "The price dropped, but not due to demand. This reduction of consumption may take place in case the crisis gets worse, reducing the growth of trade or maintaining it at the same level," he said.
The great depreciation of the dollar against the Brazilian real, observed in recent weeks should partly compensate the reduction of prices. However, the exchange rates should boost the prices of inputs, especially fertilizers. There is, however, a great offer of these products on the national market.
In the area of credit, Cota said that the decisions of planting the current crop have already been taken. That is, farmers have already bought what they need to produce. However, last week the federal government anticipated the disbursement of 5 billion reals in agricultural credit. Greater problems in terms of availability of funds should take place in the financing of the next crop.
*Translated by Mark Ament
