Production Increases in Brazil and Argentina
In South America, two powerhouses of the region’s agriculture industry, Brazil and Argentina, are in the final throes of their summer corn crops, and production estimates across the board are already showing an increase on 2014.
In just 35 years, Brazil has developed from a food importer to a major exporter, mostly by improving productivity. Since 1976, based on grain and oilseed production figures, agricultural productivity has increased by about 250%.
Between 1976 and 2014, the area planted for grain and oilseed production increased by 27%, while production increased by 213%. In the 1970s Brazilian farmers could produce food from their land for an average of 73 people. Using the same land, in 2014 that figure had increased to 155.
Today, the agriculture sector is responsible for 25% of Brazil’s GDP and employs some 35% of the workforce. According to figures released by the Ministry of Agriculture, 2014/15 grain production is forecast to be 6.6%, ahead of 2013/14, at 206 million MT .
By far Brazil’s biggest crop is soybeans. This season, production is forecast to reach 96.2 million MT, an increase of more than 10% over 2014/15. Much of this crop is destined for export markets, with some 60-70% heading to China.
Two corn crops each year are good not only for the crop rotation on the farms, but also for production. Despite difficult growing conditions in late 2014 resulting in reduced production in this season’s first corn crop, better weather, and a forecast 6.5% increase in the second crop, will see the 2014/15 is season deliver more than 81 million MT.
Another product where production is outstripping the previous season is peanuts. Across two crops, production is expected to reach 347,000 MT, an increase of almost 10% on 2013/14.
A strong showing across the board, and increased yields per hectare, are positive signs for trade in Brazil this season.
We cannot forget that currency fluctuations have had a big impact on Brazil’s agribusiness too. The dollar super cycle, coupled with a struggling Brazilian Real, means that the movement in basis and currency is offsetting soybean and corn international prices. Therefore, currency will be an important element in decisions about how many hectares Brazilians will decide to plant for the coming 2015/16 season, that will start in October 2015. This can be an extra stimulant to plant more and more grains in the country.
Agriculture is an important part of Argentina’s economy. Though it has shrunk since its heyday in the 1950s, when it accounted for 20% of GDP, the industry still accounts for 10% of GDP and some 7% of all employment.
In 2015, the country is forecast to produce about 100 million MT of agricultural grains. In a country with a population of just 40 million, much of this production is destined for international markets. Soybeans, corn and wheat are the country’s main export products.
Wheat has made a slight return to the export markets this year following several years of falling production. Estimated production for 2014/15 is 13.90 million MT, of which the Ministry of Trade believes some 7.2 million MT will be exported. However, estimates of the area to be cultivated for the 2015/16 crop show a decrease of about 20%.
More than 50% of this year’s corn crop will be exported. Argentina’s second largest crop, the predicted corn yield for 2014/15 is slightly down on 2013/14, but exports remain healthy and will be destined for markets across Latin America, Asia, Africa, the Middle East and Europe.
Soybean production has leapt again. Production doubled between 2000/01 and 2013/14 to reach 53 million MT, but this year the latest production estimate from GAFTA is 60.80 million MT.
Other crops are showing positive improvements. Sunflower, mainly destined for the oil production industry is predicated to produce a little over 3 million MT in 2014/15, bouncing back from a low of 2 million in 2013/14. At the same time barley and sorghum, both of which are predominantly destined for export, have decreased.
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For further information, please contact:
Business Manager, Brazil
SGS do Brasil Ltda
t: +5511 3883 8800
Business Manager, Argentina
Tronador 4890 6th floor
Ciudad de Buenos Aires
Buenos Aires, Argentina
t: +5411 4124 2060