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Importance and complexity of agribusiness in Brazil

Amid the covid-19 crisis, the performance of agribusiness in Brazil has been resilient and surprising, which is reinforced by several records that the sector hit in 2020. The good performance is directly related to its exports. Moreover, record productions were registered for agriculture in 2020. As for livestock, despite a modest production increase, price rises guaranteed the revenue growth, which is linked to the sharp international demand for Brazilian meats.

 

The Focus Survey, released by Central Bank of Brazil, estimates that the exchange rate will be at 5.30 BRL by the end of this year, while Brazilian economy may grow 4.36%. At the field, data from Conab indicate new records for soybean and corn production, and their areas are expected to increase 4.2% and 8.8%, respectively. As for meat, the good export performance should continue.

 

In spite of the records, some factors must be considered: a) the sharp agriculture growth was actually a recovery, because of the decrease of the real income in the segment from 2017 to 2019; b) a part of producers who had already traded their production could not take advantage of price rises; c) costs of production soared, reducing producers’ margin.

 

On the other hand, Brazilian consumers have been facing a significant increase in food prices. One year after the World Health Organization (WHO) declared the coronavirus outbreak is pandemic, IBGE (Brazilian Institute of Geography and Statistics) indicated that food prices increased 13.9% up to April this year, higher than the general index (6.1%).

 

Food price rises are mainly attributed to the exchange rate devaluation, the increase of the international demand for commodities and changes in consumers’ behavior, due to social distancing. Moreover, the effects of the emergency aid on demand and, therefore, the domestic price rise, need to be considered in this scenario. The economic crisis affects more critically the share of the population that has lost their jobs and/or faced a decrease in their income. In 2020, according to data from IBGE, the unemployment rate hit 13.5%, a record of the historical series (started in 2012), totaling 13.4 million people.

 

This context has arisen a debate about the number of Brazilian families that are vulnerable to hunger, since: a) inflation reduces population’s purchase power, which is more critical among the poor; b) income is an important factor to assure food security (or not). A recent research indicated that, during the pandemic, more than half of Brazilian households has faced food insecurity situation.

 

As a result, these contrasts highlight both the importance and complexity of the sector, drawing attention to producers’ interests, aiming to guarantee the agribusiness performance and its role in Brazilian economy, generating income and employment. Moreover, public policies need to assure that families have enough income to guarantee food security. In terms of programs on food security direct actions, some alternatives were proposed, and others area already implemented.

 

An aspect that has been discussed is the buffer stock scheme, which needs to be aligned with economic sustainability of production. However, poor performance in the public sector in this type of policy reinforces the contrariety to its reintroduction. This activity demands fast decisions, available resources, and logistics efficiency, which is not a characteristic of the Brazilian public sector.

 

On the other hand, there are agricultural policies of access to food, such as the PAA (Food Acquisition Program, in English), created in 2003, aiming to purchase family farming production.

 

Despite the unprecedented severe economic and health crisis faced by Brazil, governments should’ve known that overcome hunger is a primary challenge to reach a developed status.

 

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