São Paulo – Fertilizer purchases increased, as did agricultural machinery. Rural property infrastructure was expanded, the quality of seeds used in crops improved. These are some of the consequences that the rise in price of the main agricultural commodities produced in Brazil, which started in the middle of the past decade, brought to the Brazilian countryside. Soy and maize prices started to rise in that time and currently are still at least 100% higher.
“Last year sales of harvesters and tractors grew a lot, as well as pesticides, fertilizers. The technological level grew a lot”, says the head of the Brazilian Agribusiness Association (Abag), Luiz Antonio Pinazza. According to him, Brazilian farmers still own resources, due to the rise of agricultural commodity prices, and the countryside is going through a very favorable moment.
The head of the Economy Department of the Brazilian Ministry of Agriculture, Livestock and Supply (MAPA, in the Portuguese acronym), Wilson Vaz de Araújo, cites, besides the use of technology and fertilizers, the investments in storage systems and field management capacity as consequences of the rise in agricultural product prices. More modern processes, according to him, allowed the increase of productivity, and thus, the increase of production.
Larger investment in fertilizers can be seen in the sector statistics. The delivery of fertilizers on the Brazilian market, which were 20.1 million tonnes in 2005, increased to 31 million last year, according to the Brazilian National Fertilizer Association (Anda).The Brazilian industry of agricultural machinery and implements profited US$ 5.9 billion in 2008 and US$ 13.1 billion in 2013, according to the Brazilian Machinery Manufacturers Association (Abimaq).
Life in the countryside
According to Araujo, from Mapa, in regions where agriculture is strong the new level of prices for agricultural commodities influenced the quality of life, the financial sector, commerce, input suppliers and even education. In this regard, Afrânio Cesar Migliari, secretary of Agriculture and Environment of the municipality in Mato Grosso, which is considered the national capital of agribusiness, said “quality of life in the countryside improved, in cities devoted to agribusiness”.
According to the secretary, Sorriso and the remaining soy and maize producing municipalities in the region, such as Lucas do Rio Verde, Nova Mutum and Princesa do Leste, have better living conditions today. “There are new vehicles, new trucks, imported vehicles”, says Migliari. Civil construction is thriving in Sorriso, according to him, and there are several new housing complexes, high-value condominiums. “The state changed a lot in the past ten years”, he said about Mato Grosso.
The higher income has consequences not only on the personal life of farmers in Mato Grosso, according to Migliari, but also on agricultural activity itself, on farms’ structures, investment in higher quality seeds and fertilizers, more modern machinery, acquisition of new airplanes, tractors, automatic planters and harvesters. And the acquisition of newer technology helped the state to address one of its main bottlenecks, which is agricultural labour. Sorriso plants 660,000 hectares of soy per year and 440,000 hectares of maize, which was considered secondary in the municipality until it started to profit better and to receive investments.
Rise in soy and maize prices
Asian demand for grains and the decision of the US to produce ethanol from maize are among the factors leading to maize and soy’s new prices. “China imported two million tonnes of grain in 2000, and today it imports between 65 and 70 million tonnes. And Brazil occupies a big part of this market”, says Pinazza. Speculation in the commodity market as a whole, which also includes non-agricultural products such as oil, has also favored the price rise, according to the director.
The head of the Economy Department of the Brazilian Ministry points out the variation of stock prices, especially after 2009. “In general, the prices were quite generous”, he says, citing income increase and urbanization in developing countries, mainly from Asia as possible reasons. Araújo believes the grain market will keep the upward trend. “The level of agricultural commodity prices has changed. There may be some fluctuation, but they will stay in this new level”, he says.
*Translated by Rodrigo Mendonça
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