The release of Aprosoja Brasil’s estimates for the 2023/2024 harvest has sparked discussions regarding the discrepancy between the real data reported by producers on a daily basis and the methodologies adopted by official bodies and private consultancies. There is at least a 20 million ton difference between the 135 million announced by the entity and the 155.26 million announced by the National Supply Company (Conab) and the 157 million predicted by the United States Department of Agriculture (USDA).
The Brazilian Association of Vegetable Oil Industries (Abiove), which represents the major buyers of our main commodity, estimates the Brazilian harvest at 160.3 million tons. Even more worrying is the way in which the data is used by the grain market to define the prices paid to producers.
Taking into account the practical effects of the “law of supply and demand”, it is in the interest of grain buyers to publicly disclose information saying that Brazil will be able to harvest a super harvest, even if in reality the field will experience strong drops in production and productivity due to cause of climate problems, as has been occurring in the 2023/2024 harvest.
Logically, if there is information about an excess supply of soybeans, the “natural” behavior of the market is to reduce the prices paid to producers, a mechanism that solely meets the objectives of buyers, who are mainly interested in publishing these estimates.
However, the market closes its eyes and does not take into account the 21% loss estimated for the soybean harvest in Mato Grosso, the largest national producer, nor the fact that the Tocantins government declared an emergency situation throughout the state. . Parts of these states, and regions of Paraná, Goiás, São Paulo, Minas Gerais and Mato Grosso do Sul, for example, were strongly affected by the same problem: drought and delay in rainfall during the germination phase of plants and excess water at harvest.
Given this climate scenario, in which crops were affected by drought, then by excessive rain and also by pests, other areas continue to have drought problems in MS, PR and in some pockets detected in Rio Grande do Sul. And Even in crops that were visually in good condition, the grains are not developing well, resulting in low weight at the end. Imagine the effects on the pocket of a producer who invested resources to plant a crop and will not harvest enough to pay production costs and financing.
Evidently, if the market reflected the reality of crops, given the great global demand for the oilseed, prices would be showing the opposite behavior to the current one and reducing, in part, the losses caused by the weather in this harvest. Unfortunately, as usual, harvest data is artificially overestimated, with benefit only for buyers and loss for producers and the country.
It is surprising that the producers linked to the 16 state Aprosojas themselves are not consulted by bodies to provide data on the conditions of their crops, at least not this harvest. The truth is that it is very difficult to estimate the productive potential of crops if the technician is not present in the areas, as the productive irregularity due to the climate is very large and its reality will only be revealed by the harvester, and not by mathematical models and images. satellite.
That Brazilian agriculture is a global power, no one has any doubt. But we cannot forget that agricultural production continues to be an “open-air industry”, in which all climate and exchange rate risks fall directly on rural producers in a country where agricultural insurance is very limited.
Besides producers, who else loses from the artificial reduction in soybean prices? Loses local commerce, service providers and the entire population affected by the reduction in circulating money in the regions and the reduction in jobs and work opportunities.
The entire agricultural sector will lose, including the agricultural machinery sector, which will have to deal with a reduction in sales of new machines; animal production, which will see higher feed prices; It even loses the soybean industry itself, which will see a reduction in supply for the following year’s harvest.
With the reduction in the investment capacity of soybean producers, everyone loses. But, mainly, Brazil loses, with the lowest inflow of dollars into the economy. The failure of the Brazilian harvest is a reality. But what is certain is that buyers want prices (and producers) to remain on the ground.
Considering that the price of a bag of soybeans in Brazil was R$ 150.00 last harvest and that this year it is below R$ 100.00 in most of Brazil, with an estimated harvest of 135 million tons, we can say that there has already been a drop of R$112.5 billion in gross production value. And each real less in the price of a bag represents R$2.2 billion less in the country.
Aprosoja Brasil has already forwarded its estimates and proposals to the Government, such as an immediate extension of installments for a minimum of six months, followed by the creation of a special refinancing line for farmers, these being minimum measures to solve the problem.
Structuring solutions include the creation of an income insurance model, more effective than the current policy of interest equalization on rural credit, with equalization going directly to farmers and not to banks and insurance companies as is done today.
Given this scenario, the Government, buyers and harvest financiers need to come to the table to negotiate with producers a new harvest estimate and emergency actions for farmers in difficulties to avoid movements of producers in the capitals and in Brasília, like what we see in other countries, especially in Europe.
See below the most recent estimates for the 2023/2024 Soybean Harvest (in mi/ton)
Safari & Market: 151.3
Soy Sector Chamber (Map): 137
Aprosoja Brazil: 135
*Antonio Galvan is president of the Brazilian Association of Soy Producers