2023 brings positive expectations for agribusiness in São Paulo

In the last 2 years, agribusiness has gone through an increase in costs with the crisis of inputs resulting from the pandemic period associated with climate issues and the problems caused by the war in Ukraine, says Carlos Nábil Ghobril, coordinator of the São Paulo Agribusiness Technology Agency ( APTA).

According to the coordinator, estimates indicate that in 2023 there should be a reversal of these trends. The agribusiness sector has a favorable scenario in international trade, especially with China and the European Union, which strengthens with the environmental issue and the conservation of natural resources.

“Data from the Institute of Agricultural Economics (IEA) indicate that in the first 5 months of 2023, compared to the same period last year, exports grew by more than 7% — which results in a balance of trade in agribusiness positive by 8 billion dollars in these first 5 months”, he explains.

Nábil says that this result is relevant, as it indicates an overcoming of the 2022 result, which had shown a growth of 40% compared to 2021. Allied to this optimism, the government announced last week the Crop Plan 2023/2024 — worth more than 364 billion reais. Public investment fundamental for the development of the sector”.

The coordinator expresses that despite the positive expectations, there are some concerns in the sector, such as the climate issue, which can be decisive with the influence of the La Niña phenomenon, which causes periods of drought and a hotter summer. In addition to climate challenges, profit margins are also a concern, as high production costs can reduce margins.

“On the international scene, the uncertainties caused by Russia’s war in Ukraine raise doubts about the global availability of grains and inputs. In Brazil, the concern lies with the implementation of fiscal policy, mainly in tax matters, in addition to the expectation about the high levels of the Selic rate, which raise the cost of credit”, he comments.

The coordinator assesses that the agencies still differ in the projections for the coming months, but all indicate growth in Brazilian agribusiness. The National Confederation of Agriculture (CNA) indicates growth of 2.5%, while the Brazilian Institute of Economics at FGV estimates 8% and the Institute for Applied Economic Research (IPEA) projects an increase of almost 11%.

Nábil points out that, with the increase in growth projections for the Brazilian economy, the drop in inflation and the prospect of a drop in interest rates, there is a favorable outlook for agribusiness in São Paulo. The sector’s representation in the state’s Gross Domestic Product (GDP) has varied in recent years, from 12% to 15%. Regarding exports, agribusiness represents about 37% of all that is exported by the state of São Paulo.

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By Brasil 61