South America Calling

Brazilian Agriculture To Outpace Wider Economy In 2014

Brazilian agriculture is expected to considerably outperform the wider economy in 2014.

The gross product of the farm sector will total R$456 billion ($204 billion) in 2014, up 6.3% on the year before, according to the Brazilian Agriculture Confederation (CNA), while a central bank survey of economists predicts the Brazilian economy as a whole will grow by just 2%.

Farm revenues will grow despite dry summer weather, which caused significant losses to key crops such as soybeans, sugarcane and coffee.

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Driving farm growth is soybeans, which will see production rise 10% to R$96 billion, according to CNA.

Agricultural production represents a little under 10% of the whole Brazilian economy and its strong performance is important at a time when consumption and industrial production is lagging.

Indeed, the importance of farming, especially in propping up the trade balance, has led the government of President Dilma Rousseff to offer greater support to the sector than previous administrations, most notably through initiatives to improve rural and port infrastructure and the support of a new farmer-friendly forestry code.

However, the public image of farming remains generally negative. Agriculture is not associated with development and is often linked in the public's mind to the devastation of the environment.

As such, it remains susceptible to attacks, a perfect example being the recent attempt to levy a 9.25% tax on soybean sales and exports. The farm lobby in Congress managed to defeat the proposal but the threat remains that it may be revived.

At the end of the day, farmers make up a small portion of the population and that is important in a presidential election year.

(AG)

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