Brazilian agribusiness is expected to grow by 1.9% in GDP-volume in 2018, according to data from January to May 2018, analyzed by Cepea (Center for Advanced Studies in Applied Economics), Esalq / USP, in partnership with CNA of Agriculture and Livestock of Brazil), and released on Monday (20).
According to researchers from Cepea, the upward trend in agribusiness for the year was reduced compared to the previous report (first four months), mainly due to the lower estimated growth for the agroindustry in 2018.
In general, Brazilian agroindustry has evolved since the second half of 2017. However, researchers from Cepea indicate that, as the Brazilian economy shows very modest signs of recovery – lower than market expectations in early 2018 – the agribusiness reaction ends up being limited.
As for the relative prices of agribusiness, which allows an evaluation of the income of the sector, current estimates point to a loss of 8.4%, indicating that the products of the sector are depreciating against the average of the Brazilian economy.
Freight table
Researchers at Cepea point out that the resilience of a scenario of agribusiness prices below the Brazilian economy average and the pressure on costs – this originated from the freight tariff policy – can bring down the income of the sector.
According to Cepea’s calculations, based on IBGE’s input-output matrix, agribusiness is the sector most vulnerable to freight tariffs in the Brazilian economy, given the possibility of rising costs and inefficiencies in pricing, since it consumes about 42% of all transportation services in the country.
Thus, the impact of the implementation of freight tariffs should fall directly on the Brazilian population, since, as it tends to reduce the price to the rural producer, it results in increases of values in the retail. As agribusiness is the sector potentially most vulnerable to politics, the high weight of food and beverages in the Brazilian consumer basket (approximately 25% of the IPCA) and the fact that, inevitably, the burden of the policy ends up being shared with the consumer final results show the possible negative impact on the welfare of the lower income population in the country.
This text was translated by machine from Brazilian Portuguese.