Good performance of agricultural production and favorable foreign scenario increased annual rate.

In 2007, the Brazilian agriculture industry increased 5.0%, a result considerably above the one recorded in 2006 (1.5%), however, below the rate of 6.0% registered by the national industry.  The expansion of sectors related to agriculture (4.9%), with major participation in the agriculture industry, surpassed the ones related to livestock (2.8%).  The group of insecticides, herbicides and other agricultural pesticides had a strong increase (22.6%), due mainly, to their major use in the crops of soybeans, sugar cane, corn and cotton.  The segment of wood decreased 6.1%. 

In quarterly basis, the agriculture industry had positive results in the four periods of 2007. After growing 6.9% in the first quarter, decelerated in the second quarter (3.3%) and in the third quarter (1.8%), returning to show a good dynamism in the fourth quarter (9.3%).

The good performance of agriculture occurred as a consequence of the good climatic conditions and to the increase of use of adobes and fertilizers and agriculture pesticides, which contributed to the record grain harvest of 2007.  According to data of the Systematic Survey of Agricultural Production (LSPA), the harvest of 2007 was 133.0 million tons of grains, a result 13.7% greater than the one of 2006 (117.0 million tons), and 7.0% major than the record harvest of 2003 (124.3 million tons).

The world growth of food consumption, influenced by the good performance of the economies of the developing countries; the use of agricultural products for the production of fuel; the elevation of international prices of commodities ; and the growing insertion abroad of Brazilian agricultural products contributed for the increase of exports.  According to statistics of the Bureau of Foreign Trade (SECEX/MDIC), in 2007, the volume exported of the main products of agriculture industry had the following changes: frozen cattle meat (4.9%), poultry pluck, giblets and meats (12.6%), meat of hens and roosters not cut in pieces (23.0%), frozen pork meats (22.2%), alcohol (11.4%), sugar cane (-2.8%), cellulose (5.3%) and frozen orange juice (0.4%).  Regarding soybean products, the export of grains fell 4.9%, while bagasses and other residuals of the extraction of soybean oil (1.1%) and crude soybean oil (1.5%) increased.  It is also worth mentioning that the revenues with exports of these soybean products increased, respectively, 18.4%, 22.2% and 47.4%.

Industrial Agricultural Products

The sector of industrial agricultural products increased 3.5%, with positive results in six among eight surveyed sub-sectors. The good performance of soybean products (5.5%) and corn (12.9%) may be explained by the growth of their harvest and the good quotations, due to a greater domestic and foreign demand, since these grains are basic inputs in the productions of poultry and pork rations.  In the case of corn, the price increase is a consequence of the reduction of exports from the United States, with a harvest being directed to the production of ethanol.  The sugar cane products (6.4%) were influenced by the increase of alcohol exports (11.4%), due not only to the world concern in the use of alcohol, as an alternative fuel to petroleum, but mainly due to the major domestic consumption, as a consequence of the increase in the number of automobiles with bi-fuel motor.  Other positive contributions came from cellulose (4.1%) and orange (13.0%), influenced by the exports, and rice (1.3%), a product directed to the domestic market.  On the other hand, tobacco (-4.7%) and wheat (-5.8%) were the only decreases.

Industrial Products Used by Agriculture

The sector of industrial products used by agriculture showed increase of 15.1%, due to the increase in the production of adobes and fertilizers (4.8%) and machines and equipment (49.3%).  This good performance was influenced by a low base of comparison and by the growth of the agricultural income, as a consequence of good prices of commercialization of the record harvest of grains in 2007.  The hike of the agricultural income enabled the investment in agricultural machines and equipment and the purchase of adobes and fertilizers, which contributed to the increase of the agricultural productivity.  The exports also had participation in the growth of the sector, since according to data from the National Association of the Manufacturers of Automotive Vehicles (ANFAVEA), the quantity exported of wheel trucks and combine harvesters increased, respectively, 21.4% and 49.1%.

Industrial Livestock Products 

The sector of industrial livestock products increased 2.0%.  The cattle and pork products increased 3.2%, influenced by the domestic demand and by Brazilian exports to more than 100 countries, especially Russia, European Union and Arab countries.  The foreign sector, influenced by good international prices, also contributed for the increase of poultry products (7.1%).  The main importing regions of pullet meat were the European Union and Asia, besides the countries of the Middle East.  On the other hand, there was decrease in the production of leather and furs(-2.0%) and milk (-6.2%), this last one influenced  by the increase of production costs and by the drought which damaged the formation of pastures for cattle in important producing states, such as Minas Gerais, Goiás and São Paulo.

Industrial Products Used in Livestock

The sector of industrial products used in livestock increased 5.8%.  The group rations, which has a significant participation, increased 7.2%, due to the production of cattle, pork and pullet meat, while veterinary products had a negative change of 0.6%.

In summary, the good performance of agriculture industry in 2007 (5.0%) was related to the growth of the agricultural production, to the major consumption of the domestic market (due to the expansion of the income), and to a favorable foreign conjuncture of the sector, with growth of the exported volume and prices.  These factors contributed for the increase of the income of the sector, and caused the increase of the production of inputs such as adobes and fertilizers (4.8%) rations (7.2%), and agricultural equipment (49.3%).  The year of 2007 brought a significant recovery of some sectors of agriculture industry, being that the main one was machines and equipment which changed from a decrease of 16.7% in 2006 to an increase of 49.3% in 2007. It is also worth mentioning agricultural pesticides (from -8.7% to 22.6%), livestock products (from -0.7% to 2.0%) and products used by livestock (from -1.5% to 5.8%).