In 2008, agriculture industry in Brazil grew 1.8%, a figure below the one of 2007 (5.0%,) and lower than the national average of industry in the year (3.1%). The expansion of subsectors related to agriculture (0.8%), which were more significant to agriculture industry, was below the rate observed in the subsectors related to livestock (1.6%). The group insecticides, herbicides and other substances for use in agriculture had strong increase (20.5%), affected, mainly, by the increase in the production of soybeans, sugarcane and corn, crops which usually make use of these inputs. Wood faced decrease of 27.7%, being affected by the reduction of exports. On a  quarterly basis, after increasing by 6.1% in the first quarter, agriculture industry decelerated in the two following quarters (2.6% and 2.4%) and had a quite opposite result in the fourth quarter (-3.1%). The decrease of dynamism in the last quarter, affected by the change in the world economic scenario, caused a lower demand for the main exported agricultural products. In the first nine months of the year, the positive performance of agricultural industry was stimulated by the increase of harvests, by bigger consumption in the internal market due to the rise of family income and by the increase of exports of some items. 

The annual result of agriculture was positively affected by the favorable climactic conditions throughout the year and by the bigger use of chemical substances in agriculture, which contributed to the increase of productivity and production¹. According to data in the Systematic Survey of Agricultural Production (LSPA), the grain harvest in 2008 reached a record production of 145.8 million tons of grains, a result 9.5% above that of 2007 (133.1 million metric tons), being the highlight the production of soybeans, of rice, corn, milk and rice, which account for about 90% of the harvest.

Exports also contributed to the positive result of agriculture industry. According to data of the Secretariat of Foreign Trade - SECEX/MDIC, in 2008, the exported volume of the main agricultural products changed as follows: poultry pieces and giblets (4.9%), poultry meat not cut into pieces (14.5%), alcohol (47.2%), sugar (9.5%) and cellulose (8.6%). On the other hand, there were negative results for frozen beef (-16.1%), frozen pork (-13.4%), tobacco (-7.6%) and frozen orange juice (-20.2%). Considering soybeans, the exports of grains (3.3%) and crude soybean oil (2.9%) increased, whereas bagasse and other residues of soybean oil extraction (-1.5%) decreased. It is worth mentioning that the revenue obtained from exports of soybean derivatives, due to the rise of international prices compared to 2007, increased by respectively, 63.2%, 62.4% and 47.5%.

Industrial Products from Agriculture 

It is worth mentioning that this oilseed is used as an input for the production of biodiesel. The increase of sugarcane derivatives (2.5%) can be seen as a result of the redirecting of harvests to the alcohol production, which increased 11.2%, once the production of crystallized sugar decreased 6.0%. The production of alcohol was stimulated by a higher internal demand, which occurred due to the increase of bio-fuel vehicles and to the increment of exports (47.2%)², in order to supply the need of alcohol as an alternative to petroleum as a fuel. Other positive impacts came from cellulose (8.4%), a product with strong external demand, rice (11.0%), a typically product for domestic consumption, and corn (3.9%), a basic input for the production of animal food for fowl and hogs and pigs. On the other hand, there were decreases in tobacco (-6.6%) and oranges (-17.3%), affected by the reduction of exports (7.6% and 20.2%)³, respectively), and in wheat (-12.0%).

Industrial Products used in Agriculture 

The subsectors of industrial products used in agriculture had an increment of 2.1%, stimulated by the increase in the production of agricultural machinery and equipment (35.4%), once manure and fertilizers decreased 12.2%. The good performance of agricultural machinery and equipment was influenced by the rise of agricultural income, due to the high prices of agricultural commodities until the first semester of 2008, and to the record grain harvest of 2007. As a consequence, agricultural producers could invest in machinery and equipment, fundamental items for the rise of agricultural productivity. It is worth mentioning that exports were also relevant to the growth of this sector, as shown by statistics of the National Association of Vehicle Manufacturers (ANFAVEA). According to this source, the amount of harvesting machines and tractors exported increased by, respectively, 28.2% and 14.6%.

Industrial Products from livestock

The subsector of industrial products generated by livestock grew 1.5%. Poultry derivatives grew 5.4%, affected by the exports to Asia and the European Union. Derivatives of cattle and hogs and pigs livestock fell 2.8% due to the decrease of exports after the embargo imposed by the European Union, because of the accusation of lack of sanitary conditions. The production of milk, a product directed to the internal market, increased 1.6%, whereas the production of rawhide and leather decreased by 1.1%. 

Industrial Products used in Livestock

The subsector of industrial products used by livestock grew 2.0%, with increase of 3.0% of the group animal food, and 2.9% of veterinary products.

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¹ According to data from the Systematic Survey of Agricultural Production

² According to data from SECEX/MDIC

² Source: SECEX/MDIC