Coronavirus crisis affects Brazilian exports and imports of vegetables

Brazil produces around 20 million tons of vegetables annually, almost all of which is destined for domestic consumption. Thus, unlike the commodities (soy, corn, coffee, sugar, meat, etc.) that we export, the external vegetable market in Brazil is restricted to a few countries and to a few species, especially melon and watermelon, conventionally called fruits, but categorized as vegetables due to their short cycle and because they are herbaceous plants. Products such as pumpkin, sweet potatoes, ginger, yams and pepper derivatives, among others, are also exported, but in smaller quantities and values. Regarding imports, some vegetables, such as garlic, potatoes, onions and leguminous vegetables called pulse (peas, lentils and chickpeas) have been the most important.

The pandemic caused by the new coronavirus has generated a huge crisis in different aspects of production chains, including the marketing of agricultural products. It is not known how long this crisis will last and, therefore, we cannot accurately predict or determine the extent of the consequences. It is true that, in a short period, some implications for the transport and marketing of products have already been noticed, with losses to producers, industries and traders of vegetable products. In this article, we will discuss the panorama of Brazilian exports and imports of the main vegetables sold by the country.

In 2019, Brazil exported around 251,6 thousand tons of melon fresh (yellow and noble types) worth US$ 160,3 million, and 102,9 thousand tons of watermelon fresh (like baby, without seeds) worth US$43,8 million, mainly to the Netherlands, Spain and the United Kingdom. As we are in the off-season, the export of melon and watermelon, at the moment, is practically zero. However, in the period from May to August, internal production in Europe, mainly in Spain, is expected to be reduced due to the lack of labor, mainly among African immigrants, due to the coronavirus crisis. This could be, to a certain extent, advantageous for Brazil, as there should be an increase in exports to European countries in the second half of 2020. Planting, in the middle of the year, in the states of Ceará and Rio Grande do Norte - main hubs producers in Brazil - to meet exports from August onwards is still uncertain, as European buyers are waiting for the negotiation process to begin, which should take place next May. On the other hand, in relation to internal consumption, vegetables such as melon and watermelon have greater durability (shelf life) after harvest, both in the market and at home, when compared to other fruits; and at a time when people are shopping less, this undoubtedly becomes an important attribute and advantage for these vegetables.

Although without an in-depth analysis of the foreign market in relation to the new coronavirus, it is important to mention that Brazil has exported other vegetables, but in lower volumes and values ​​when compared, for example, with melon and watermelon. Thus, in 2019, Brazil exported 22 thousand tons of ginger at a value of US$22,1 million, mainly for Europe, Argentina, USA and Russia. O yam is another product to be considered in the export agenda, and, last year, the country exported 5,6 thousand tons at a value of US$6,2 million, mainly to the USA and Europe. Products derived from chili (dry or powder) were exported mainly to Germany and last year reached a volume of 2,2 tons, representing a value of US$ 4,5 million. Already the sweet potato, exported mainly to Europe and Argentina, reached, in 2019, a volume of 8,8 thousand tons at a price of US$4,4 million, while pumpkin It was also exported that same year to countries in Europe and Argentina in a volume of 7,4 tons and a value of US$2,4 million. Thus, Brazil's export value in 2019, with these five products - ginger, pepper, yam, sweet potato and pumpkin - reached US$39,6 million.

With regard to movements in the context of vegetable imports, Brazil produces approximately 45% of the garlic which is consumed internally. This important product of our cuisine is imported mainly from Argentina and China, totaling, in 2019 alone, around 165,5 thousand tons at a value of US$225 million, which is equivalent to 55% of the annual need. The garlic we are consuming in Brazil at the moment is from national stock (stored garlic) or coming from Argentina, a country that should maintain garlic exports for the next two months. Garlic from China should also arrive in the coming months. The shipment of garlic to Brazil from these two countries this year was delayed due to the closure of packaging houses (packing houses) in Argentina and problems loading the product in China, right at the beginning of the new coronavirus pandemic. The problems observed in these two main exporting countries, together with the rise in the dollar, led to a higher selling price of the product on the national market, which will certainly remain high, at least in the short term, and could influence domestic consumption.

Concerning potato, Brazil mainly imports the product in pre-fried frozen form. In 2019, the country imported 340,5 thousand tons worth US$321,1 million, which is equivalent to around 60% of the volume of frozen pre-fried potatoes consumed annually in the country. Of this imported volume, around 57% originated in Argentina, although Belgium and the Netherlands are also important suppliers of processed potatoes. With the start of the pandemic and the closure of restaurants, especially chains fast food, in which the consumption of French fries is greater, imports from Argentina were reduced. Argentine producers, for example, were encouraged to place their fresh potatoes on the domestic market, as industries stopped or closed their activities, refusing the product for processing.

According to information provided by the Center for Advanced Studies in Applied Economics (CEPEA-Esalq/USP), the need for social isolation implemented in most Brazilian municipalities, as a result of Covid-19, has negatively impacted Brazilian demand for onions. The country produces a large part of the onion consumed, although there may be occasional imports, depending on the balance between domestic demand and supply. In 2019, the country imported 211,5 thousand tons of onion fresh (in natura), mainly from Argentina (71% of the total), but also from countries such as the Netherlands, Spain and Chile. In a normal situation of high prices for Brazilian onions, Argentine onions should be entering the country in greater volume. However, the need for social isolation imposed in the neighboring country, with repercussions on activities in the field, especially with regard to labor mobility, and in product processing, classification and packaging units, has reduced trade between two countries, even with the attractive price.

With the end of the Santa Catarina onion harvest approaching and until onions from the Southeast and Central-West regions begin to be offered, Argentine onions should be responsible for supplying the Brazilian market. In any case, it is expected that the export of Argentine onions to Brazil will remain restricted, as a result of measures adopted by the neighboring country to avoid crowds of people. The expectation is that the volume of Argentine onions exported to Brazil in 2020 will be lower than that of 2019. Despite a lower domestic demand for the product compared to previous years, due to Covid-19, the expectation is for price increases of onions until the 2020 harvest in the Southeast, Central-West and Northeast begins to supply the domestic market.

With regard to leguminous vegetables or pulse (peas, lentils and chickpeas), Brazil has been a traditional importer. In 2019, we imported around 30,5 thousand tons of dry peas, 14,4 thousand tons of lentils and 7,2 thousand tons of chickpeas, which represented values ​​of US$ 14 million, US$ 7,6 million and US$6 million, respectively. Demand in the domestic and foreign markets for these products is overheated, although there is an increase in the price of imported products due to the rise in the dollar. Dried peas, destined for the rehydration industry, or split peas have been imported mainly from Argentina (68% of the total) and Canada. As with garlic and onions, measures imposed by the Argentine government have made the transport of these products difficult.

Almost all of the lentils imported by Brazil come from Canada, and volumes are being sold normally. Lentil production in Argentina in 2019 was very low. Chickpeas, imported mainly from Mexico (57% of the total) and Argentina, had, in 2019, a reduction of around 20% in imports compared to the previous year, and this import volume is expected to decrease in 2020 due to the increase in national production. It is worth mentioning that chickpeas on the international market have uncompetitive prices. Therefore, the supply of these grains is normal, with no apparent losses on imports as a result of the pandemic.

Regardless of the consequences on the production and marketing of vegetable products in Brazil, caused by the coronavirus pandemic, the time seems to have come for the various actors in the vegetable value chains to join forces (research, teaching, extension, producers, input companies, government and others) in order to enable the competitive and sustainable production of these crops in the country, mainly so that the sector is competitive compared to the countries from which we import. This increase in competitiveness undoubtedly depends on a series of factors, including promotion (including credit) of production, implementation of public policies and other guidelines, and promotion of regulatory frameworks. On the other hand, dependence on imports and the vulnerability of the national productive sector arise from several factors, such as protectionism (e.g. garlic), lower competitiveness (e.g. potatoes), bilateral agreements (e.g. onions), lack of interest from importing companies in the promotion and/or lower cost of the imported product (e.g. pulse).

The crisis caused by the new coronavirus pandemic has alerted countries dependent on food imports of the risk that this dependence can bring to national food security, making it necessary to review the internal supply of these important vegetable crops. The country has technology, climate conditions favorable to production for most of the year, depending on the region, abundant natural resources, availability of labor, entrepreneurship of its rural producers and other structures to promote national production without the need to annually resort to imports of such products.

On the other hand, trying to follow the path of commodities - where the country is one of the largest exporters - or even of some fruits, we must seek new markets (emerging and/or alternative countries) and expand our range of vegetable exports. This can be done by organizing the sector through cooperatives, or by greater professionalization of producers, and also by improving the management of rural entrepreneurs, thus generating greater competitiveness of our product in relation to other competing countries.

Furthermore, it is also necessary to encourage and/or observe compliance with international standards and the prerequisites of good practices and quality in relation to exports; the implementation of greater mechanization and automation of different agricultural activities; increasing connectivity on rural properties, aiming at the use of digital technologies; the intensification of the cold chain and logistics; among other aspects. Without a doubt, the opening of new markets and products will not only increase the income of producers and companies, but will also significantly improve, “by scale”, the quality of the product offered internally in the country. Finally, the new coronavirus, declared a pandemic by the World Health Organization (WHO), is a great opportunity for the government, companies, producers and society in general to rethink their actions and their form of organization in search of alternative paths . Times of crisis are conducive to identifying new opportunities, and going further, innovating and seeking new experiences.