RS producers should have lower margins for the next harvest

The consolidation of data collected by the Campo Futuro program panels indicates that the profit margins obtained by producers in the 2020/2021 harvest were historic, but should not be maintained for the next one. The survey is carried out by the Brazilian Agriculture and Livestock Confederation (CNA), in partnership with the Agriculture Federation of the State of Rio Grande do Sul (Farsul) and the Center for Advanced Studies in Applied Economics (Cepea) and carries out survey panels of grain production costs in Rio Grande do Sul.

The work consists of analyzing the information obtained from the productive reality presented by producers. The panels took place in Bagé, Camaquã, Carazinho, Cruz Alta, Tupanciretã, and Uruguaiana for soybean, corn, wheat and rice crops. Farsul economist Ruy Silveira Neto is part of the technical team carrying out the study. "From the results of the panels we saw that costs increased much more than the country's official inflation. However, the trajectory of price increases and the recovery of productivity in the face of last year's drought meant that gross revenue was high and margins were very wide for the 2020/2021 harvest. Currently, we see that costs are following an increasing trajectory, mainly concentrated in the year 2021, while prices are already showing a tendency towards stability. Which could lead, in the future, to the costs begin to converge closer to revenue and margins become increasingly narrow until the next 2022 harvest", he assesses.

In the case of soybeans, the main crop in the state, costs related to inputs had a reduction when comparing the 2019/2020 and 2020/2021 harvests. Even so, seeds registered an increase of 38%. According to Ruy Silveira Neto, this happened because seed values, especially Intact seeds, are related to the exchange rate. Other items also saw a strong increase, such as Mechanical Operations (20%); Interest on Working Capital (14%); Total Operating Cost, which also considers equipment depreciation, for example (13%); General Cost, values ​​related to property administration, accounting, electricity, employee meals (44%); and Shipping (53%). Soybean crops, in total, were 13% more expensive between the two most recent harvests. However, costs continue to accelerate. If in the last case, to cover all costs, a bag of soybeans should be sold for at least R$67,00, currently this value has jumped to R$85,00.

The corn harvest recovered the loss in productivity compared to 2019/2020, but is still far from its potential. "Even though it doesn't have exceptional productivity, it is the crop that best responds in terms of gross margin", comments Ruy Silveira. The main reason is the 72% increase in grain prices. However, production costs continue to rise. Therefore, the minimum value of the bag to cover costs, which was R$34,87 in the last harvest, would have to increase to R$44,47 currently.

Wheat also sees a sharp increase in price, reaching 90% in the 2020/2021 harvest. Costs also increased. In inputs, seeds (35%) and fungicides (38%) drove the increase, along with General Cost (49%). Even so, Ruy Silveira highlights the good moment experienced in the last harvest and the projection for the current one. "It was a historic result, the producer paid all costs and still had a comfortable gross margin. It was the best result in the last decade. The reality has now completely changed. To break even on costs, the producer today needed to sell the bag for R$70,00, 45,00, against R$ XNUMX from the last harvest", he informs.

Rice goes through a similar situation to wheat. "While there is still room for profitability for soybeans and corn, not so much for rice and wheat", assesses the economist. The 2019/2020 harvest had already recorded good results, but the 2020/2021 harvest was much better. "We had record productivity reaching an average of 206 sc/ha in our survey. Prices also followed the same trajectory as other grains, guaranteeing a 52% increase in revenue", he explains.

Costs were also readjusted. Inputs increased by 17%, especially Seeds (29%) and Herbicides (34%); Mechanical Operation, 23%; Harvest Costs, 19%; Shipping, 10%; General Cost 29%. The Total Operating Cost (TOC) of rice was the one that increased the most, with 21%. Irrigation values ​​grew by 32%, bringing its costs closer to the total value of inputs in absolute values. "The big problem with rice is that it has changed from wine to water. The tendency is for good margins not to be repeated. To cover costs, the bag that should previously have been sold for R$ 44,31, now cannot be below R$ 65,87", he analyzes.

The Campo Futuro project also carried out a survey of the costs of dairy and beef farming. The data has already been compiled and is in the final stages. The last fruit growing survey had taken place in 2017.