Rising production costs put pressure on GDP, which fell 0,16% in OCT/18

Brazilian Agribusiness GDP fell 0,16% in October/18, according to research by Cepea (Center for Advanced Studies in Applied Economics), Esalq/USP, in partnership with CNA (Confederation of Agriculture and Livestock of Brazil). From January to October, the scenario remained negative for the sector's income, with a drop of 0,62%. The pressure continues to come from the livestock sector.

According to Cepea/CNA researchers, the negative performance of income generated in agribusiness in 2018 is linked to the increase in production costs in the primary agricultural and livestock segments and the declines mainly related to demand seen in various activities in the livestock sector.

According to surveys by Cepea/CNA, the livestock sector recorded a drop of 1,18% in October, while the agricultural sector grew 0,26% in the month. In the year (from January to October), movements are in the same direction, with a decline of 10,90% for livestock and an increase of 3,85% for agriculture.

In the livestock sector, weakened domestic demand and the closure of important foreign markets for meat – beef, pork and poultry – from Brazil influenced prices more intensely throughout the year. However, the trade dispute between China and the United States, in addition to the exchange rate favorable to increasing the competitiveness of Brazilian protein in the foreign market, has had favorable effects on Brazilian meat exports since September, notably destined for Asian markets, which resulted in some support October prices (accumulated, however, the result remains negative). The primary segment of the livestock sector also suffered impacts from the increase in production costs, with emphasis on the increase in the price of corn in the period. 

As for the agricultural sector, despite the recovery in prices throughout 2018, the expected increase in production and the increase in costs, with emphasis on the prices of fertilizers and diesel, still keep the primary segment with low income for the year. 

GDP-VOLUME – Projections for 2018 of agribusiness GDP-volume, calculated using the constant price criterion, continue to point to growth in all segments. Agribusiness GDP-volume is expected to grow 2,21% in 2018, with increases of 5,31% for inputs, 0,97% for the primary segment, 2,33% for agroindustry and 2,56% for agroservices.