Agribusiness GDP continues to fall in the second quarter, accumulating a 3,5% decline in 2024

The Gross Domestic Product (GDP) of Brazilian agribusiness, calculated by the Center for Advanced Studies in Applied Economics (Cepea), at Esalq/USP, in partnership with the Brazilian Confederation of Agriculture and Livestock (CNA), fell 1,28% in the second quarter of 2024, accumulating a drop of 3,50% in the year.

Among the segments of the sector, when comparing the first two quarters of 2024, GDP registered a decline for inputs (-2,68%), for the primary segment (-1,77%), for agribusiness (-0,62%) and for agribusiness services (-1,15%). The performances of the segments were impacted by the reduction in the gross value of production, which in turn was pressured mainly by the fall in prices and, in some cases, by the lower production expected for the year, as occurred with agricultural inputs and agricultural primary products.

Finally, the results of agribusiness services (-2,74%) in the first half of 2024 were due to the reduction in agricultural-based agribusiness services (-5,39%), given the growth in livestock-based agribusiness services (3,78%). In the agricultural sector, the accumulated drop in the semester reflects the behavior of the other segments, especially inputs and primary products. In the livestock sector, the accumulated growth in the semester (3,78%) was due to the higher production expected for the year in the upstream segments, inside and outside the farm gate.

Considering the performance of agribusiness, its branches and segments in the first two quarters, Table 3 presents the estimates for the annual monetary values ​​of GDP in 2024. Based on this partial performance, the GDP of Brazilian agribusiness could reach R$2,50 trillion in 2024, with R$1,74 trillion in the agricultural sector and R$759,82 billion in the livestock sector (at prices for the second quarter of 2024). Considering this projection and the behavior of Brazilian GDP in the period, it is estimated that the sector's share in the economy will be close to 21,8% in 2024, below the 24,0% recorded in 2023.

Inputs segment: GDP of the segment influences drop in the second quarter

In the second quarter of 2024, the GDP of the agribusiness inputs segment fell by 2,68% (Table 2). In the year to date, the drop was 8,13% (Table 1). The result reflects the performance of the activities of fertilizers and soil amendments, pesticides, agricultural machinery and feed, whose dynamics are shown in Figure 1.

The projection for the fertilizer and soil amendment industry points to a 16,87% reduction in the gross value of annual production, resulting from a 16,99% drop in real product prices, when comparing the average values ​​for the first half of 2024 with those of 2023. In contrast, annual production is expected to register a slight increase of 0,14%, suggesting stability. In 2022, fertilizer prices reached record levels, due to the suspension of exports of important inputs for fertilizer production – such as potassium, nitrogen and phosphorus – in view of the sanctions to which Russia, one of the world's main suppliers of these products, was subject. However, the resumption of Russian exports contributed, at least in part, to the curb in prices, given the expansion of global supply.

It is important to highlight that, although not yet reflected in the results presented in this report, which uses data up to the first half of the year, the increase in geopolitical tensions in the Middle East is already driving up fertilizer prices, as it increases the risk of interruptions in the supply of essential products, such as urea and potassium chloride. This movement should be reflected in the next Agribusiness GDP reports. In the domestic scenario, other factors are also putting pressure on prices, such as the slower pace of purchases by farmers. For example, a survey by the Agricultural Costs/Cepea team shows that, by the end of the first half of the year, just over 70% of the fertilizers used in Brazil's main producing regions had been purchased, compared to around 80% in 2021 and 2022. Furthermore, the devaluation of grains and the Real against the dollar contributed to this performance.