Agro GDP advances in August and accumulates an increase of 8,48% in the year

Brazilian agribusiness GDP grew 1,65% in August, according to calculations by Cepea (Center for Advanced Studies in Applied Economics), Esalq/USP, carried out in partnership with CNA (Confederation of Agriculture and Livestock of Brazil). As a result, in the year to date (until August), agribusiness GDP registered a significant increase of 8,48%, a record performance for the period.

According to Cepea researchers, the highlights are the GDPs of the primary and agro-services segments, which, in 2020, have already increased significantly by 23,03% and 7,28%, respectively.

Agroindustry, the segment of agribusiness most affected by measures related to the pandemic, continued with the least satisfactory result. In this case, after declining in April and May, the GDP of the agro-industrial segment has shown recovery since June – which explains the stability result (-0,09%) recorded in the period from January to August. It is also important to highlight that the difficulties in growing agro-industrial GDP are mainly related to agricultural-based activities. The livestock agroindustry, in turn, has shown growth in the period, driven by higher prices for meat and dairy products compared to 2019.

As for the significant growth in GDP in the primary segment in 2020, Cepea researchers indicate that it reflects, on the supply side, the voluminous production of grains – it is worth remembering that the country produced a record 2019/2020 harvest. Furthermore, the advance is due to the strong rise in real agricultural prices, a result of significant increases in demand, both external and domestic, and the high level of the exchange rate. In the domestic market, public policy instruments aimed at guaranteeing income for those most impacted by the crisis generated by the pandemic have contributed to sustaining demand. As for exports, in addition to growing demand, reinforced by the “China effect”, profitability and competitiveness have been favored by the devaluation of the Real against the dollar.

Cepea researchers conclude that, in general, despite the pandemic having negatively affected agribusiness at different times of the year and particularly specific sectors – such as horticulture, flowers and milk and various agro-industries –, the general performance of GDP has been quite favorable .