FecoAgro/RS confirms good performance of agricultural cooperatives in RS

Agricultural cooperatives in Rio Grande do Sul are expected to close 2019 with revenues close to R$25 billion, continuing the growth recorded between 2016 and 2018. Despite the timid moment that the Brazilian economy is experiencing, the cooperative sector continued to advance at levels above other segments of the country and the State, and the expectation is that this growth will continue. The harvest plan has contributed to the investment strategy with more attractive interest rates and conditions. Successive good harvests since 2013/2014, as well as favorable prices for some products, have also helped to improve the cooperative's revenue levels each year.

The Federation of Agricultural Cooperatives of the State of Rio Grande do Sul (FecoAgro/RS) points to a scenario of stability for the agricultural sector at the end of the year. The outlook is for a normal harvest with price sustainability, but still with concerns about the constant rises in production costs that the production sector has been facing in recent years. According to the entity's president, Paulo Pires, while GDP does not show signs of more robust growth, the cooperative sector and its members seek an average increase in productivity in the field and in enterprises that can provide better results in results at the end of the year or harvest. .

In Brazil, economic growth is signaling that it will close 2019 with a GDP of 1%, slightly above the estimated 0,9%. Projections for 2020, in turn, indicate a growth of 2,24% in GDP. According to Pires, the ideal for the resumption of investments is growth of around 3% per year. For Rio Grande do Sul, an increase greater than the national GDP should be confirmed, which could be above 2%. “What can be seen is that the State still faces problems with its finances and continues to look for ways out of the financial crisis. On the other hand, economic sectors are making investments, as is the case with agricultural cooperatives, taking advantage of the opportunities that present themselves in the market”, he states.

For 2020, FecoAgro/RS believes that agricultural production will be greater, if weather conditions are favorable as in the last seven harvests. In Pires' opinion, the main challenge for the cooperative sector and for Rio Grande do Sul and Brazilian agribusiness will be to keep up with innovations in the field, especially in the digital environment. “The moment is one of expectation for better days for next year with the economic recovery, an increase in the search for investments and greater demand in the international market for food, especially animal protein”, he observes.

Agricultural cooperatives believe in the continuity of reforms and their implementation as they are important for resuming the country's economic growth and addressing deficiencies in infrastructure such as roads, ports, railways, energy, logistics, research, among others. The solution to these issues improves competitiveness. According to the director, the agricultural cooperative sector works with a diversity of products, which requires a high demand for financing, due to low profitability and the high risk faced. “On average, the sector works with narrow margins that are between 2% and 4% of the economic movement. This requires efficient management to meet more than 50% of the agricultural production that passes through cooperatives in Rio Grande do Sul.”

The growth of the current summer harvest, comparing the production volume, was 2,4%, according to IBGE data. The planted area increased by 1,81%, reflecting greater productivity gains. On the other hand, the Gross Production Value (VBP) of the main summer crops was R$31,3 billion, meaning an increase of 4,1% compared to the previous cycle. On the winter crops side, there was an increase in the planted area by 5,21%, compared to the previous year. Harvest numbers point to a production volume of 3,1 million tons compared to 2,5 million tons last season, which represented a 26% growth in production volume and 31,9% in VBP.

The costs of forming crops, in turn, were greater than 5% in relation to the last harvest. Some products with lower prices have pressured the results of crops such as rice and wheat. In livestock farming, on the contrary, growth is observed for all protein segments, given China's strong demand for animal protein, which has been generating an upward movement in prices in recent months. Cooperatives with meatpacking plants are taking advantage of this opportunity.