Last week, the Wheat Industry Union of the State of São Paulo (Sindustrigo) held the 9th Meeting of the Wheat Production Chain of São Paulo. Within the Noble Space of the Federation of Industries of the State of São Paulo (Fiesp), in the capital of São Paulo, the meeting, which was also broadcast online, brought together experts and professionals from the sector to discuss trends, transformations and challenges in the cereal chain.
The president of Sindustrigo, John Carlos Verissimo (pictured below), addressed the "tax war" between wheat-producing states, which, due to tax incentives such as the reduction of ICMS, have become more competitive in relation to the industry in São Paulo. He emphasized that this tax disadvantage needs to be corrected so that mills in São Paulo can compete fairly.
The Executive Secretary of Agriculture and Supply of the State of São Paulo, Edson Alves Fernandes (pictured below), was also present at the meeting and commented on these tax issues. “Paraná mills 2,5 million tons of wheat per year, but only 1 million tons is consumed domestically, while the rest enters the state of São Paulo, creating unfair competition,” he said, reinforcing the state government’s commitment to resolving these tax disparities, as well as reinforcing the support of Governor Tarcísio de Freitas and Secretary Guilherme Piae in working on solutions that attract more investment to the state, generating jobs and increasing São Paulo’s participation in the national wheat production and processing scenario.
"The year 2024 was very difficult for the entire wheat chain, we had the tragedy in Rio Grande do Sul, climatic factors in Paraná, and there was a significant reduction in national production and in the Argentine market, which made life difficult for the industry in Brazil", said, in his speech, the executive president of the Brazilian Wheat Association (Abitrigo), Rubens Barbosa (in the photo below).
Despite the difficulties in 2024, the CEO stressed that there is an outlook for improvement next year, with a larger harvest in 2025, although there was a drop in production in São Paulo. "The wheat sector, especially with the increase in production and the work that Embrapa is doing in researching new production areas, is essential for the future of the industry," he concluded.
The chief economist of Banco Itaú, Mario Mesquita (pictured below), highlighted during the panel "Brazilian Economic Scenario" the importance of looking at the country in a macro context, as the country is connected to the global economy. "Brazil is not an island. We had post-pandemic global inflation, and although it is falling, the process is heterogeneous. The prices of raw materials fell faster than services," he said.
Speaking about the prospects for global growth, Mesquita pointed out that global GDP is expected to grow by 3% in 2023 and increase to 3,4% in 2024, and that this represents a recovery, but is still below the 3st century average. "As for Brazilian GDP, it is surprisingly positive. Initially, we expected lower growth, but today we are projecting something between 3,5% and XNUMX%," he said.
Mesquita also highlighted the growth of investments in Brazil, which are at historically high levels. And speaking about the exchange rate, he mentioned that the real has followed global movements, but that the Brazilian currency is depreciating more than other emerging market currencies. He believes that the real may appreciate slightly by the end of 2024.
Finally, Mesquita summarized the economic projections, indicating that GDP should grow 2% in 2024, with an upward bias. “The unemployment rate should continue to fall, and inflation tends to fall slowly,” he summarized.
The international grain scenario was among the main topics addressed by the economist and head of the Wheat Market Analysis Department, Elcio Bento (pictured below). He addressed the possibility of a good harvest in Argentina, but highlighted the climate uncertainty that could affect this forecast and stressed the lack of predictability, which makes Argentine wheat prices high compared to North American ones.
He also described a complicated scenario for wheat production in Brazil in 2024, especially in Paraná and Rio Grande do Sul. "Two strong frosts in August, at very sensitive times, practically devastated production in Paraná. In the case of Rio Grande do Sul and Santa Catarina, so far, these states are experiencing good crop development, but heavy rains are forecast, which could compromise production," he summarized.
The economist also highlighted the drop in wheat stocks in Brazil and the need for imports to balance domestic supply. "Last year, we saw a drop from 11,3 to 8,5 million tons. This caused stocks to plummet from 1,9 million to 658 thousand tons. For the next season, a significant increase in imports is expected, especially with the reduction in domestic production," he explained to the audience, reinforcing that Brazilian states depend on imports to meet domestic demand for wheat and flour.
In addition to the debate involving the wheat production chain, invited experts reinforced the need for an in-depth understanding of the consumer market to ensure the competitiveness of the local industry.
In the panel "Global consumption trends and applicability in the Brazilian market", the Director of Sales for New Businesses for Latin America at Nielsen/NielsenIQ, Claudio Czarnobai (in the photo below), pointed out that the self-service channel (cash & carry) is standing out in the growth of retail, offering an improved customer experience with the modernization of stores and the customization of offers for different regions.
He also explained that Generation Z is shaping consumer behavior, influencing family purchasing decisions and seeking detailed information about products and prices. Although they do not yet have great purchasing power, they will be decisive in the future. “In ten years, they will be the main decision makers when it comes to purchasing,” he summarized.
The Marketing coordinator at Prozyn Biosolutions, Julia Browne (in the photo below), also mentioned during the same panel, that the Brazilian consumer is cautious, prioritizing basic foods due to economic uncertainties.
Julia also mentioned during the same panel that today's consumer is increasingly aware and concerned about issues of sustainability, health and well-being. This generates a growing demand for products that offer functional benefits and are environmentally responsible.
Furthermore, she noted that personalization of consumption is on the rise, with companies needing to adapt their products to meet the specific needs of different market niches. "Global consumer trends point to a more informed and demanding consumer, seeking not only quality and price, but also sustainability and functional benefits in the products they consume. Adapting to these changes is essential for brands to remain relevant and competitive in the market," she recommended.
The president of Sindustrigo, João Carlos Veríssimo, highlighted the importance of understanding consumer trends and changes in customer habits. “It is essential that industries adapt to these new demands in order to keep up with market developments,” he concluded.
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