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Agribusiness in Brazil promises record crop figures in 2022Posted 12/08/2022
Considered as a Third World country, Brazil already experienced numerous economic crises over the decades. But one sector in particular stands out for its soundness and business opportunities: the agribusiness industry.
In 2020, when the world was on alert for COVID-19, the country reached record figures in agricultural production (R$470.5 billion, according to IBGE). Therefore, the results evidenced an amazing performance in the segment. Thus, it is important that you, as an investor, get to know more details on the Brazilian agribusiness industry in this article of Europartner, tax accounting firm in Brazil.
Here, we will list a number of reasons for you to invest in agricultural lands in the South American country, considering essential aspects and including crop estimates for 2022.
Importance of agribusiness in Brazil
By understanding agribusiness, an economic sector of huge relevance for developing countries, investors may explore possibilities and find opportunities to generate new businesses.
For example, the soybean market chain in Brazil is highly attractive for foreign companies. While foreign companies hold 60% of the soybean market, Brazilian companies hold only 40% of the whole business.
In addition, participation of Brazilian business groups in the capital-intensive and technology industries is 12.4% only. On the other side, participation reaches 2.4% in the production of seeds.
The participation of Brazilian businessmen in the fertilizer production industry is 4.8% only. In the agrochemical, machinery and agroindustry segments, Brazilian companies hold participation of 0.6%, 0.3% and 4.3% only, respectively.
Indeed, countries like Brazil have an agribusiness-based economy extremely dynamic. This surely drives expansion not only of the agricultural sector, but also that of processing industries.
We must highlight that many changes have been introduced in the Brazilian agribusiness, due to factors like:
- Increasing integration of the country in global economy
- Inflow of large direct foreign investments
- Occurrence of economic interventions by the federal government, which demanded adaptations of the production sector in the country and more investments in technology.
As a result, the agribusiness industry is currently responsible for 52,2% of total Brazilian exports. That is, this sector in the South American country plays the role of being one of the greatest drivers of the local economy. For a more complete understanding of this scenario, check the crop estimates for 2022.
Crop estimates 2022
IBGE, the official statistics agency of Brazil, slowed down two cereal crop estimates, namely for legumes and oleaginous. Thus, a new estimate made in March, indicates that the crop must reach 258.9 million tons by the end of the year.
The production results indicate 1% drop (2.7 million tons less) when compared to the figures of February. But the monthly decline does not affect the annual record of the Brazilian crop, which must hit the mark of 5.7 million tons (2.3%) produced above 2021 figures.
According to the estimates, check the products that presented better performance:
- Wheat crop – 9.6%
- 2nd corn crop – 4.9%
- Cotton crop – 3.7%
- Oat – 3.3%
- Bean crop – 3%
- Sorghum – 0.5%
In addition to high productivity, what draws attention in the country is the availability of agricultural lands for those intending to invest.
Reasons for investing in agricultural lands in Brazil
Agricultural market in Brazil is booming and this is, per se, a good reason to attract investments. However, there are other factors that foster the investment in agricultural lands. Undoubtedly, one of the reasons is the global population growth.
According to the World Bank, there are forecasts for the global population growth of approximately 7.9 billion to 8.8 billion by 2030, and 9.7 billion by 2050. This creates a substantial demand for agricultural products, requiring increased production of products, such as coffee, orange and livestock.
Another aspect that benefits Brazil and the investors in agricultural lands in the region is its geographical location and a mild climate, which allows year-round production. Likewise, it is important to remember that the country has the largest port of Latin America to export products by sea transportation, supported by a wide rail / road network.
Do you intend to invest in Brazilian agribusiness? Look for a tax accountant in Brazil
Europartner is a company specialized in accounting for several segments, including agribusiness. Our team of professionals counts on wide experience in accounting and finance, assisting our clients to open businesses in Brazil.
Therefore, in case you need a tax accountant in Brazil, call Europartner! Our experts can help you to invest in Brazil!Author's post: Europartner Accounting