Current business environment and expectations for business development of Brazilian farmers mediocre
By DLG
Dairy cattle farmers are is a phase of low milk prices. After a price peak in the first half of 2017, the milk prices for the Brazilian producers dropped considerably in the second half of 2017. At the same time, the costs for feed and labour increased, resulting in milk producers tending to be dissatisfied with the current business environment.
Cash crop producers are considerably more satisfied. Soy exports are on a continuing high level and have led to good economic results. The continuing high demand for soy on the world market results in continually increasing cultivation areas. Nevertheless, 12.5 percent of the surveyed cash crop producers evaluate the current business environment as poor. For some regions the maize harvest as a second harvest was unprofitable. This concerned both the two previous and the upcoming harvests.
Poultry farmers are on average satisfied with the current business environment. Prices dropped in the first quarter of 2018 due to seasonal influences. However, prices are also 21 percent lower compared to the first quarter of 2017. For international trading with poultry meat is currently slowly growing and results in price pressure.
Expectations for business development: Mixed prospects for Brazil’s farmers
The expectations of milk producers is marked by considerable scepticism. For in addition to the price drop in the second half of 2017, the costs of milk production have risen, putting pressure on the profitability of milk production. Nothing will basically change about this development at this time; this results in scepticism about the expectations for business development.
Cash crop producers are cautiously optimistic, for a majority expects little change in the business development of the coming 12 months, and somewhat more than one-quarter of the arable farmers surveyed expects a good business development. As a result, a record soy harvest is expected, which could result in price pressure. However, the continuing high demand on the world market and the drought in Argentina counteract this and provide for the cautious optimism.
The expectations of the poultry farmers are also broadly based. With one-quarter of the surveyed poultry farmers definitely expecting a good business development. An important factor for the demand for poultry meat is the domestic market. The economic growth is three percent and provides for growing domestic demand. The business prospects are, however, also clouded by the restrained development of exports. Especially the sale of poultry meat in the Middle East is stagnating.
DLG-Agrifuture Insights
DLG-Agrifuture Insights is the new DLG knowledge brand and platform for international trend analyses in the agricultural sector. It examines the business environment in agriculture and agricultural business with a global panel of 2,000 leading farmers in 13 countries. Each month Agrifuture Insights will publish a "Graphic of the month" from the extensive range of development trends on the international agricultural markets.
Interested persons can obtain additional information on DLG-Agrifuture Insights from the DLG. The contact is Dr. Achim Schaffner, Head of the Economy Department, Tel.: 069/24788-321 or e-mail: afi@dlg.org. Information is also available at www.DLG.org/afi.