Brazil has consolidated its position as a major global grain producer and exporter. Crop production in the country reached an all-time high of 308 million metric tons in 2021. The South American country is also forecast to produce a record corn and wheat harvest in the 2022/2023 season. Brazil is investing in becoming self-sufficient in wheat within the next ten years by increasing its planted area, production, and yield.
Brazil is the world’s fifth-largest and fifth most populous country. As the tenth largest economy in the world, it is among the global giants of agriculture. After a pandemic-induced recession in 2020, the economy bounced back in 2021. The country is still working on rebuilding itself. GDP is projected to grow by 1.2% in 2023, and 1.4% in 2024.
In the agricultural sector, Brazil has grown from being an exporter of coffee, sugar and cacao in the 1960s and 1970s, to becoming a major global supplier of soya beans, corn, cotton, sugar, coffee, orange juice, meat and ethanol. Brazil’s agriculture and food sector accounts for 29 percent of the country’s GDP, valued at $1.8 trillion in 2021. Agriculture employs 15.1 million people in rural establishments, equivalent to 15 percent of the labor force.
Over the past two decades, Brazil has been consolidating its position as a major producer of agricultural commodities and related food products as well as a supplier to international markets. It is now a top-5 producer of 34 commodities and is the largest net exporter in the world. Continuing trade expansion and diversification of markets and products remain at the core of Brazil’s agricultural growth strategy.
The south American country is among the few countries with the potential to increase agricultural productivity. Brazil uses 63.5 million hectares for crop production, of more than 410 million hectares of total potential arable land, according to FAO, suggesting that continued growth of agriculture is possible. The USDA Agricultural Projections to 2031 indicate an additional 20 million hectares of cropland will be brought into production by 2031. Brazil will need to produce 76 percent more grain and 41 percent more oilseeds in 2031 than it did in 2021 to meet projected demand from consumers and from corn and soybean importers such as China, according to USDA projections.
However, increases in fuel and fertilizer costs, credit and storage limitations, an overburdened port and transport system, and pressure to preserve the environment are challenging the long-term growth of Brazilian agriculture.
Measured in U.S. dollars, the value of Brazil’s agriculture, including cultivation of crops and livestock production, grew an average of 8 percent annually over the past two decades (2000–20), with agricultural output doubling and livestock production increasing threefold. Soybeans stand out as a crucial crop in the expansion of Brazil’s farm sector and the country’s ascent as a top global supplier of agricultural products. In 2000, Brazil’s soybean exports were 40 percent of the United States’ exports; they now surpass U.S. exports by 20 percent. Brazil supplies more than 50 percent of the world’s soybean trade from crops produced on 17 percent of the country’s arable land. The value of Brazil’s agricultural exports, including processed products, has grown an average of 9.4 percent a year from 2000 to 2021 and accounts for 37 percent of Brazil’s total exports. Brazil now exports major agricultural commodities and food products to 222 countries and territories and is the world’s third-largest exporter of agricultural products, behind the European Union (EU) and the United States. According to the Brazilian Agricultural Research Corporation (EMBRAPA), Brazilian agribusiness feeds 800 million people annually, using only 7 percent of its territory for farming.
Factors driving Brazil’s transformation include agricultural research that has increased yields, expansion of the arable land base, large investments in production technologies to develop crop and forage varieties, and increased global demand for food and animal feed, particularly over the last decade. Most important, Brazil’s ability to harvest two to three crops a year in the same plot of land makes it unique compared with other grain and soybean-producing countries. Other factors include export-oriented macroeconomic policies, extended periods of depreciation for Brazil’s currency (the real), crop-specific agricultural policy incentives, improved sanitary controls, acquisition of foreign competitors, and a growing multinational presence and foreign investment in the country.
Brazil remains in fourth place in the world production of grains (rice, barley, corn, soybeans and wheat). Crop production in Brazil reached an all-time high of 308 million metric tons in 2021, according to the Food and Agriculture Organization of the United Nations (FAO).
2022/23 CORN PRODUCTION AND EXPORTS OUTLOOK
The increase in Brazil’s corn production over the past decade—driven by rising global demand and the combined influence of changes in price, technology, crop management practices, and area harvested—has made the country the third-largest global corn producer and exporter. Brazil has emerged as the largest U.S. competitor in the global corn market with second-crop corn, harvested late in the local marketing year, boosting exports from September to January, months traditionally dominated by Northern Hemisphere exporters.
The U.S. Department of Agriculture (USDA) forecasts Brazil’s 2022/2023 corn production at a record 126 million metric tons (MMT) based on the growing demand and price for corn both in the domestic and international market. This is up 8.6 percent on 2021/2022 production estimated at 116 MMT.
Brazil plants corn during the entire year, divided into three different crops. First-season corn is usually planted between August and December and harvested between January and June depending on the region, starting in the south of Brazil. The second-season corn, commonly referred to as ‘safrinha’ corn, is planted from December to March, usually following the soybean harvest, and comprises the biggest area, accounting for most of the production (roughly 76 percent in the 2021/2022 corn season).
Since 2019, Brazil has also planted a third-season corn crop, planted only in some states of the country’s North and Northeast. Due to the region’s climate, this crop cycle resembles that of the United States, with planting occurring around May and harvesting in October. In the 2021/2022 cycle, third-season corn is estimated by CONAB to account for around two percent of production and three percent of the total corn area.
For the marketing year (MY) 2022/2023 (March 2023 – February 2024) USDA maintains the forecast of planted corn area at 22.5 million ha, 3.7 percent higher than the harvested area of this current season. Although the increase in demand for corn both in domestic and international markets and rising prices have encouraged the planting of this grain, ongoing elevations in production costs have led some producers to switch to more profitable crops, such as soybeans, resulting in a more conservative forecast for the coming season.
In its latest report released in November 2022, USDA Foreign Agricultural Service (FAS) post in Brasilia increased its forecast for corn exports for 2022/23 to 47 MMT, up 2.5 MMT on the current season, due to the projected increase of production and continued interest for corn in international markets. With the low performance of crops in important producing countries including the United States and Argentina, it is estimated that corn prices will continue to rise. Additionally, Brazil expects record production, and farmers are hopeful for the commencement of Brazilian corn exports to China, which will likely give producers an extra incentive.
USDA also increased the 2022/23 domestic consumption forecast to 77 MMT, up two million tons from the previous estimate, based on the expectation of ongoing expansion of Brazil’s livestock and poultry industries and an increase in the use of corn ethanol by the industry.
WHEAT OUTLOOK
Brazil is investing in becoming self-sufficient in wheat within the next ten years by increasing its planted area, production, and yield. Current research being conducted by the Brazilian Agricultural Research Corporation (EMBRAPA) is focusing on growing wheat in the Cerrado biome, adapting the plant to tropical climate through investments involving genetic improvement and integrated soil, water, nutrient, and plant varieties that allow weather resistance and have high grain productivity. This includes a production potential for 1 million hectares in an irrigated system and the incorporation of another 2.5 million hectares in the rainfed system. This represents about 4 million tons of additional wheat production in the country.
BRAZIL SET TO PRODUCE RECORD WHEAT CROP
Brazil is headed for record wheat production in the 2022/2023 season, considering optimal weather conditions, better use of fertilizers, and the high-interest level of farmers in investing in this crop. Brazil sows most of its wheat between April and September, depending on the region, and almost 90 percent of the crops are planted in the southern states of Paraná, and Rio Grande do Sul.
For MY 2022/23 (October 2022 – September 2023), USDA maintained its forecast for the wheat area at 3.2 million hectares, based on continued interest by Brazilian growers over the strong demand for the grain as a result of the impact of the conflict in the Black Sea and rising global prices of the commodity. As such, USDA increased its forecasts in production for 2022/2023 to 9.4 MMT from its previous forecast of 8.7 MMT
2022 has been a year of uncertainties for the wheat harvest and trade in Brazil and the world. The ongoing war initiated by Russia against Ukraine severely impacted the offer of grain worldwide while attention remained focused on international stocks and prices. At the same time, severe weather conditions have affected harvest in key producing countries, with some regions suffering from extreme droughts and others undergoing heavy rains. This scenario, aligned with an increase in harvested area, has given Brazilian growers a new boost, as production is expected to increase in the upcoming harvest.
For 2022/2023 (October 2022 – September 2023), USDA lowered its forecast for wheat import to 6.2 MMT on a wheat grain equivalent basis (WGE), three percent lower than the previous estimate. The revision is based on the high demand for grains in the international market and an expectation that souring wheat prices may hinder purchases by Brazilian importers.
Although Brazil is forecast to produce a record wheat harvest in the 2022/2023 season, production is not enough to meet internal demand, and trade is heavily dependent on neighboring countries, in special Argentina, which has been responsible for more than 80 percent of Brazil´s imports under a tax-free arrangement. However, with increased production and international markets with high demand for wheat, producers expect more opportunities and better market prices to export and offset high production costs. As such, USDA increases its forecast for MY 2022/2023 wheat export by 6 percent from its previous estimate to 3.3 MMT on a wheat grain equivalent basis (WGE).
Brazil is the fourth-largest global wheat importer; traditionally, more than 90 percent of its imports are tax-free from its Mercosur neighbors, Argentina, Uruguay, and Paraguay. The country also has a duty[1]free tariff-rate quota (TRQ) for 750,000 MT of non-Mercosur wheat imports.
USDA maintains its MY 2022/2023 wheat consumption forecast at 12 MMT, based on the notion that wheat is a staple food category in Brazil and on the growing expectation of economic improvement, albeit at a slower pace, following the damaging impacts of the COVID-19 pandemic to the Brazilian economy.
Brazilian consumers are swapping wheat products which are traditionally more expensive, such as pasta dough made with eggs, for cheaper versions, such as instant noodles. Consumers are also opting for changing brands or buying smaller packaging sizes to save money. This pattern is a reflection not only of higher inflation rates that have affected the purchasing power of consumers but also a result of the increase in the costs of end products, such as industrialized pasta, cookies, bread, and cakes, which had their prices increased by the industry to compensate for higher production costs of wheat flour, fuel, and cooking gas, among others. According to the Brazilian Manufacturers Association of Biscuit, Pasta, and Industrialized Bread & Cakes (ABIMAPI), flour makes up 70 percent of the cost of pasta, 60 percent of industrialized bread, and cakes, and 30 percent of cookies, making it an essential commodity in the Brazilian food basket.
Logistical issues have a substantial effect on consumer prices and patterns throughout Brazil. While 90 percent of the production is concentrated in the southern states, wheat must be distributed around the country. However, given Brazil’s territorial extension, many states that border Mercosur countries find it easier to import wheat at zero tariffs than to purchase from Brazilian producers who end up processing the wheat in mills that are often located close to the sea. Those, in turn, facilitate trade with other countries that are willing to buy at a higher price. According to EMBRAPA, 19 percent of wheat consumption is in the South Region of Brazil; 42 percent in the Southeast Region, 5.5 percent in the Center-West states; 22 percent in the Northeast Region; and 10 percent in the North Region.
RICE PRODUCTION
Rice is a primary food product for Brazilian families, present in the diet of almost 95 percent of the Brazilian population. More than half consume it at least once a day, making Brazil the biggest consumer of rice outside Asia, according to CONAB. To soften the effects of the COVID-19 pandemic, the government established food stipend programs that guaranteed this grain’s consumption, even though higher inflation figures have decreased the purchase of food products in the country.
In its latest report, USDA maintains the forecast for milled rice production at 7.1 million metric tons (MMT) of milled rice equivalent (an equivalent of 10.44 MMT of paddy rice) in 2022/23. USDA increased the 2022/23 season rice export forecast to 900,00 MT, from the previous 700,000 MT estimate, based on the growing interest for rice in international markets. At a recent meeting with the World Trade Organization (WTO), the Brazilian Rice Industry Association (ABIARROZ) said that Brazil is prepared to increase its export capacity by 60 percent in the coming years, including by adding the stocks that come from neighboring Mercosur countries.