SpecialArticle
LuizCarlosCorrêaCarvalho
President of the Brazilian Agribusiness Association (Abag)
Signs of renewed
encouragement
I
n spite of the political and econom-
ic disturbances that affected the mar-
ket in 2016, theGross Domestic Product
(GDP) of agribusinessmanaged to grow
at a rate of 2.5% to 3%. Exports brought
in more than US$ 85 billion, up 2.5% from
2015, and the trade of balance should
reachUS$ 70billion. For 2017, expectations
are still uncertain, clearly pointing to the
need of creating an environment of harmo-
ny between the Legislative, Executive and
Judiciary Powers, so as to achieve a more
consistent economic growth by 2018. We
believe, however, that in the second half
of 2017 we will have a more promising sce-
nario, with a drop in interest rates, whilst
keeping inflation under control.
In conjunction with this more favorable
scenario, we equally take it that the reform
of the National Pension System will get on
track and the questions of logistics and in-
frastructure will reach a solution. From the
credit point of view, it is likely for us to have,
as a result of the less disturbed economic
environment, the re-establishment of sight
deposits by the banks, which end up gener-
atingmore rural credit, thus diminishing the
indebtedness level of the companies, con-
firming the more promising perspectives
for 2018. It is essential for us to go through
2017, free of disturbances, for clearer elec-
tions in 2018, then start thinking in more
positive four years ahead of us.
As for the behavior of the main com-
modities, we believe that, if the exchange
rate remains in the range of R$ 3.50 to R$
3.70, the soybean, corn, sugarcane, coffee
and orange producers should experience
a rather comfortable situation throughout
2017.There is also a trend for the area of
meat to improve during the second half
of the year. In the geopolitical field, the
Brexit, in Europe, and the election in the
United States, could have impacts that
characterize the non-existence of new
markets, and the Country could, eventu-
ally, export less. We also should consid-
er which consequences could stem from
ever-increasing interest rates in the Unit-
ed States and their impact on the pric-
es of commodities, but, if the GDP goes
up about 2%, in line with the forecast by
the Brazilian Confederation of Agricul-
ture and Livestock (CNA), 2017 should be
a positive year for the Country.
To a big extent, this favorable environ-
ment stems from some concrete advanc-
es carried out by the new government. A
clear example is the way the Ministry of Ag-
riculture, Livestock and FoodSupply (Mapa)
is acting, with intense efforts towards find-
ing the way into Asianmarkets, a fact that is
fantastic for the people involved with agri-
business. Furthermore, the ministry has
managed to reconquer the North American
market for Brazilian beef. Another topic that
wehighlight at theMapa is the awareness of
the importance of a Pluri-Annual CropPlan.
It is alsoworth highlighting the renewed
initiative of the Itamaraty, now much more
pragmatic and less ideological, geared to-
wards the opening of new markets and the
prospection of agreements of interest of the
national private sector. Finally, it isworth re-
calling the huge steps forward taken by the
Ministry of Energy and Mines, which began
to dialogue with the sugar and alcohol sec-
tor,inamatureandmodernway,onmatters
related to ethanol and bioenergy.
For all these factors, we understand that
there has been a drop in the importance of
remnant problems, likedeficient farm insur-
ance programs, the persistence of bureau-
cracy, which is still present in some organs,
and the bottlenecks that still exist in logistic
infrastructure. For sure,wehavealready tak-
en some steps towards the right direction.
theexpectationisforthesecondhalfofthe2017scenarioismuchbetter,
withafallintheinterestrateandcontinuedinflationreduction
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