01-13-2014 10:54 AM - edited 01-13-2014 11:01 AM
Luis Vieira, a Brazilian freelance writer for Successful Farming/Agriculture.com, sat down with a Brazilian lawmaker and president of the Federation of Agriculture and Livestock. There's more evidence that Brazil will have a lot less corn this year. This could be a longterm bullish factor for the corn market.
Anyway, here is the Q & A:
Kátia Abreu once was listed listed among the top 100 most influential people in Brazil. She is an indepedent senator from the state of Tocantins and president of the Federation of Agriculture and Livestock of Brazil, a counterpart of the National Farmers Union. Being recognized as the rural voice of the country, Abreu joined many fights in order to defend less aggressive regulations that would curb the Brazilian agricultural production. The height of these frictions was when the new Foresting Code was discussed in Brazil. In an UN Conference about climate change in Cancún, Mexico, Greenpeace even delivered a chainsaw to Abreu in an unkind protest.
In an exclusive interview to Agriculture, she chatted about the challenges of Brazilian agriculture. The senator thinks the main challenges to agricultural production in the country are not logistics nor caterpillars, but the next election. Abreu believes that if former Natural Environmental minister Marinal Silva is elected vice-president, Brazilian farmers would be hurt by aggressive environmental regulations pushed by international NGOs.
Agriculture.com - Do you think the logistics chaos will repeat again in 2014 with lines in the main ports by April? Do you think logistics will continue to be the main challenge of Brazilian agriculture?
Kátia Abreu - I'm more optimistic about this situation. The first aspect is the corn production. We will not have the same level of corn exports in the same period. Other factor is anticipated commercialization. Last year, 85% of the sales were made in advance. This year, we did not sell 30% of our corn until December. And a third thing is the government program directed to build warehouses. Payment deadlines are extended and interest rates are compatible with producers capability. More warehouses will be availaible in the farms and to other chain players.
Agriculture.com - Helicoverpa Armigera (known as the corn earworm in the US) have been a major concern at several in many states of Brazil. In some areas, soybean losses are estimated at 10% just because of that caterpillar. How farmers and the sector in general are fighting back the problem?
Abreu - I have worked hard in order to approve the usage of biotech production at Anvisa (Brazil's National Agency of Sanitary Surveillance). There is a huge bureaucracy that does not release the most effective pesticides. I've made a huge pressure on Anvisa to release those pesticides that effectively will resolve the problem.
Agriculture.com - In 2013, the United States have exported a record amount of wheat to Brazil because of shortages generated by Argentina in the Mercorsur trade bloc (which includes Brazil, Argentina, Uruguay, Paraguay, and most recently, Venezuela, and Bolivia). The extension of the exemption of external tariff benefiting US farmers have made some Brazilians complain about the changes. Mills, on the other hand, want more US wheat in the market. In the meantime, local federations say that Brazil could triple wheat production from one season to another if rules are not changed within the year. In your opinion, what is the solution?
Abreu - In the past, Brazil was already self-sufficient (on wheat). There is a perspective of a lack of the grain again in 2014. The government will be launching soon a new program to tackle that problem. They heard us. We need an improved policy. I suggested agricultural insurance with 80% and mechanisms of commercialization. I think Carlos Sperotto, president of the Federation of Agriculture of Rio Grande do Sul, is right when he says that quickly the sector can increase the production. There is still the issue of the quality of our seeds. There is just more specialized planting in Paraná and Rio Grande do Sul.
Agriculture.com - Brazilian farmers have made a lot of investments throughout 2013. A new record of machinery sales was set with 65,200 units of tractors and 8,545 harvesters sold in the year. With crop markets falling into a different price zone, are Brazilian farmers financially stable enough to withstand the pressure of lower markets?
Abreu - Of course the lower market represent a significant loss for everybody, but we have good estimates. Most of the investments are being made with the capital of farmers and the international prices are still competitive. Plus, we've reached an agreement to sell most of our stocks. A market of 10 million tons was open for annual sales.
Agriculture.com- I don't know original source of that information, but there have been talks about a possible copy in Brazil of the taxation of grain exports of Argentina. The retentions of grain exports in that country are up to 35%. Do you think this policy might be applied if the current president Dilma Roussef is reelected in 2014?
Abreu - I don't think there is a possibility that this would happen. It would bring total chaos to Brazilian agriculture. I've met several times with president Dilma and I don't think she would take that out of the scope initiative. I did not have the impression that she wants to transform Brazilian agriculture into chaos.
Agriculture.com - Marina Silva, Brazil's former minister of Natural Environment under former president Lula, might run for vice-president of the country in this year's election with Eduardo Campos as running mate. You said previously that if her bloc is elected that would be "catastrophic" to Brazilian agriculture. Why?
Abreu - We've had a period of terror with regards to environmental issue. Farmers were transformed in rivers of CO2, the polluters. I totally attribute to her the leadership of that process. She had zero complacency with rural producers. We no longer import agricultural products. We've made a green revolution in the world. We've tripled the productivity without increasing deforestation. In the meantime, she transformed the Environment Ministry into an NGO. She was there to defend international NGOs. As minister, Marina Silva had never received me or my proposals for environmental projects. We just want that our opinions are heard and respected. During the discussion of the Foresting Code in Congress, after she left office, finally we took out the monopoly of NGOs, after 15 years, in the environmental discussion.
Now that you have read the perspective of this independent lawmaker, do you agree that the Brazilian logistic problems will subside in 2014? Do you agree that logistic issues and less corn production could help corn prices?
01-13-2014 01:30 PM
If roads are better it is by only a single digit % number.
The amount of bu's are still formidible. In just a few years the production has gone from the high 50's low 60's to somewhere north of 90mmt's.
That is a 50%+ increase in product to be shipped. Some larger % is domesticly used in livestock feed But the roads will still be cluttered with trucks making a 500 mile or longer trip per load. Just less corn more beans still close to the same # of trucks.
Only if the port facilities have been upgraded will it help much. Just my view from my lowly perch.
01-13-2014 02:05 PM
She didn't mention road hazards...........like tractors in two pieces in the middle of the road....................
01-13-2014 03:35 PM - edited 01-13-2014 03:36 PM
Another country living with no reserves ------------- 80mmt + production and nothing in the bin at the end of year.????? Did I miss understand her?
The world is changing. Now big producers are expecting to sell or use 90+% of each harvest . I guess they will fall back on each other if something goes wrong.
Wonder if china will share their reserves outside the country if needed?
01-13-2014 04:39 PM
Sounds and looks to me that politics is the # uno enemy of production agriculture.
Stalin and Hitler did it to eastern Europe and western Asia 80 years ago.
Still has not recovered.
Argentina is doing it now to the best of their ability to themselves. She makes it sound like the UN and the "greenies" are on the doorstep in Brazil.
The "greenies" have us in their gun sights too. Their weapon is ignorance by the masses and control of the EPA, DNR, and even OSHA. Even class envoy.
Their battle cry is "It is for your own good".
Maybe more later...?
01-15-2014 03:11 PM
it's a pity that Katia Abreu didn't mention tha losses of farmers that is happening in Brazil cause of the indians invasions e as some used to say international interest in our properties. Certanly Brasil was a threat in all grains if we could have serious politics rules about lands, comecialization and so on.
01-15-2014 04:52 PM
As a Senator and head of CNA, Katia Abreu is a very important voice for Brazilian agriculture, and it is good to see her perspectives being shared on Agriculture.com.
It is interesting to note that Brazilian farmers’ shift from corn to soy has been widely reported over the past several months.
SAFRAS & Mercado predicted it in July of 2013 (link in Portuguese):
Oil World made the same prediction in August:
Brazil’s National Supply Agency (Conab) forecast more soybeans and less corn in October:
This Bloomberg story from December discussed the 2nd crop shift to soy:
From a long-term perspective, Abreu’s most important comment related to government funding for the building of new warehouses and silos, that could ease the logistic bottleneck and result in a more controlled commercialization of the corn and soybean crops. A key question is – how much capacity will be added in advance of harvest time?