Brazil presidential candidates make ag industry pitch

  • Market: Agriculture, Fertilizers
  • 29/09/22

Brazil's leading presidential contenders Luiz Inacio Lula da Silva and incumbent Jair Bolsonaro aim to raise agricultural production and exports while reducing environmental impacts, but fail to provide details on how to achieve those goals.

Brazil's leading spot in global agribusiness and the sector's key role in the domestic economy, accounting for more than 25pc of the country's gross domestic product (GDP) in recent years, make agriculture a key issue for candidates vying for the country's presidency on 2 October.

Left-leaning Lula — who led the country from 2003-2010 — is seen by European countries as a politician more committed to environmental preservation policies. Conservative Bolsonaro has taken positions less friendly toward environmental concerns and has been accused of actively bolstering deforestation.

Lula proposes a "zero net deforestation" policy, vowing to aid the "reforestation of degraded areas and forest recomposition in biomes." Bolsonaro pledges to combat illegal deforestation and promote sustainable agriculture. The term "illegal" is widely used by rural leaders aligned with Bolsonaro to distinguish between an environmental movement that wants to stop all deforestation and current legislation that requires farmers in the Amazon to preserve 80pc of the property's total area, but allows the remainder to be used for crops.

Land reform

Lula's government plan mentions the commitment "to a new model of urban and rural land use, through an agrarian and agroecological reform."

Governments before Bolsonaro have expropriated unproductive lands that were then distributed in small plots to families. Those families were often part of the landless workers movement (MST) — a group aligned to left-wing political parties that aims to redistribute land to rural workers for small-scale farming in a family production model.

By contrast, Bolsonaro's administration has highlighted the policy of granting property titles to 326,000 farming families. Known as land title regularization, the policy tries to document ownership families who were encouraged by the Brazilian government in the 1970s and 1980s to populate and plant food crops in certain regions of the country — especially in the north and northeast.

Bolsonaro's plan does not mention expropriations — where land is seized from farmers who it determines are not using the land as they should and given to families connect to MST. Instead, it aims to reduce conflicts in the countryside. Another section of the program, related to security in rural areas, mentions "the strengthening of legal institutions that ensure access to firearms," signaling the continuity of policies adopted in favor of arming the population, which would help farmers fight members of MST from illegally occupying their unused farm land, which has been a significant source of conflict in some areas.

Agriculture and cattle-raising

The candidates promise to keep creating policies to support financing to the agriculture section, and argue over who has offered the most through the government's long-running subsidized loan program for farmers.

Both presidential campaigns also vow to facilitate financing lines for the adoption of sustainable practices that reduce carbon emissions.

Recently, statements made by Lula on possibly regulating agribusiness and the need to "discuss the price of meat in the country" — whether to continue current export levels or leave more for the domestic market — caused controversy among rural leaders.

On the first topic, the former president's plan speaks of recreating public food stock programs to guarantee minimum prices to farmers and prevent excessive increases in consumer prices, which contribute to higher inflation. Lula's team denied any kind of formal regulation and released two statements in September highlighting the candidate's commitment to encourage agribusiness, including rural producers of all sizes, especially small ones.

As for the export issue, Brazil is the world's largest beef exporter, so decreasing exports would be seen as detrimental to domestic producers. China is the main buyer of Brazilian meat.

Neither candidate mentions how they would conduct their relations with the Asian country, which is also the biggest buyer of Brazilian soybeans.

Leadership

Although most of the country's agribusiness leaders have been aligned with Bolsonaro since the 2018 election, Lula's connections with the sector has been growing. Some politicians from Mato Grosso, the country's largest agricultural state, have even declared their support to the former president.

The best example is Lula's former agriculture minister, Blairo Maggi, who was once considered the largest soybean grower in the world through his family's company.

Lula is leading in the polls, with 48pc of tallied voter intentions, 17 percentage points above Bolsonaro's 31pc, according to an Ipec poll conducted from 25-26 September.

Regardless of whether the election is determined in one or two rounds of voting, negotiations between the winner and the agricultural sector must advance, as both candidates' proposals lack key details.


Sharelinkedin-sharetwitter-sharefacebook-shareemail-share

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

News
03/05/24

Heavy rainfall floods Brazil's Rio Grande do Sul

Heavy rainfall floods Brazil's Rio Grande do Sul

Sao Paulo, 3 May (Argus) — Brazil's southern Rio Grande do Sul state continues to flood after heavy rainfall since 29 April, leading the government to declare an emergency yesterday. The highest volumes reached the central areas of Rio Grande do Sul, with cities receiving rainfall of 150-500mm (6-20 inches), regional rural agency Emater-RS data show. The monitoring station of Restinga Seca city, in the center of the state, recorded rainfall of about 540mm. Rainfall in Rio Grande do Sul overall surpassed 135mm in most of the state, according to the US National Oceanic and Atmospheric Administration (NOAA). Meanwhile, dry weather prevailed in other Brazilian regions. NOAA expects rainfall to abate in the next week, but adverse weather conditions are set to remain. As of today, 154 sections of 68 highways were totally or partially blocked, according to the state's emergency service. The 100MW 14 de Julho hydroelectric plant also partially ruptured . The Rio Grande port has not suspended operations, but handling is slower. Despite the heavy rainfalls, demurrage rates and waiting queues for docking and unloading were not altered. Demurrage rates were stable at $1/metric tonne (t) and the total cost for handling fertilizers remained at $19/t. But market participants expect the situation to change in the coming days, which may increase demurrage rates. If the rain does not stop and the level of the Guaiba River continues to rise, some areas in the port are likely to flood in the coming days, as is the case in part of the Porto Alegre port. Amid slower cargo release, logicitical difficulties and the already-low demand for fertilizer transport services, fertilizer freight rates on the Rio Grande-Dourados route, monitored weekly by Argus , fell by R20/t ($4/t), on average, to R225-250/t. Excessive rainfall to damage 2023-24 soybean crop Rio Grande do Sul is harvesting its 2023-24 soybean crop, set to be the second largest in the country this season. Works reached 76pc of the state's expected acreage by 2 May, posting an weekly advancement of 10 percentage points despite the excessive rainfall, according to the rural agency Emater-RS. Farmers seized shorter windows of more favorable weather — or when rainfall subsided — to intensify field activities, especially in areas expected to register higher yields and that were not deeply affected by a drought earlier in the year. The moisture levels of grains harvested are considered above average and will require more investment in their drying processes. Some areas reported premature germination and plant decay because of the humidity excess. Emater-RS maintains the state's average yields estimated at 3,329 kg/hectare, with recent results remaining within prior projections, according to the agency's weekly report released on 2 May. Thus, soybean production in Rio Grande do Sul is still set to reach a record 22.2mn metric tonnes (t). But market participants agree that forecasts for the state may be revised down in the next weeks, as field surveys begin to accurately assess the excessive rainfall's total damages. By João Petrini, Maria Albuquerque and Nathalia Giannetti Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Find out more
News

Brazil hydroelectric dam bursts under record rains


03/05/24
News
03/05/24

Brazil hydroelectric dam bursts under record rains

Sao Paulo, 3 May (Argus) — Brazilian power generation company Companhia Energetica Rio das Antas (Ceran) found a partial rupture in its 100MW 14 de Julho hydroelectric plant following record precipitation in Rio Grande do Sul state. Flooding from the record rains has left 37 dead and forced more than 23,000 people out of their homes, causing widespread damage across the state, including washed out bridges and roads across several cities. Ceron reported that the dam of the hydroelectric plant on the Antas River suffered a rupture under the heavy rains and the company implemented an emergency evacuation plan on 1 May. Ceron's 130MW Monte Claro and 130MW Castro Alves plants are under intense monitoring, the company said in a statement. Rio Grande do Sul state governor Eduardo Leite declared a state of emergency and the federal government promised to release funding for emergency disaster relief. Leite said the flooding will likely go down as the worst environmental disaster in the state's history. Brazil's southernmost state along the border with Argentina has been punished by record precipitation over the past year owing to the effects of the strong El Nino weather phenomenon, according to Rio Grande do Sul-based weather forecaster MetSul Meteorologia. Brazilian power company CPFL Energia controls Ceran with a 65pc equity stake. Energy company CEEE-GT, which is owned by steel manufacturer CSN, owns another 30pc, and Norway's Statkraft owns the remaining 5pc. The state had declared a state of emergency as recently as September 2023 because of unusually heavy rains that resulted in the death of more than 30 people. Weather forecasters expect El Nino conditions to abate in the coming months over the eastern Pacific. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Canada rail strike to affect grains, industry says


03/05/24
News
03/05/24

Canada rail strike to affect grains, industry says

London, 3 May (Argus) — Strike action by workers at Canadian National Railway and Canadian Pacific Kansas City could have significant repercussions for the country's grains market, according to industry body the Grain Growers of Canada (GGC). Members of the Teamsters Canada Rail Conference authorised a strike on 1 May. Industrial action at the two major Canadian railroad companies could begin as early as 22 May. The parties have now entered a mandatory period of mediation. The GGC has called for a resolution to be reached in this period that safeguards Canada's grains supply chain. Canadian grain trade operations are particularly dependant on rail logistics, with the vast majority of grain from producing regions transported to ports by rail — 94pc of all Canadian grain is transported by rail, according to the GGC. Disrupted logistics could limit grain storage capacity, which could result in less stock available for export and curb selling by farmers. This could cause importers to seek alternative grains origins. Members are "worried about the impact a strike would have [...] on Canada's reputation as a reliable supplier", the GGC said. "Consecutive supply chain disruptions have already strained our relationships with international buyers. Another stoppage could drive them to seek other markets, affecting us in the long term," GGC's second vice chair Brendan Phillips said. In the high-protein wheat market — one of Canada's major agricultural exports — buyers may turn to US-origin Hard Red Spring wheat as an alternative, traders in both regions told Argus . This could have a significant effect on the market. "In June 2023, Canada exported over 2.6mn t of grain, highlighting the potential economic loss of over $35mn for each day in June that a strike persists," the GGC said. That said, wheat exports accounted for around 1.7mn t of this volume, Argus -aggregated data show. Canada's wheat exports have increased significantly ahead of the long-term average pace in 2024, surpassing 2023 levels by 710,000t in the week to 28 April. Remaining stocks of the 2023-24 wheat crop are low, according to market participants, and with the winter wheat harvest not scheduled to begin until July, low stocks could shelter Canada's wheat market to some extent. By Megan Evans Canadian wheat (excl. durum) exports mn t Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Canadian rail workers vote to launch strike: Correction


02/05/24
News
02/05/24

Canadian rail workers vote to launch strike: Correction

Corrects movement of grain loadings from a year earlier in final paragraph. Washington, 2 May (Argus) — Workers at the two major Canadian railroads could go on strike as soon as 22 May now that members of the Teamsters Canada Rail Conference (TCRC) have authorized a strike, potentially causing widespread disruption to shipments of commodities such as crude, coal and grain. A strike could disrupt rail traffic not only in Canada but also in the US and Mexico because trains would not be able to leave, nor could shipments enter into Canada. This labor action could be far more impactful than recent strikes because it would affect Canadian National (CN) and Canadian Pacific Kansas City (CPKC) at the same time. Union members at Canadian railroads have gone on strike individually in the past, which has left one of the two carriers to continue operating and handle some of their competitor's freight. But TCRC members completed a vote yesterday about whether to initiate a strike action at each carrier. The union represents about 9,300 workers employed at the two railroads. Roughly 98pc of union members that participated voted in favor of a strike beginning as early as 22 May, the union said. The union said talks are at an impasse. "After six months of negotiations with both companies, we are no closer to reaching a settlement than when we first began, TCRC president Paul Boucher said. Boucher warned that "a simultaneous work stoppage at both CN and CPKC would disrupt supply chains on a scale Canada has likely never experienced." He added that the union does not want to provoke a rail crisis and wants to avoid a work stoppage. The union has argued that the railroads' proposals would harm safety practices. It has also sought an improved work-life balance. But CN and CPKC said the union continues to reject their proposals. CPKC "is committed to negotiating in good faith and responding to our employees' desire for higher pay and improved work-life balance, while respecting the best interests of all our railroaders, their families, our customers, and the North American economy." CN said it wants a contract that addresses the work life balance and productivity, benefiting the company and employees. But even when CN "proposed a solution that would not touch duty-rest rules, the union has rejected it," the railroad said. Canadian commodity volume has fallen this year with only rail shipments of chemicals, petroleum and petroleum products, and non-metallic minerals rising, Association of American Railroads (AAR) data show. Volume data includes cars loaded in the US by Canadian carriers. Coal traffic dropped by 11pc during the 17 weeks ended on 27 April compared with a year earlier, AAR data show. Loadings of motor vehicles and parts have fallen by 5.2pc. CN and CPKC grain loadings fell by 4.3pc from a year earlier, while shipment of farm products and food fell by 9.3pc. By Abby Caplan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

India’s Coromandel to build Kakinada fertilizer complex


02/05/24
News
02/05/24

India’s Coromandel to build Kakinada fertilizer complex

Singapore, 2 May (Argus) — Indian fertilizer producer Coromandel International will build a 650 t/d phosphoric acid-sulphuric acid complex facility in Kakinada, Andhra Pradesh with an investment of approximately 10bn rupees ($120mn). The project is expected to commission in two years' time, CIL's executive chairman Arun Alagappan said on 26 April. Phosphoric acid and sulphuric acid are used in the production of phosphate fertilizers like DAP and NPKs. CIL's new phosphoric acid facility aims to provide for its fertilizer manufacturing and to replace more than 50pc of the plant's import requirements. It also plans to build a 1,800 t/d sulphuric acid plant to supplement phosphoric acid production. By Deon Ngee Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more