fiesp.com.br/outlook
CMYKCMYK4ª capa 1ªcapa
2ª capa CMYKCMYK
São Paulo, 2016
OUTLOOK FIESP 2026
- International Cataloging in PublicationLIBRARY DIVISION - DIBD / ESALQ / USP (University of São Paulo – Luiz de Queiroz School of Agriculture)
Federation of Industries of the State of São Paulo Outlook Fiesp 2026: projections for brazilian agribusiness / Federation of Industries of the State of São Paulo. - - São Paulo: FIESP, 2016.100 p. : il.
ISBN: 978-85-7201-020-7
1. Agronegócio 2. Projeções 3. Economia 4. Fertilizantes 5. Crédito rural 6. Economia Agrícola 7. Área plantada 8. Produção9. Consumo doméstico 10. Exportação 11. Uso da terra I. Título
CDD 338.13 F293o
4
PROJECTIONS FOR BRAZILIAN AGRIBUSINESS
PresidentPaulo Skaf
AGRIBUSINESS DEPARTAMENTHead DirectorMario Sergio Cutait
OfficersInputs Division: Welles Clovis PascoalPlant Products Division: Nathan HerszkowiczAnimal Origin Products Division: Francisco Sérgio TurraNuts Division: José Eduardo Mendes de Camargo
ManagerAntonio Carlos P. Costa
Technical TeamAnderson dos SantosFabiana C. FontanaGregory Honczar
OfficersJosé Roberto Mendonça de BarrosAlexandre Mendonça de BarrosJosé Carlos Hausknecht
Technical TeamAna Laura MenegattiCesar de Castro AlvesEduardo PessinaFrancisco QueirozRenata Marconato
Federation of Industries of the State of São PauloAgribusiness Departament – DEAGROAv. Paulista, 1.313, 5º andarCEP: 01311-923 – São Paulo – [email protected]
MB Agro ConsultoriaR. Henrique Monteiro, 90, 12° andar CEP: 05423-020 – São Paulo – [email protected]
Graphic Design and Layout: Studio MRKRevision: Hassan AyoubPrinting: Gráfica HRosaTranslation: Laura Faro
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OUTLOOK FIESP 2026
Making long-run projections for a complex sector such as agribusiness is quite challenging,
regardless of the model to be used. There is a large set of variables to consider. Climate,
exchange rates, interest rates, income, opening and closing of markets, and geopolitical
and sanitary issues make up a highly complex environment for the sector as a whole, with
its always-present unpredictability.
The corn market’s atypical behavior in 2016 is a good example of a situation that was not on
the radar, but ended up having a strong impact on animal protein industries, whose produc-
tion depends on that raw material. Frustrating second-crop yields and all-time high export
volumes in early 2016 increased corn prices and generated insecurity about its supply and
also about production chain imbalance. The scenario got worse when meat consumption
dropped even further than expected.
Very positive facts have also occurred, such as the confirmation of the reciprocal opening of
the US and Brazilian markets for beef, which may indicate that the Brazilian beef can soon
enter countries still closed to it. One of the highlights in 2016 was the substantial recovery
for the sugar-energy sector, propelled especially by sugar, whose prices responded signifi-
cantly to the imbalance in the global supply framework.
However, the great variable for Brazil was undoubtedly the clarification of the political
scenario. In this context, agribusiness, among all segments of the economy, was the one
that responded more effectively.
From the first to the second quarter of 2016, the Agribusiness Confidence Index rose 20
points, as measured by the Federation of Industries of the State of São Paulo (FIESP) and
the Organization of Brazilian Cooperatives (OCB). It was a recovery of the highest levels
ever achieved, driven mainly by the improvement in the perception of our economy. In the
third quarter, reports on the confidence of producers and manufacturers confirmed that
improvement, when the indicator rose again and achieved another all-time high figure.
PRESENTATION LETTER
6
PROJECTIONS FOR BRAZILIAN AGRIBUSINESS
Nonetheless, the change in government does not mean that the economic problems will be
solved immediately, considering the persistent deterioration of socioeconomic indicators.
Although showing better economic results than the other sectors, agribusiness was also har-
med by the biggest economic crisis in Brazil’s history. Sharp declines in the consumption of
more elaborate foods, the downturn in the investments made by producers in recent years,
such as for purchasing agricultural machinery and implements, and rising loan costs were
some of the harmful effects.
It is in that scenario that structural measures must be implemented, laying the foundations
for a resumption of economic, employment and income growth. Such outcomes depend
necessarily on a greater efficiency of the government, such as better management of pro-
grams and services offered to the population and to production sectors, resulting in greater
rationality in the use of public resources.
Our “FIESP Outlook 2026 – Projections for Brazilian Agribusiness” are based on the premise
that a gradual recovery of the Brazilian economy is on its way, and can even be accelerated,
provided that government can increase the speed and magnitude of the structural reforms
that Brazil so badly needs.
I wish everyone a good read!
Paulo Skaf
President
7
OUTLOOK FIESP 2026
TABLEOF CONTENTS
VEGETABLE-BASED PRODUCTS
FERTILIZERS
ANIMAL-BASED PRODUCTS8
PROJECTIONS FOR BRAZILIAN AGRIBUSINESS
1. Considerations about the Projection .............................. 1 1 (Methodological notes)
2. Changing the Macroeconomic Model .............................14
3. Consequences of MacroeconomicChanges on Agribusiness.......................................................16
4. Argentina:An Agriculture in Transformation .....................................19
Projection Outcomes
5. Cotton...............................................................................................23
6. Rice.....................................................................................................26
7. Coffee ...............................................................................................29
8. Sugarcane, Sugar and Ethanol............................................33
9. Pulp ....................................................................................................38
10. Beans.................................................................................................42
11. Corn ....................................................................................................45
12. Soybeans: Beans, Meal and Oil...........................................49
13. Orange Juice.................................................................................53
14. Wheat ...............................................................................................57
15. Beef....................................................................................................61
16. Broiler and Eggs.........................................................................66
17. Pork . 70
18. Dairy Products.............................................................................74
19. Fish.....................................................................................................78
20. Fertilizers........................................................................................80
21. Land Use..........................................................................................86
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OUTLOOK FIESP 2026
10
PROJECTIONS FOR BRAZILIAN AGRIBUSINESS
The 2016 issue of Outlook Fiesp 2026 - Projections for Brazilian Agribusiness was prepared in a scenario of lower volatility
in the international agricultural market. Commodity prices fell significantly, but in a troublesome domestic scenario, with a
deteriorating economy caused by the current political crisis.
Despite the resumption of an adequate economic policy focused on sustained growth in the horizon, many uncertainties are
still present and permeate the universe of projections, making even more difficult the exercise of predicting the future.
Global and national growth estimates will determine the demand for agricultural products, and exchange rates will change
Brazilian producers’ competitiveness. Moreover, the economic crisis ends up affecting other variables such as credit availabi-
lity and corporate debt, which have significant effects on agribusiness.
Just like in the previous issue, in this version of Outlook Fiesp 2026 we have used as the base scenario a prospect of a macro-
economic adjustment that will allow an economic growth rebound beginning in 2018, which should succeed the turbulent
period Brazil is currently going through. We have also considered that there will be no abrupt disruption of global growth and
that, despite the emerging countries’ economic slowdown, a heated food demand is expected, though at relatively lower
rates compared to those reported in recent years.
Furthermore, this issue aims to provide elements for discussing the various agribusiness-related industries, and thus help in
the identification of bottlenecks and in the preparation of proposals for the future of agribusiness. That should allow antici-
pating the actions required to ensure the expected growth.
The model establishes a balance between global supply and demand where consistency is held among the main food pro-
ducing and consuming economies in the world. This consistency is evaluated on the basis of stock-to-use ratios that should
keep the market stability in the long run.
CONSIDERATIONSABOUT THE PROJECTION
(Methodological notes)
1
11
OUTLOOK FIESP 2026
The projection model for the Brazilian production of the commodities at issue is based on a worldwide food production and
consumption balance. The demand of each country was set considering the population expansion plus per capita income
growth forecasts, combined with income elasticities of food demand in each country. The income forecasts used in the
projections were those disclosed by the International Monetary Fund (IMF) and the population forecasts were those of the
United Nations (UN). The Brazilian economic growth estimates were prepared by MB Associados on the basis of their macro-
economic model for the country.
From the standpoint of supply, food production is projected according to productivity and area availability trends in each
major producing country. Brazil is the key variable to close the international balance, since it is one of the few regions where it
is possible to obtain productivity gains associated with harvested area expansion; unlike the USA, for instance, where produc-
tion may only grow at the expense of restricted productivity gains or reduced production of a certain commodity to benefit
another.
After calculating the Brazilian agricultural production needed to keep the global stock/consumption ratio on a level where
prices justify a global supply increase, the cultivation areas required for achieving outputs are estimated from the projected
productivity curve for each agricultural commodity in each Brazilian region.
As for ethanol, one of its particularities is that domestic consumption derives from a model based on vehicle fleet growth and
depreciation keyed to the GDP, and its exogenous variable is the flex-fuel vehicles’ share in total sales.
As for pulp, the demand for forest planted areas originates from the new investments in plants planned by the industry,
which, on a long-term basis, should meet export and domestic market demands.
Estimated areas of land and productivities are the input variables in the fertilizer demand model for the Brazilian agriculture.
The association of productivity rates with fertilizer response curve results in the required quantity of NPK by hectare for each
crop. The total area of each crop multiplied by the required quantity of NPK equals the NPK consumption for each crop. Such
consumption, added to the consumption of fertilizers for pastures, forestation and base fertilization for new areas, results in
Brazil’s total NPK demand for 2026.
The future domestic supply of fertilizer nutrients is estimated on the basis of investment projects for expansion of fertilizer
production installed capacity and considering the historical proportion of use of installed capacity. The balance between
supply and demand is assessed for all regions, and indicates the need to import fertilizers in 2026.
Because of the delay in the implementation of new fertilizer production plants and also due to the Brazilian macroeconomic
situation, we have conceived two scenarios for the supply of those products. In the first scenario, the planned projects will be
implemented, although after the estimated deadline, considering their current stage. In the alternative scenario, we consider
that only those investments that are already at an advanced implementation stage will be completed, and the others will be
discontinued. This allows us to simulate our level of dependence on foreign suppliers in order to meet the domestic demand
for fertilizers, if those investments are not actually made.
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PROJECTIONS FOR BRAZILIAN AGRIBUSINESS
It should be borne in mind that all projections are based on assumptions that may change over the period due to unexpec-
ted severe climate events, opening of markets, change in sanitary regulations and reduction or increase in international
protectionism, which are some variables capable of affecting expectations for a given commodity.
The production of some commodities is geared to the domestic market demand only, as is the case for rice, dry beans, wheat,
and milk, since Brazil is not a major exporter of those commodities. Despite the increased competitiveness of producers due
to the Brazilian Real depreciation, we are not yet forecasting a substantial increase in exports of dairy products, for example.
If that happens, projections for future demands will require changes.
Some parameters used in the cattle raising projections released in 2015 had to be changed due to the lack of reliable infor-
mation on the actual size of the national herd, which had great variations depending on the data sources. Some assumptions
about productivity and herd size and resulting estimates for the future were changed in this updated version. Pasture area
data were also updated, thus raising the baseline set in the previous issue of this report.
Since production and demand estimates may require modifications due to risk factors inherent to the agricultural sector
or macroeconomic scenario changes, a dynamic modeling will be employed to update estimates if any outstanding event
significantly affects the outlook for the commodities at issue. The updates may be followed at www.fiesp.com.br/outlook.
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OUTLOOK FIESP 2026
CHANGING THEMACROECONOMIC MODEL
In 2016, the heterodox macroeconomic model was replaced by an orthodox one. The economic crisis that marked years 2015
and 2016 compelled to a drastic change of direction. Never had there been, in the recent history of the Brazilian economy,
two consecutive years when GDP fell 3% or more. In those two years, per capita income declined by almost 10%. The unem-
ployment rate is expected to close the year at 12%.
To make things worse, the economic activity decline came together with high inflation rates. In 2015, the annual inflation
rate was 11%, while in 2016 it is projected at around 7%. High inflation with high unemployment is a disastrous combination,
since the high interest rates used to curb price hikes can harm economic activity and employment.
The attempt to curb inflation by raising interest rates created additional fiscal problems to the Brazilian government. The in-
crease in capital costs rose the debt cost to prohibitive levels. The sluggish pace of the economic activity reduced tax revenues.
Revenue declines and interest expense increases, coupled with the lack of control over public spending in Dilma Rousseff’s
government designed an explosive trajectory for the public debt. In the last ten years before 2014, the public debt to GDP
ratio had ranged from 54% to 58%, with a primary surplus of 2.5% to 3% of GDP, which allowed the payment and consequent
stabilization of public debt in that period.
However, primary deficits rising interest rates and declining tax collection levels beginning in 2014 resulted in a debt to GDP
ratio of 66% in 2015. This indicator is projected to be 74% in 2016 and possibly 82% in 2017. The macroeconomic disorgani-
zation is such that a change in the direction of economic policy has become inevitable. The macro design that should guide
the economy in the next few years will be quite different from that used in the last decade.
From government intervention to market liberalization
The main vector of change in the Brazilian macroeconomics will be the size of the government structure and the resulting
degree of its interventionism in the economy. The profound fiscal imbalance requires the government to undertake a long
process of account adjustment, which tends to reduce the public sector’s share in GDP. The government’s recent decision
2
14
PROJECTIONS FOR BRAZILIAN AGRIBUSINESS
to place a cap on the absolute value of public spending will, if there is economic growth, steadily reduce the public sector’s
share in GDP over time.
The economic growth rebound will mostly depend on private investments to leverage the process of capital accumulation.
For that goal to be achieved, private capital investors will require a horizon in which the actions of public institutions are more
reliably predicted. In various sectors of the economy (oil, gas, electricity, basic sanitation, and in concessions for roads, ports,
railroads, airports, etc.), rules, agreements and pricing should be consistent with those of an open market economy. The fe-
deral government’s ongoing proposals fortunately go in that direction. New concessions will use a quite different regulatory
framework, compared to the one applied by the previous government. The “national champion” policy will be replaced by
credit lines for efficient projects, regardless of whether contractors have or have not previously been selected as winners.
A decreasing inflation, which is already becoming a reality for 2016 and 2017, indicates the feasibility of a much welcome
reduction in interest rates. The price forecast model used by the Brazilian Central Bank indicates that inflation rates will be
very close to the target (4.5%) by the end of 2017. Lower interest rates and new investments will allow a gradual resumption
of employment and income. The consumer market should quickly respond to cheaper credit incentives and Brazilians should
be prone to consuming again. Thus, the simultaneous increase in consumption and investments will put the country back on
the track of growth and public accounts normalization. This economic trajectory provides support to our projections for food,
fiber and energy demand in the next decade.
The macroeconomic modeling indicates that the Brazilian currency appreciation of 2016 may be reversed in the medium term.
Two vectors should contribute to that. Brazilians hope that the reduction of interest rates will reduce the appetite for arbitrage
in the domestic market. In addition, a growth rebound will induce a rise in imports, and that should decrease the Brazilian
trade balance.
The other vector is the current situation of the US economy, where interest rates are likely to recover their historical levels in
the medium term, thus allowing the dollar to appreciate against emerging countries’ currencies. Profitability scenarios that
support the projections reported in this FIESP Outlook Report for 2026 consider that exchange rates will possibly return to
their long-term equilibrium, in an economic model enjoying the tripod support of fiscal adjustment, inflation under control
and floating exchange rate.
15
OUTLOOK FIESP 2026
The Brazilian macroeconomic imbalance has affected agribusiness especially through three channels, namely: I. Foreign
Exchange; II. Credit; and III. Consumption.
The strong devaluation of Real in 2015 allowed significant gains in profitability for Brazilian agriculture. Currency devaluation
usually improves the margins of most agricultural products because only a portion of costs is priced in dollars.
That is not necessarily true for the cattle-raising industry, since devaluation leads to high grain prices, which sometimes
deviate from the fundamentals of the domestic livestock market. And that was proved true when a significant deterioration
in the operating margins of broiler, egg, pork and milk production sectors was witnessed in 2016. From 2015 to early 2016,
the devaluation led to an all-time increase in corn exports (31 million tons).
Moreover, the first and especially the second corn crop loss greatly reduced the domestic supply of that important animal
feed input. Consequently, corn prices would be set by import parity. In previous years, the reference was export parity due
to the excess supply of corn. Since corn has a relatively low value, freight costs ended up stretching the distance between
import and export prices. Cost pressures forced livestock margins down and, consequently, production volumes declined in
the second half of 2016.
The exchange rate devaluation occurring until the beginning of 2016 generated another imbalance in the balance sheet of
several companies. In recent years, many companies incurred US dollar debts. The depreciation of the Brazilian Real affected
their financial metrics, thus jeopardizing their credit status. That issue was worsened by the interest rate increases and the
lower credit availability that marked the second half of 2015 and the entire year of 2016.
It is important to emphasize that the Brazilian rural credit system is clearly procyclical. In Brazil, most rural loans are made
with money from demand deposits in major banks. Thus, with the GDP reduction and the inflation increase, demand deposit
CONSEQUENCES OF MACROECONOMIC CHANGES ON AGRIBUSINESS
3
16
PROJECTIONS FOR BRAZILIAN AGRIBUSINESS
volumes tend to fall, reducing rural credit availability. Moreover, in the deteriorated economic scenario, several sectors of the
economy have faced reductions in demand. Their revenues have fallen significantly, harming their balance sheets. Therefore,
trade banks needed to increase their reserves, and limited the volume of credit available to agricultural enterprises and rural
producers.
The low credit supply has made loan operations more expensive and, for the first time in a decade, the agriculture sector
had to deal with frankly positive interest rates. Reduced bank loans were offset by an increasing share of lending by compa-
nies physically linked to the sector, such as traders, input industries, distributors and production cooperatives, with loans
exceeding 180 days.
Unemployment at all-time high levels, reaching 12%, combined with high inflation, brought down Brazilians’ purchasing
power. Consequently, consumption declined, especially that of the most expensive products, such as meats, milk and dairy
products. Consumers initially replaced expensive products by cheaper ones, such as a leading brand yogurt by a lower priced
one, or by substitutes, such as replacing cheese by yogurt or milk; replacing prime beef by second graded beef; second gra-
ded beef by broiler meat; and broiler meat by eggs. That was the consumption model in 2015 and 2016, and several markets
have shrunk. Brazil has seldom experienced a downturn of such magnitude.
What can we expect for coming years?
The macroeconomic scenario that has been outlined for coming years predicts a recovery of lost opportunities for progress
and a rebound of consumption growth. Reductions in unemployment and inflation rates will bring back the demand for food,
fiber and energy. It should be born in mind that food is the first industry to recover its sales after a downturn, especially one as
deep as that experienced by Brazil. 2017 may turn out to be a surprising year in the second half, depending on the interest rate
decline and the rebound of growth. If the interest rate decline and the rebound of growth are stronger than average market
expectations.
An economic recovery and a falling inflation rate should restore demand deposits to pre-recession levels. The larger the de-
mand deposits, the greater the availability of rural credit. The reduction in interest rates should provide great relief to today’s
highly indebted companies, improving their balance sheets and reducing banks’ needs for reserves. This move will encoura-
ge banks to expand credit supply.
Regarding exchange rates, an appreciation of the Brazilian Real was observed in 2016. It reduced the profit margins of seve-
ral crops, even with the cost reduction resulting from the stronger Real.
However, for some other crops, the balance of world supply and demand has unexpectedly improved the margins, as was the
case of sugarcane, coffee and orange, despite the appreciated Real. Those commodities are undergoing a similar imbalance
between supply and demand. The stocks-to-use ratio of orange juice, sugar and coffee has been decreasing worldwide.
In addition, those Brazilian commodities hold an expressive share in world trade, and thus, changes in the country’s exchan-
ge rates affect their prices in the international market.
17
OUTLOOK FIESP 2026
Therefore, the combination of a declining world supply and an appreciating Brazilian Real has raised the dollar prices of
those commodities, fully offsetting (or more than fully) the effects of our currency’s appreciation on prices for producers.
That caused prices in Brazilian Real to remain either stable (at a high level) or on the rise.
An appreciating Real, however, makes production costs fall and, at the same time, reduces the leverage ratio of companies
and producers who have debts in foreign currency. However, the overall result for those crops was that the aforementioned
conditions brought significant improvements in production margins. It was a rare event, but it will serve to stimulate the
resumption of investments in those important agricultural industries.
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PROJECTIONS FOR BRAZILIAN AGRIBUSINESS
ARGENTINA:AN AGRICULTURE IN TRANSFORMATION
As everyone who is well informed about agriculture knows, only a few places on the globe are as apt for agricultural produc-
tion as Argentina, with its fertile plains, excellent logistics, sufficient human capital and technology. Since the beginning of the
last century, Argentina has stood out for its red meat and wheat production. More recently, soybeans and corn were added
to its production base.
Argentina’s large territorial dimensions, but relatively small population (close to 44 million inhabitants), explain the dominance
of exports in agriculture. In this regard, there is a clear difference in relation to Brazil. Although the Brazilian agricultural trade
balance is greater than that of Argentina, the size of Brazil’s domestic market compels it to use most of its production to meet
the domestic demand, and only a smaller portion can be exported.
Argentina’s export/production ratio is exactly the opposite of Brazil’s. The weight of exports on the structure of demand for
Argentine agricultural commodities has called the federal government’s attention to agribusiness exports as an important tax
collection source. As Argentina’s industrial sector lost momentum due to the economic crises of the 1980s, 1990s and 2000s,
the relative importance of agriculture for tax collection purposes kept rising.
Over the past 15 years, especially in the successive Kirchner governments, federal intervention in agricultural markets increased.
The initial objective was to raise federal revenues through export taxation. Later, the government intervened in some markets
to limit export volumes in order to increase domestic market supply and reduce food prices for the population.
However, economic agents often react unpredictably to market incentives. In response to price changes arising from export
taxation and controls, producers either modified their production profile or adopted risk reduction strategies by decreasing
the use of inputs.
The lower profitability resulting from higher taxation soon decreased the Argentine production dynamics. Dwindling profits
led to lower investments.
4
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OUTLOOK FIESP 2026
A notable aspect of economic policies is that, sometimes, a short-term measure produces deleterious effects on a sector’s
medium- and long-term performance, and ends up reducing the economic gain intended by the policy. There is no doubt
that, in the short term, export taxation generates higher federal revenues and reduces food prices for domestic consumers.
However, the loss of dynamism in agricultural production and its multiplying effects on employment and income generation
can harm future gains in both income and economic development for the country’s population.
The theory of economic growth has shown in different models that, in the long run, only productivity gains allow increases in
per capita income and government revenue. Therefore, distorted economic incentives for short-term benefits translate into
less social well-being in the future.
The economic interventions in agriculture made by successive Kirchner governments clearly exemplify such distortions.
After 2002, tariffs on soybeans, corn and wheat exports increased steadily. In 2002, such tariffs were set at 27.5%, 20% and
23%, respectively, and in 2008, they jumped to 35%, 25% and 28%, respectively.
Those numbers are significant, and so are the resulting distortions. Agricultural productivity gains stagnated. A study develo-
ped by the United States Department of Agriculture (USDA) clearly shows the damage to Argentine agriculture development
caused by public sector interventions.
The study shows the changes in Total Factor Productivity (TFP) in several countries of the world between 1961 and 2011.
Economists use TFP to measure the share of output growth not explained by the increase in the use of agricultural inputs
(land, machinery, fertilizers, seeds, animal feed, etc.). The index also measures the use of knowledge (technology) in the
production process.
The chart below shows Total Factor Productivity changes in Brazilian and Argentine agriculture. The productivity level me-
asurement was established in 1992, when it was set at 100 points. Between 1992 and 2001, the TFP grew almost 20% for
agriculture in Argentina and 25% in Brazil. From 2001 onwards, the Argentine productivity stagnated, while the Brazilian
grew substantially. Between 2002 and 2011, the TFP for agriculture in Argentina increased 0.93% per year, while in Brazil it
grew 3.36% per year. In the long term, the magnitude of the difference in agricultural growth rates between both countries
widened substantially in terms of agricultural output volume, producers’ income, food prices and, finally, the well-being of
the population.
Measuring Total Factor Productivity inBrazilian and Argentine agriculture (1992=100)
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
180
160
140
120
100
80
ArgentinaBrazilSource: USDA
Inde
x (19
92 =
100
)
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PROJECTIONS FOR BRAZILIAN AGRIBUSINESS
Measuring Total Factor Productivity inBrazilian and Argentine agriculture (1992=100)
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
180
160
140
120
100
80
ArgentinaBrazilSource: USDA
Inde
x (19
92 =
100
)
Production and export data clearly show Argentina’s loss of productive capacity when compared to Brazilian agriculture,
as shown below.
In Brazil, where no export restrictions are imposed, agriculture generates far more income gains, employment, trade surplus
and tax revenues produce effects that are far more beneficial. The Brazilian agribusiness accounts for 21% of GDP and almost
30% of employment. The benefits of agricultural production spread throughout the whole economy due to the multiplier
effects of employment and income, both in upstream and downstream sectors.
More recently, Argentina once again served as an excellent example of how public policy changes can boast the economy. In
late 2015, Mauricio Macri was elected president and promptly took two measures that are expected to change the future of
the country’s agriculture.
Comparison of Brazilian and Argentine Production and Exports of Corn, Wheat and Soybeans
Million tons
PRODUCT
PRODUCTION
YEARCOUNTRY 2000 2015 Var (%) 2000 2015 Var (%)
Corn
Wheat
Soybeans
EXPORTS
Argentina
Argentina
Argentina
Brazil
Brazil
Brazil
17
16
21
32
1.6
35
28
14
57
85
5.5
97
65%
-13%
171%
166%
244%
177%
58%
-56%
175%
68%
789%
391%
12
12
4
19
0.2
11
19
5.3
11
32
1.8
54
Source : USDA, MDIC
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OUTLOOK FIESP 2026
The first measure was a heavy devaluation of the peso. The second was to eliminate export taxes on wheat and corn, and
reduce (from 35% to 30%) the soybean export tax. There was no time for those changes to benefit the results of the 2015-2016
summer crops, but the wheat cultivation area was increased by almost 30% in 2016.
From January to September 2016, the consumption of fertilizers increased by 50%. The expectations of the Argentine gover-
nment and the USDA are that corn output in the next harvest season could jump from the current 27 million tons to above 35
million tons in a single year.
These numbers are a brief forecast for the growth of Argentine agricultural supply in the coming years. The benefits deriving
from the economic policy changes will certainly be felt in the medium term by all Argentines.
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PROJECTIONS FOR BRAZILIAN AGRIBUSINESS
COTTON
5
In the last few years, we have witnessed a reduction in the cotton planted area all over the world, as a result of the high sto-
ckpiles of cotton worldwide, especially in China.
Although the stock/consumption ratio has also been reduced, it still shows that there is enough supply to meet the market
demand, limiting any price reactions in the international market. In this scenario, the area of land for cotton cultivation would
hardly be recovered. Moreover, low oil prices and competition with synthetic fibers are additional constraints to natural fiber
price increases.
On the other hand, the reduction of cotton production in China and the recovery of its imports are important indicators that
price levels should soon be sustained. In addition, the uneven climate conditions in Asia and the not-so-good conditions of
crops in the US can cause sudden upward movements of cotton prices in the market.
In Brazil, we observed substantial productivity differences between producing regions. While in the North and Northeast re-
gions adverse weather conditions severely affected great part of the producing area, in the Center-West region, especially in
the State of Mato Grosso, cotton crops achieved a good performance.
The situation in the agricultural region known as MAPITOBA (which includes parts of the states of Maranhão, Piauí, Tocantins
and Bahia) has been highly critical, as also the volumes of corn and soybean harvests have dropped significantly and, in
some regions, farmers faced a third consecutive year of crop failure. Therefore, although La Niña is likely to occur in the next
season, thus favoring that region, many producers are undercapitalized and may have insufficient funds to invest in cotton
cultivation, since cotton production costs are substantially higher than those of soybean and corn.
Moreover, the current low credit availability in Brazil tends to hurt cotton cultivation prospects, considering that the situation
of MAPITOBA farmers should further slow down financial agents’ lending activities.
Therefore, despite the favorable climate forecast, the cotton cultivation area is expected to decrease in that region in the
mid-term and its expansion may only resume after a few years. Meanwhile, in the Center-West, production should continue
to grow in a more sustainable way.
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OUTLOOK FIESP 2026
Brazilian Production, Area and Productivity of Cotton
Domestic Consumption and Net Exports of Cotton
1000
tons
Domestic Consumption
18%
Net Exports
71%
Regional Share in the Production of Cotton
in 2025/26
Notes:* The sum of shares above/below 100% is explained by the rounding method. Source: Outlook Fiesp Prepared by: FIESP/DEAGRO e MBAGRO
Production
65%
Planted Area
31%
Productivity
26%
Prod
uctio
n (1
000
tons
) and
Are
a (1
000
ha)
Prod
uctiv
ity (K
g/ha
)
Production Area Productivity
2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/260
400
800
1,200
1,600
0
500
1,000
1,500
2,000
2,0002,500
Domestic Consumption Net exports
2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/262015/160
200
400
600
800
1,000
1,200
2025/26Total Production: 2.2 Million Tons
2015/16Total Production: 1.3 Million Tons
Share*:
North 1%
Northeast 23%
Southeast 2%
South 0%
Center-West 74%
Share*:
North 0%
Northeast 34%
Southeast 1%
South 0%
Center-West 65%
24
PROJECTIONS FOR BRAZILIAN AGRIBUSINESS
planted hectares1.2 MILLION
1.2 MILLIONnet ton exports
in 2025/2026
Source: Outlook Fiesp Prepared by: FIESP/DEAGRO and MBAGRO Notes: *Comparison between the 2015/2016 and 2025/2026 seasons - Projection for 10 years. ** The sum of shares above/below 100% is explained by the rounding method.
domestic demand
0.7million tons
2015/16
0.8million tons
2025/26
26%productivity growth forecast (t/ha)
1.41.8
2015/20162025/2026
production by region
+2.7% increase p.a. or 31% compared to the 2015/2016 season
18% increase (+1.7% p.a.)
71% increase compared tothe 2015/2016 season
COTTON(GINNED)
Growth (from 2015/16 through 2025/26)
Share in 2025/26**South
-98%0%
North
24%0%
Center-West
46%65%
Southeast
-26%1%
Northeast
137%34%
production tons2.2 MILLION
+5.1% increase p.a. or 65%compared to the 2015/2016 season 25
OUTLOOK FIESP 2026
As one of the world’s most consumed cereals, rice is a strategic commodity for food security in several nations. In Brazil, rice
cultivation has taken root in the South Region, where fertile soils in lowland areas allow its cultivation with high technology
and high productivity.
In other localities of the country, especially in the Center-West Region, the cultivation of dryland rice is also important for
domestic supply and for allowing the generation of an exportable surplus. The Brazilian participation in foreign trade has
consolidated in recent years and is expected to continue in coming years.
Because rice production is highly concentrated in the South of Brazil, especially in the states of Rio Grande do Sul and Santa
Catarina, the climate behavior during the growing season in that region is decisive for the final outcome. In the 2015/2016
harvest season, for instance, a good harvest was expected, but the El Niño phenomenon and its resulting high rainfall volu-
mes excessively increased soil moisture, thereby impairing final productivity, total supply and grain quality.
The poor harvest, together with the Brazilian Real devaluation, which affected the competitiveness of imported rice, espe-
cially that from Paraguay, which had significantly increased its share in the domestic market, substantially increased rice
prices in the domestic market. For the next season, the meteorologists expect the La Niña event, a climate phenomenon that
results in a rainfall reduction, particularly in the South Region of Brazil.
That lower rainfall would be bad news for other crops, but for rice it may paradoxically indicate a bumper crop. For rice
growing on irrigated soil, since reservoirs are at good levels, the risk of crop failure is reduced. The combination of rising
prices, low production costs and a favorable weather forecast for agriculture allows us to expect that supply levels will be
recovered.
In addition, an increase in rice productivity is also expected due to the development of new varieties and the use of rotation
with soybeans, a technology that has proved to be a good agronomic option for improving productivity and increasing far-
mers’ income. However, since the domestic consumption growth is limited, mostly depending on population growth, supply
can only grow consistently in the future if new markets are opened for Brazilian rice exports.
RICE
6
26
PROJECTIONS FOR BRAZILIAN AGRIBUSINESS
Brazilian Production, Area and Productivity of Rice
Prod
uctio
n (1
000
tons
) and
Are
a (1
000
ha)
Prod
uctiv
ity (K
g/ha
)
Domestic Consumption and Net Exports of Rice
Domestic Consumption Net Exports
1000
tons
Production
31%
Planted Area
-2%
Productivity
34%
Regional Share in Rice Production
2025/26Total Production: 13.9 Million Tons
2015/16Total Production: 10.5 Million Tons
Share*:
North 9%
Northeast 4%
Southeast 1%
South 81%
Center-West 6%
Share*:
North 10%
Northeast 3%
Southeast 0%
South 81%
Center-West 5%
Variation from 2015/16 to 2025/26
Notes:* The sum of shares above/below 100% is explained by the rounding method. Source: Outlook Fiesp Prepared by: FIESP/DEAGRO e MBAGRO
Production Area Productivity
2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/262015/160
2,000
4,000
6,000
8,000
10,000
12,000
14,000
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/262015/16
12,000
10,000
8,000
6,000
4,000
2,000
0
Domestic Consumption
7%
Net Exports
will reach
1.6 million tons
27
OUTLOOK FIESP 2026
34%
in 2025/2026
Source: Outlook Fiesp Prepared by: FIESP/DEAGRO and MBAGRO Notes: *Comparison between the 2015/2016 and 2025/2026 seasons - Projection for 10 years. ** The sum of shares above/below 100% is explained by the rounding method.
productivity growth forecast (t/ha)
5.37.0
2015/20162025/2026
-1% reduction compared to 2015
domestic demand
12.3million tons
11.5million tons
2015/16 2025/26
7% increase (+0.7% p.a.)
planted hectares2 MILLION
0.2% reduction p.a. or 2%compared to the 2015/2016 season
RICE
200 Knet ton imports
in 2015/16
to 1.6 MILLIONnet ton exports
in 2025/26
per capita consumption(kg/inh./year)
55.32015
54.72026
32%81%
45%10%
10%5% 10%
0%
Growth (from 2015/16 through 2025/26)
Share in 2025/26**
produced tons13.9 MILLION
+2.8% increase p.a. or 31%compared to the 2015/2016 season
14%3%
production by region
North
Center-West
South
Southeast
Northeast
28
PROJECTIONS FOR BRAZILIAN AGRIBUSINESS
COFFEE
7
After two years of frustrating crops due to droughts in 2013 and 2014, the Brazilian production of Arabica coffee had an upturn
in 2016. In this season, Conilon coffee areas were hurt by the drought that hit the State of Espírito Santo in 2015 and early
2016. Consequently, the Brazilian production of that variety fell to 8.4 million bags, the lowest level in more than ten years,
according to National Supply Company (Conab) estimates.
Nonetheless, the decline was offset by the growth (estimated at 29%) in the production volume of Arabica coffee compared
to the previous year, totaling 41.3 million bags. The outcome reflects the investments made in plantations, in the wake of high
prices obtained in the last two years, and combined with the excellent climate conditions in Arabica plantation areas during
the spring of 2015 and summer of 2016.
Therefore, in addition to the high yields that are typical of a two-year crop cycle1 , with the 2016 harvest naturally producing
higher yields than in the previous season, the favorable conditions potentiated productivity. High-quality beans that produ-
ce a high-quality beverage have now replaced the poorly developed beans harvested in the previous season that reduced
farmers’ income. Despite the rainfall events in the beginning of the harvest, which affected the drying process and made ripe
beans fall from the trees, somehow affecting product quality, overall performance was satisfactory.
In the main Asian competitors, Vietnam and Indonesia, coffee production is expected to fall by 7% and 12%, respectively, due
to the 2015 drought and the strong El Niño phenomenon. For this reason, prices have remained high in the last two years.
Nevertheless, in 2016, Brazilian Arabica producers achieved substantial benefits from the combination of attractive prices
and good performance harvests.
The global supply and demand balance remains tight, despite Brazil’s second largest harvest in history. Asia’s low supply at a
time of steady consumption growth worldwide explains that fact. Diversified kinds of preparation, more sophisticated coffee
drinkers, and consumption growth in non-traditional regions, such as China, are some factors that contribute to the increase
in coffee consumption.
1 Two-year crop cycle: the crop size peaks in alternate years, which is a physiological feature of Arabica coffee and results in Brazil’s market share variance in the international trade from one year to another.
29
OUTLOOK FIESP 2026
Although El Niño has weakened and rainfall has stabilized in Asia, global stocks are unlikely to remain stable, considering that
the Brazilian production of Arabica coffee is expected to fall in 2017, the second season of the two-year crop cycle, especially
after the substantial growth achieved in 2016. At least another year of tight supply is expected for Conilon. Accordingly, in
terms of prices, the scenario in Brazil will remain positive and stimulating for investments. In addition to being the largest
producer in terms of volume, Brazil stands out for the increasing quality and diversification of its coffee production.
30
PROJECTIONS FOR BRAZILIAN AGRIBUSINESS
Brazilian Production, Area and Produtivity of Coee
Prod
uctio
n (1
000
bags
) and
Are
a (1
000
ha)
Prod
uctiv
ity (b
ags/
ha)
Production Area Productivity
Domestic Consumption and Net Exports of Coee
Domestic Consumption Net Exports
1000
bag
s
Production
Planted Area
-1%
Productivity
28%
26%
Domestic Consumption
Net Exports
30%
20%
Regional Share in the Production of Coee2026/27
Total Production: 62.4 Million Bags2016/17
Total Production: 49.6 Million Bags
Share*:
North 3%
Northeast 5%
Southeast 89%
South 2%
Center-West 1%
Share*:
North3%
Northeast 4%
Southeast 91%
South 2%
Center-West 1%
Variation from 2016/17 to 2026/27
** Productivity based on production area.Source: Outlook Fiesp Prepared by: FIESP/DEAGRO e MBAGRONotes: * The sum of shares above/below 100% is explained by the rounding method.
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 2026/27
2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 2026/270
10,000
20,000
30,000
40,000
50,000
60,000
70,000
0
5
10
15
20
25
30
35
2,000
31
OUTLOOK FIESP 2026
in 2026/2027COFFEE
planted hectares2.2 MILLION
domestic demand
20,5million bags
2016/17
24,6million bags
2026/27
28%productivity growth forecast*** (bags/ha)
25.532.5
2016/20172026/2027
-1% decrease compared to the 2016/2017 season
20% increase (+1.8% p.a.)
45.4 MILLIONbags exported
30% increase compared tothe 2016/2017 season
12% growth
per capita consumption(kg/inh./year)
5.92016
6.62026
Growth (from 2016/17 through 2026/27)
Share in 2026/27**
-11%2%
-4%1%
12%3%
28%91%
8%4%
produced bags62.4 MILLION
+2,3% increase p.a. or 26%,compared to the 2016/2017 season
Notas: *Comparison between the 2016/2017 and 2026/2027 seasons - Projection for 10 years. ** The sum of shares above/below 100% is explained by the rounding method.
Source: Outlook Fiesp Prepared by: FIESP/DEAGRO e MBAGRO*** Productivity based on production area.
production by region
South
North
Center-West
Southeast
Northeast
32
PROJECTIONS FOR BRAZILIAN AGRIBUSINESS
SUGARCANE, SUGAR AND ETHANOL
8
In 2016, a combination of market factors led to significant sugar and ethanol price improvements, benefiting the industry.
Increased harvests in countries where the government provides effective support to production raised the global supply
of sugar, but adverse climate conditions occurring more recently in the same regions have reduced global availability and
stockpiles.
In 2015, the severe drought that hit India due to the El Niño phenomenon resulted in substantial sugarcane crop losses and
reduced sugar production by 3 million tons. The European Union also faced problems relative to beet cultivation in some
major producing countries, and the lower 2015/2016 harvest reflected the setback. Also negatively affected were some Asian
countries, such as Thailand and China.
In Brazil, a combination of factors led to a decrease in sugar production: the growth in ethanol consumption resulting from
the increase in the percentage of anhydrous ethanol blending in gasoline and the reformulation of federal and state taxes
led mills to produce more ethanol than sugar. Another factor affecting production was the excess humidity at harvest time.
All those factors reduced the national sugar supply in 2015-2016 to 34 million tons, approximately 5% less than in the pre-
vious period.
After five years when supply exceeded demand, in the 2015/2016 global season the significant shortfall resulted in a raise of
international prices to over US$c 20/lb., unheard of since mid-2012. No significant increase in world production is expected
for the short term, and thus another stock reduction is expected for the next cycle.
In the Center-South region of Brazil, which was hit by a drought in the beginning of the season and by frost in the winter, and
due to the low volume of replanting observed in recent years, it is highly probable that the volume of sugarcane harvested in
the 2016/2017 season will remain unchanged in the next period. In the Northeast Region, despite better climate conditions
predicted for the next season, no substantial recovery in production is expected in view of the financial crisis most mills in
the region are going through.
In India, because of crop losses in the previous year, a reduction in planted area is expected and the country may face a fur-
ther decline in sugarcane production. Sugar consumption has been outstripping supply, thus downsizing stockpiles.
33
OUTLOOK FIESP 2026
Therefore, a scenario of firm prices in the international sugar market is expected, and, consequently, mills can expect more
favorable results. Nevertheless, no substantial resumption of investments is expected in the short term due to the deepening
financial crisis that those mills are facing, as observed in recent years.
The scenario for ethanol is also favorable, since the restricted supply of sugarcane in the 2016/2017 season and the destina-
tion of the raw material mainly to sugar production reduced ethanol supply, raising prices to higher levels compared to the
previous year.
However, the ethanol market is highly dependent on the country’s ability to meet its demand for fuel. The coming economic
rebound, coupled with Petrobras’ intent to maintain “competitive prices for oil products”, as mentioned in its “Business and
Management Plan 2017-2021”, are factors that indicate an upward trend in fuel consumption. Thus, limited ethanol supply
growth would imply a raise in long-term gasoline imports.
Therefore, the current reform of the ethanol policy, which takes into account the international market’s conditions, is of
utmost importance for the Brazilian energy scenario. Brazil’s current deficiencies in the fuel import infrastructure and the
need to comply with the international commitment assumed at COP 21 in Paris, ratified by the National Congress, aiming to
reduce greenhouse gas emissions, explain such importance. It includes incentives to biofuels and expansion of the share of
renewable sources in the Brazilian energy matrix, to contribute to global efforts to keep global temperature increases below
2 degrees Celsius by the end of this century.
Brazil has, more than any other country, the advantage of having biofuel technology, production capacity and distribution
infrastructure.
34
PROJECTIONS FOR BRAZILIAN AGRIBUSINESS
Production
27%
Planted Area
14%
Productivity
11%
Brazilian Production, Area and Productivity of Sugarcane
Domestic Consumption
6%
Net Exports
25%
Domestic Consumption and Net Exports of Sugar
1000
tons
Domestic Consumption Net Exports
Variation from 2016/17 to 2026/27
Prod
uctiv
ity (t
ons/
ha)
Production Area Productivity
Prod
uctio
n (1
000
tons
) and
Are
a (1
000
ha)
8,000
84
82
80
78
76
74
72
70
86900,000
800,000
700,000
600,000
500,000
400,000
300,000
200,000
100,000
02016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 2026/27
68
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 2026/27
2026/27Mix
43%Ethanol
Sugar
57%
Sugarcane Destination
Sugarcane for Sugar Sugarcane for Ethanol
2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 2026/270%
20%
40%
60%
80%
100%
35
OUTLOOK FIESP 2026
% Flex-fuelfleet with
hydrous ethanolblend in 2026/27
in 2026/2733%
Evolution of the Brazilian Fleet of Vehicles
1,00
0 un
its
Regional Share in the Production of Sugarcane2026/27
Total Production: 833.0 Million Tons2016/17
Total Production: 654.7 Million Tons
Share*:
North 1%
Northeast 7%
Southeast 66%
South 6%
Center-West 21%
Share*:
North 1%
Northeast 7%
Southeast 65%
South 5%
Center-West 22%
Hydrous Ethanol
68%
Anhydrous Ethanol
10%
Domestic Consumption of Anhydrous and Hydrous Ethanol
Mill
ion
liter
s
Hydrous Comsumption Anhydrous Comsumption
Variation from 2016/17 to 2026/27
25,000
20,000
15,000
10,000
5,000
02016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 2026/27
44,000
42,000
40,000
38,000
36,000
34,000
32,0002016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 2026/27
35% 29% 30% 31% 31% 32% 33% 33% 33% 33% 33%
Total Fleet % Flex-Fuel Fleet Running on Hydrous Ethanol
Source: Outlook Fiesp Prepared by: FIESP/DEAGRO and MBAGRONotes: * The sum of shares above/below 100% is explained by the rounding method.
36
PROJECTIONS FOR BRAZILIAN AGRIBUSINESS
in 2026/2027
Source: Outlook Fiesp Prepared by: FIESP/DEAGRO and MBAGRO Notes: *Comparison between the 2016/2017 and 2026/2027 seasons - Projection for 10 years. ** The sum of shares above/below 100% is explained by the rounding method.
SUGARCANE, SUGAR AND ETHANOL
Area(million hectares)
Production(million tons)
Productivity(t/ha)
growth 14% growth 27% growth 11%
9.9 833.0 84
Su
gar
Production mix
2026/27
Production(million tons)
growth 19%
44.3growth 25%
Net Export (million tons)
32.6growth 6%
Domestic Demand (million tons)
11.7 Sugar Ethanol
Su
garc
an
eE
than
ol
Southeast
27%65%
Growth
(from 2016/2017 through 2026/2027)
Share in 2026/27**
Northeast
34%7%
South
4%5%
Center-West
34%22%
North
22%1%
Production(billion liters)
growth 40%
38.9bi
Net Export(billion liters)
growth 75%
1.4bi
Domestic Demand (billion liters)
growth 43%
37.5bi 33% hydrated ethanol flex
Brazilian lightvehicles fleet
43.7 million units
sugarcaneproduction byregion
(compared to the 2016/2017 season)
(compared to the 2016/2017 season)
(compared to the 2016/2017 season)
43% 57%
37
OUTLOOK FIESP 2026
In 2015, the paper and pulp industry benefited from the appreciation of the US Dollar against the Brazilian Real (of almost
50%), as well as the increase in pulp prices in the international market. Prices in BRL hit all-time-high levels in the beginning
of the year, thereby allowing pulp industry players to achieve excellent returns and significantly improve their financial
conditions.
That state of affairs allowed the industry to sustain planned investments. At the end of October 2015, Fibria set the corners-
tone of Project Horizon 2, and its eucalyptus pulp production plant at Três Lagoas, State of Mato Grosso do Sul, will increase
production from 1.3 million tons to 3.05 million tons per year.
Eldorado Brazil, another pulp company, also started to build its second pulp production line, with the implementation of
Vanguard Project, also in the city of Três Lagoas. Plant startup is projected for 2018. The expansion will add 2 million tons of
pulp to the current volume of 1.7 million produced by the company.
In turn, in March 2016, paper and pulp company Klabin inaugurated its Project Puma in the city of Ortigueira, State of Paraná.
The plant has a production capacity of 1.5 million tons of pulp, which will be divided into three types: hardwood (eucalyptus),
softwood and fluff pulp (pine).
The increased global supply had an impact on international hardwood pulp prices after the recent startup of new pulp mills,
such as CMPC Celulose Riograndense, at Guaíba (State of Rio Grande do Sul), Klabin, at Ortigueira (State of Paraná), as men-
tioned above, and Stora Enso in Uruguay, as well as the Asia Pulp and Paper plant in Indonesia.
Since the beginning of the year, we have been observing a reduction in domestic prices, aggravated by the US Dollar devalua-
tion against the Brazilian Real. To illustrate the situation, in August 2016, prices in Brazilian Real were 24% below the prices
charged in the same month of the previous year.
Despite the decline, current prices remain at relatively high levels and, if the market conditions remain unchanged, industries
should operate under adequate conditions of profitability.
PULP
9
38
PROJECTIONS FOR BRAZILIAN AGRIBUSINESS
Although pulp demand in European and Asian markets is expected to remain heated, a possible slowdown in China may
affect pulp prices, thus preventing a price increase in the international market.
The scenario stimulates the development of planned projects in Brazil, while less favorable conditions for investments in
other countries, together with higher costs, may restrict an increase in the world production capacity, thereby allowing more
market stability in the long term.
39
OUTLOOK FIESP 2026
Eucalyptus Plantation Area for Pulp Production
Supply and Demand of Pulp
100
0 to
nsDomestic Consumption
Net Exports
82%
35%
Production
59%
Regional Share in Area of Pulp
2026Total: 3.0 Million Hectares
2015Total: 2.6 Million Hectares
Share*:
North 5%
Northeast 29%
Southeast 27%
South 22%
Center-West 18%
Share*:
North 9%
Northeast 28%
Southeast 23%
South 18%
Center-West 23%
Variation from 2015 to 2026
Source: Outlook Fiesp Prepared by: FIESP/DEAGRO and MBAGRONotes: * The sum of shares above/below 100% is explained by the rounding method.
Prod
uctio
n ar
ea (1
,000
ha)
Planted Area
16%
Production Net Exports Domestic Consumption
20162015 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
500
0
1,000
1,500
2,000
2,500
3,000
30,000
25,000
20,000
15,000
10,000
5,000
20162015 2017 2018 2019 2020 2021 2022 2023 2024 2025 20260
40
PROJECTIONS FOR BRAZILIAN AGRIBUSINESS
Crescimento (from 2015 through 2026)
Share in 2026**
hectares of eucalyptus plantations3.0 MILLION
21.0 MILLIONnet ton exports
pulp production tons27.6 MILLION
in 2026
Source: Outlook Fiesp Prepared by: FIESP/DEAGRO and MBAGRO Notes: *Comparison between the 2015 and 2026 seasons - Projection for 11 years. ** The sum of shares above/below 100% is explained by the rounding method.
domestic demand
3.4million tons
2015
4.6million tons
2026
planted area forpulp production
+1.3% increase p.a. or 16% compared to the 2015 season
+4.3% increase p.a. or 59% compared to the 2015 season
35% increase (+2.8% p.a.)
82% increase compared to 2015
-6%18%
91%9%
44%23% -1%
23%
15%28%
PULP
Southeast
Northeast
South
Center-West
North
41
OUTLOOK FIESP 2026
Dry beans are a staple food in the diet of Brazilians, which is why their consumption is little influenced by the country’s eco-
nomic activity or prices. In fact, the current reduction in income tends to increase the demand for dry beans, since the popu-
lation usually replaces more expensive sources of protein, such as meats, for cheaper ones, such as beans.
The national supply is made up by three harvests. Dry beans are cultivated virtually in all parts of Brazil, at different periods
of the year, allowing a relatively stable supply all the time.
Whereas consumption remains almost unchanged, momentary fluctuations in supply and product quality strongly affect
prices. In years of crop failure, the commodity usually has a substantial impact on inflation rates due to its significant share in
the composition of the food basket of Brazilians.
Several factors, some related and some unrelated to its cultivation, have placed dry beans on the spotlight in 2016. The Bra-
zilian economic crisis and the consequent general reduction of the population’s income led Brazilians to consume more dry
beans, thereby raising the domestic demand. Concomitantly, the drier climate in the Northeast Region and the excessive
rainfall in the South Region caused a drop in production and the result was an explosive effect on prices. In July 2016, for
instance, the price of the carioquinha variety increased 225% compared to the same month last year, significantly raising
inflation rates in the period.
Farmers’ margins this season were considerably improved due to high prices and decreasing fertilizer costs, and therefore
we can note a planted area expansion trend. Moreover, market normalization is expected as new crops are harvested. In the
future, an improved economy and better income conditions must increase the demand for animal proteins, thus reducing
the pressure on plant sources. Consequently, the market will achieve new equilibrium and prices will return to normal levels,
and the natural long-term trends for the commodity will be resumed.
BEANS
10
42
PROJECTIONS FOR BRAZILIAN AGRIBUSINESS
Brazilian Production, Area and Productivity of Beans
Domestic Consumption and Net Imports of Beans
Domestic Consumption Net Imports
1000
tons
Regional Share in the Production of Beans
Variation from 2015/16 to 2025/26
Source: Outlook Fiesp Prepared by: FIESP/DEAGRO and MBAGRONotes: * The sum of shares above/below 100% is explained by the rounding method.
Production
42%
Planted Area
Productivity
28%
12%
Prod
uctio
n (1
000
tons
) and
Are
a (1
000
ha)
Prod
uctiv
ity (k
g/ha
)
-500
3,500
3,000
2,500
2,000
1,500
1,000
500
0
2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26
2025/26Total Production: 3.7 Million Tons
2015/16Total Production: 2.6 Million Tons
Share*:
North 3%
Northeast 15%
Southeast 27%
South 32%
Centro-Oeste 22%
Share*:
North 3%
Northeast 17%
Southeast 22%
South 27%
Centro-Oeste 30%
Domestic Consumption
23%
Zero importsin 2025/26
0 0
600
1,200
1,800
2,400
3,000
3,600
200
400
600
800
1,000
1,200
2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26
Production Area Productivity
43
OUTLOOK FIESP 2026
in 2025/2026BEANS
Source: Outlook Fiesp Prepared by: FIESP/DEAGRO and MBAGRO Notes: *Comparison between the 2015/2016 and 2025/2026 seasons - Projection for 10 years. ** The sum of shares above/below 100% is explained by the rounding method.
share in total production
37%2nd crop
37%1st crop
26%3rd crop
28%productivity growth forecast (t/ha)
0.91.2
2015/20162025/2026
production by region
domestic demand
3.5million tons
2025/26
2.9million tons
2015/16
23% increase (+2.1% p.a.)
Growth (from 2015/16 through 2025/26)
Share in 2025/26**
29%3%
93%30%
22%27%
15%22%
62%17%
production tons
3.7 MILLION
+3.6% increase p.a. or 42%compared to the 2015/2016 season
per capita consumption(kg/inh./year)
16.12015
15.72026
reduction of 2%compared to 2015
planted hectares
3.1 MILLION
+1.1% increase p.a. or 12%compared to the 2015/2016 season
-net imports
reduction of 100%
South
North
Center-West
Southeast
Northeast
44
PROJECTIONS FOR BRAZILIAN AGRIBUSINESS
CORN
11
The year of 2016 was marked by a major loss in the second corn crop, caused by uneven climate conditions. In addition, low
first-crop yields, resulting from a reduction in planted area, coupled with high export volumes over the first months of the
year, resulted in a sharp increase in corn prices. Those conditions had a strong impact on the domestic market, especially for
industries that use corn as the main raw material in their production.
In the meat industry, especially broiler and pork, high costs affected producers’ profitability and led some traditional integra-
tors to discontinue their activities. The market dynamics substantially changed: in order to supply the domestic meat market,
many producers had to import corn from Paraguay and Argentina. Domestic corn prices, instead of following export parity
prices as usual, were set at import parity rates, thereby losing alignment with the international market. Consequently, some
planned exports were canceled and imports increased significantly.
In that scenario, some animal protein producers had to make production adjustments due to the lower corn supply. The pork
industry increased female slaughtering, and the broiler industry significantly reduced the housing of chicks.
The conditions observed in 2016 will also have repercussions on the next harvest season. Although corn plantations, among
other crops, have lost areas for soybean cultivation, whose area gained substantial additions (about 2.5 million hectares)
in recent years, as observed in the 2012/2013 season, the next season (2016/2017) is expected to go against that trend, and
first-corn crops should recover some areas.
In 2016, excellent corn prices created a favorable environment for summer crops and allowed winter crop expansions for the
2016/2017 season. However, soybean planting, in spite of an expected slower growth, continues to be the main cultivation
choice.
In our basic projection scenario, which starts from the assumption that climate conditions will be favorable for corn growing,
domestic supply will be normalized next year and prices will fall, returning to export parity rates.
In the international market, prices will be under pressure by all-time high yields achieved in the US and the prospect of
planted area expansion in Argentina due to better tax incentives than those granted to soybeans. On the other hand, planted
45
OUTLOOK FIESP 2026
areas are expected to decrease in China, the second largest corn producer in the world, due to changes in the country’s agri-
cultural policy, which should boost its imports in the long term.
Furthermore, the corn market behavior over last year is an indication that Brazil has definitely consolidated itself as an im-
portant player in the world market. The Brazilian grain has become the international first choice for its quality, and the re-
duction of exports in 2016 compelled buyers, who had already negotiated their purchases, to make proper adjustments.
Thus, in 2017, the dynamics of production will allow both the normalization of the domestic market and the resumption of
shipments, with significant growth in exports.
46
PROJECTIONS FOR BRAZILIAN AGRIBUSINESS
Production
59%
Planted Area
12%
Productivity
42%
Brazilian Production, Area and Productivity of Corn
Prod
uctio
n (1
000
tons
) and
Are
a (1
000
ha)
Prod
uctiv
ity (K
g/ha
)
Domestic Consumption and Net Exports of Corn
Domestic Consumption Net Exports
1000
tons
Domestic Consumption
21%
Net Exports
168%
Regional Share in the Production of Corn2025/26
Total Production: 106.3 Million Tons2015/16
Total Production: 67.0 Million Tons
Share*:
North 3%
Northeast 5%
Southeast 15%
South 34%
Center-West 43%
Share*:
North 3%
Northeast 8%
Southeast 12%
South 25%
Center-West 52%
Variation from 2015/16 to 2025/26
Source: Outlook Fiesp Prepared by: FIESP/DEAGRO and MBAGRONotes: * The sum of shares above/below 100% is explained by the rounding method.
Production Area Productivity
2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/260
20,000
40,000
60,000
80,000
100,000
1,200
2,400
3,600
4,800
6,000
0
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26
47
OUTLOOK FIESP 2026
in 2025/2026CORN
89% increasein the secondcrop production
share of thesecond crop in totalproduction in 2025/202673%
planted hectares
17.8 MILLION
production tons106.3 MILLION
42%
Source: Outlook Fiesp Prepared by: FIESP/DEAGRO and MBAGRO Notes: *Comparison between the 2015/2016 and 2025/2026 seasons - Projection for 10 years. ** The sum of shares above/below 100% is explained by the rounding method.
productivity growth forecast (t/ha)
4.22015/2016
6.02025/2026
+1.1% increase p.a. or 12% compared to the 2015/2016 season
+4.7% increase p.a. or 59%compared to the 2015/2016 season
domestic demand
65.4million tons2025/2026
54.0million tons2015/2016
21% increase (+1.9% p.a.)
168% increase comparedto the 2015/2016 season
41 MILLIONnet ton exports
15%25%
59%3%
95%52% 31%
12%
125%8%
production by region
South
North
Center-West
Southeast
Northeast
Growth (from 2015/16 through 2025/26)
Share in 2025/26**
48
PROJECTIONS FOR BRAZILIAN AGRIBUSINESS
SOYBEANS:BEANS, MEAL AND OIL
12
Climate conditions were a great challenge for the 2015/2016 soybean harvest season in Brazil. Droughts in some regions
and excessive rainfalls in others frustrated the initial expectation for soybean yields, expected to surpass the emblematic
100 million tons. In the end, due to the losses, the total production volume was slightly lower than in the previous season.
The El Niño effects on productivity in the North and Northeast regions were already expected, but their intensity exceeded
expectations, especially in the MAPITOBA region (which includes parts of the states of Maranhão, Piauí, Tocantins and
Bahia), which was thus hurt by another year of harvest loss. Significant crop losses have harmed the economic growth in
that region, since the financial problems faced by producers tend to restrain investments, considering that soybean produc-
tion plays a prominent role in the economy of those states.
Even the South Region, which usually benefits from the El Niño phenomenon, had a reduction in productivity, but for the
opposite reason: excessive rainfalls that flooded some lowland plantations.
For the 2016/2017 harvest season, good yields and recovery of the national production are expected. The neutral climate
or the effects of a weak La Niña may, on the one hand, bring greater risks to the South Region, but on the other hand it will
bring greater regularity to the North and Northeast (Cerrado region) crops, helping the region recover its share in total pro-
duction volume.
Another factor present in the current season is the continuous expansion of total planted area, though at a smaller rate than
in previous years. After a fast growth cycle, where planted area grew over 2.5 million hectares, as in the 2012/2013 harvest
season, lower growth figures are expected for the 2016/2017 harvest season. The replacement of some soybean plantations
by first-crop corn, stimulated by the advantageous prices achieved by corn in 2016, would explain the lower growth.
Lower investments in new areas were already expected due to credit restrictions and production related problems faced in
the previous season, which limited the capital availability to producers. In some regions, such as MAPITOBA, the situation
is more critical, and growth is expected to resume at a slower pace. In the Center-West Region, despite the second corn
49
OUTLOOK FIESP 2026
crop loss, reasonable soybean crop yields placed farmers on a slightly better situation. In addition, logistical improvements
should foster production growth in coming years, especially in the north of that region.
Crushing for the production of oil and meal will remain an important driver for soybean demand, but, actually, the main
vector for production will be the international market.
The domestic demand will be substantially influenced by a greater demand for crushing, either to produce meal for animal
feed, in view of the good performance of cattle-raising activities, or to supply edible oil and biodiesel industries, according
to the ratio set for diesel blends.
From the domestic consumption viewpoint, despite the meat industry’s increasing use of soy meal in animal feed formulations,
the demand for fuel and cooking oil is the main driver for the volume of processed soybeans. The increased use of bio-
diesel, due to the increased fuel blending established by the government, plus the increased consumption of cooking oil,
expanded crushing volumes, resulting in a large quantity of meal, which exceeded the demand for animal feed, thereby
generating export surpluses to meet global market demands. Since the blending of biodiesel into diesel oil is expected to
be raised to 10% in the coming years, the crushing volume must accordingly be increased to meet that market demand.
Nonetheless, soybeans will continue to be the main commodity exported by Brazil and the share of industrial processing
in total production will continue declining in coming years.
In the world supply scenario, Brazil is expected to improve its performance as exporter. The US had an excellent harvest,
pushing global oilseed prices down, despite the strong demand, mainly from China, which continues importing all-time-hi-
gh volumes.
Furthermore, two major short-term movements in the opposite direction tend to mitigate impacts on the market: in China,
the reduction of subsidies to corn planting should foster migration of some areas to soybeans and other crops. On the other
hand, in Argentina, changes in the agricultural policy implemented by the new government initially brought greater bene-
fits for the production of corn and wheat, since export taxes were suppressed for those products. For soybeans, the policy
adopted was to gradually reduce tax rates over the next few years. Therefore, in the short term, Argentina tends to reduce
soybean planting, but a progressive reversal of this trend is expected over time.
50
PROJECTIONS FOR BRAZILIAN AGRIBUSINESS
Production, Area and Productivity Brazilian of Soybeans (grains)
Prod
uctio
n (1
000
tons
) and
Are
a (1
000
ha)
Production Area Productivity
Domestic Consumption and Net Exports of Soybeans (grains)
Domestic Consumption Net Exports
1000
tons
Production
39%
Planted Area
19%
Productivity
17%
Domestic Consumption
14%
Net Exports
58%
Share Regional in Production of Soybeans (grains)2025/26
Total Production: 132.9 Million Tons2015/16
Total Production: 95.4 Million Tons
Share*:
North 4%
Northeast 5%
Southeast 8%
South 37%
Center-West 46%
Share*:
North 7%
Northeast 10%
Southeast 7%
South 30%
Center-West 46%
Variation from 2015/16 to 2025/26
Source: Outlook Fiesp Prepared by: FIESP/DEAGRO e MBAGRONotes: * The sum of shares above/below 100% is explained by the rounding method.
2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
2,000
2,200
2,400
2,600
2,800
3,000
3,200
3,400
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/262015/16 2016/17
51
OUTLOOK FIESP 2026
in 2025/2026
SOYBEANS: BEANS, MEAL AND OIL
Soybeansplanted area
19% increase
39.5
39% increase
132.9
58% increase
84.3
14% increase
48.6
14%7%
173%10%
15%30%
38%46%
145%7%
Soybean productionby region
netexports
domesticdemand
production(million tons)
(million tons)
(million tons)
(million hectares)
Soybeans
14% increase
34.8
15.3
26% increase
19.5
Meal
15% increase
8.9
1.3
18% increase
7.5
Oil
17%productivity growth forecast (t/ha)
2.92015/2016
3.42025/2026
stable 1% increase
South
North
Center-West
Southeast
Northeast
Source: Outlook Fiesp Prepared by: FIESP/DEAGRO and MBAGRO Notes: *Comparison between the 2015/2016 and 2025/2026 seasons - Projection for 10 years. ** The sum of shares above/below 100% is explained by the rounding method.
52
PROJECTIONS FOR BRAZILIAN AGRIBUSINESS
ORANGE JUICE
13
Orange juice consumption has been continuously decreasing in major world markets due to factors already mentioned in
previous FIESP Outlook reports, such as its association with carbohydrate intake and its replacement with other beverages.
However, the drop in orange juice supply has been even more significant than in consumption, due to problems faced by
the two largest global producers, Brazil and the US. As a result, the frozen concentrate orange juice (FCOJ) market has been
steady for the short term and should remain unchanged in the coming years.
In the 2015/2016 season, Florida, the world’s second largest orange producer, reduced its orange supply by 16% compared
to the previous season, to 81.5 million boxes. Figures are quite below the pessimistic forecasts released by the Florida Citrus
Commission, which, in October 2015, pointed to a volume of around 96 million boxes.
For 2016/2017, the leading US consultancies specialized in the citrus industry estimate a harvest of 60.5 million boxes, still
below the worst long-term forecasts made by the Citrus Commission.
In Brazil, the 2016/2017 harvest season brings a further drop in production, after the already reduced supply in 2015/2016,
when drought and high temperatures damaged flowering in the main producing regions. Thus, with the two largest produ-
cers in the world reducing production, global orange juice stocks will reach the lowest level in decades by the end of the
current season.
Although consumption showed no signs of recovery, extremely low stockpile levels increased FCOJ prices by more than 50%
in July, compared to the same month last year, returning to levels around US$c 180.00 / lb.
Therefore, despite the production decline, steady international prices and an appreciated dollar have allowed a rebound in
margins for producers.
In the short term, good prices for both juice and fruit should become reality until supply is effectively resumed, especially in
Brazil, since Florida’s phytosanitary problems seem to be far from an immediate and definitive solution.
53
OUTLOOK FIESP 2026
The major structural issue for the orange industry lies in the global consumption rebound. The rebound will only be possi-
ble if in developed countries, the product gains an image as a healthy natural food and is again included in the diet of the
population. On the other hand, the potential for demand in emerging markets must become a reality, especially in China
and India, where, despite some growth, per capita consumption still remains at very low levels.
54
PROJECTIONS FOR BRAZILIAN AGRIBUSINESS
Brazilian Production, Area and Productivity of Orange
Prod
uctio
n (1
000
tons
) and
Are
a (1
000
ha)
Prod
uctiv
ity (4
0.8
kg b
oxes
/ha)
Production Area Productivity
Production and Net Exports of Orange Juice
Net Exports Production
1000
tons
Production
2%
Planted Area
Productivity
1%
1%
Regional Share in Orange Production2025/26
Total Production: 16.3 Million Tons2015/16
Total Production: 16 Million Tons
Share*:
North 2%
Northeast 11%
Southeast 78%
South 9%
Center-West 1%
Share*:
North 2%
Northeast 10%
Southeast 79%
South 8%
Center-West 1%
Production
12%Domestic
Consumption
Net Exports
-16%
0%
Variation from 2015/16 to 2025/26
Source: Outlook Fiesp Prepared by: FIESP/DEAGRO and MBAGRONotes: * The sum of shares above/below 100% is explained by the rounding method.
1,000
800
600
400
200
02015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26
2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/260
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
400
420
440
460
480
500
520
540
560
580
600
55
OUTLOOK FIESP 2026
in 2025/2026
hectares of orange cultivation
699 Korange production tons
16.3 MILLION
orange productionby region
+0.2% increase p.a. or 2%compared to the 2015/2016 season
+0.1% increase p.a. or 1%compared to the 2015/2016 season
orange juice production tons
987 K
+1.1% increase p.a. or 12%compared to the 2015/16 season
ORANGE JUICE
950 MILLIONnet tons of orange juice exports
-16% decline compared tothe 2015/2016 season South
-4%8%
-8%1%
North
-4%2%
Center-West
Southeast
4%79%
Northeast
-5%10%
1%productivity growth (40.8 kg boxes/ha)
5662015/2016
5712025/2026
orange juicedomestic demand
35thousand tons
2025/2026
35thousand tons
2015/2016
stable
Source: Outlook Fiesp Prepared by: FIESP/DEAGRO and MBAGRO Notes: *Comparison between the 2015/2016 and 2025/2026 seasons - Projection for 10 years. ** The sum of shares above/below 100% is explained by the rounding method.
Growth (from 2015/16 through 2025/26)
Share in 2025/26**
56
PROJECTIONS FOR BRAZILIAN AGRIBUSINESS
WHEAT
14
The world supply of wheat has been growing more than demand for the past few years, resulting in replenishment of stocks
and international price declines. An overall and superficial analysis of the wheat market would indicate that producing cou-
ntries had little incentive to expand their planting areas.
However, illogical though it may seem, wheat-growing areas are expected to increase in the 2016/2017 season in South Ame-
rica. Thanks to the political changes in Argentina in late 2015, wheat planting has become a profitable activity. The suppres-
sion of export taxes (retenciones) brought back wheat competitiveness against soybeans, thus promoting the recovery of the
main wheat supplier to the Brazilian market.
In Brazil, some factors ended up decreasing wheat cultivation areas. International price declines and an appreciated
Real substantially reduced crop profitability. Additionally, second-crop corn has been showing a comparatively higher
profitability, and growing wheat is no longer the most convenient choice, mainly in the State of Paraná, where it is pos-
sible to grow both crops.
On the other hand, in the same year, an atypical demand supported the market. Due to second-crop losses, corn prices in-
creased substantially in the domestic market and corn was partially replaced by wheat in animal feed formulations. Those
conditions have boosted demand mostly for low quality wheat, and, therefore, they were not enough to reverse producers’
low profitability. That unconventional use should not be repeated in the next few years, unless, against all expectations, there
is further shortage of corn.
Despite the current scenario, good wheat harvests and productivity growth are expected for 2017 in Brazil.
In the long run, not only competition for area with other crops, but also climate constraints, in addition to competition with
imported wheat, will continue to reduce domestic supply, unless the government sets a more effective crop-oriented policy.
Nonetheless, Brazil is expected to continue depending on imports to meet great part of its domestic demand. At the same
time, an increasingly demanding food industry makes wheat a constant subject of research and development for new culti-
vars to help producers, and thus the quality of the wheat produced in Brazil should improve steadily.
57
OUTLOOK FIESP 2026
Brazilian Production, Area and Productivity of Wheat
Domestic Consumption and Net Imports of Wheat
Regional Share in the Production of Wheat2025/26
Total Production: 8.3 Million Tons2015/16
Total Production: 5.5 Million Tons
Share*:
North 0%
Northeast 0%
Southeast 9%
South 89%
Center-West 2%
Share*:
North 0%
Northeast 0%
Southeast 9%
South 90%
Center-West 1%
Variation from 2015/16 to 2025/26
Source: Outlook Fiesp Prepared by: FIESP/DEAGRO and MBAGRONotes: * The sum of shares above/below 100% is explained by the rounding method.
Production
49%
Planted Area
9%
Productivity
37%
Prod
uctio
n (1
000
tons
) and
Are
a (1
000
ha)
Prod
uctiv
ity (K
g/ha
)
Production Area Productivity
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
400
800
1,200
1,600
2,000
2,400
2,800
3,200
02015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26
Domestic Consumption Net Imports
1000
tons
12,000
10.000
8,000
6,000
4,000
2,000
-2,000
-4,000
-6,000
0
2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26
Domestic Consumption
6%
Net Imports
-35%
58
PROJECTIONS FOR BRAZILIAN AGRIBUSINESS
in 2025/2026WHEAT
37%productivity growth forecast (t/ha)
2.33.1
2015/20162025/2026
domestic demand
10.7million tons
2015/16
11.4million tons
2025/26
6% increase (+0.6% p.a.)
planted hectares
2.7 MILLION
+0.9% increase p.a. or 9%compared to the 2015/2016 season
Growth (from 2015/16 through 2025/26)
Share in 2025/26**90%50%
0%0%
0%1% 50%
9%
0%0%
production tons
8.3 MILLION
+4.1% increase p.a. or 49%compared to the 2015/2016 season
3.1 MILLIONnet ton imports
35% decline comparedto the 2015/2016 season
per capita consumption(kg/inh./year)
51.02015
50.82026
1% reductioncompared to 2015
production by region
South
North
Center-West
Southeast
Northeast
Source: Outlook Fiesp Prepared by: FIESP/DEAGRO and MBAGRO Notes: *Comparison between the 2015/2016 and 2025/2026 seasons - Projection for 10 years. ** The sum of shares above/below 100% is explained by the rounding method.
59
OUTLOOK FIESP 2026
60
PROJECTIONS FOR BRAZILIAN AGRIBUSINESS
After years of negotiations, Brazil and the US finally reached an agreement in 2016 for a reciprocal opening allowing the
importing of fresh beef. Therefore, Brazilian shipments to the US are expected in the coming months, though at meager
volumes, due to Brazil’s restricted share. However, the main benefit to be achieved by Brazil will be the elimination of sa-
nitary barriers imposed by the US market. That change is a persuasive argument for the opening of other large importing
markets still closed to Brazil, such as Japan, South Korea, Canada and Mexico, which, together with the US, accounted for
no less than 41% of global imports in 2015.
The Brazilian exports also grew significantly when China resumed beef imports, which was one of the main highlights in
2016. Foreign sales gained strength, while domestic consumption grew weak due to the strong economic crisis.
Furthermore, Australia’s decreased presence among exporting countries helped Brazil to expand its share in the interna-
tional market. Due to the sharp decline in the Australian herd, slaughter is expected to continue weak in the coming years.
On the other hand, the US supply resumed growth, driven by the substantial retention of females in recent years and by the
availability of feed grains, which stimulated the increase in slaughter weight.
Likewise, the Brazilian livestock cycle remains in a period of retention of females, and in 2016, the volume of females slau-
ghtered was even lower than in the previous year, although this dynamics has begun to lose strength. The price of calves
tends to adjust to that of finished cattle in the coming years, reflecting the retention of females since 2014, thus gradually
favoring an increase in the supply of finished cattle.
The production of beef and other animal proteins was affected by high corn costs, which especially hit the profitability of
confinement feedlots. That led to a significant reduction in the number of confined oxen, affecting cattle supply especially
in the second half of 2016. Unable to pass on raw material costs to final consumers, the industry was compelled to reduce
its margin significantly, and, therefore, slaughterhouses had to further reduce their purchases of cattle to protect their
profitability. Accordingly, per capita consumption of beef can fall back to the rates of over ten years ago, depending on the
pace of slaughter activities at the end of 2016.
BEEF
15
61
OUTLOOK FIESP 2026
Nevertheless, 2017 tends to be a positive year, since, in addition to an expected economic upswing, Brazil should remain
well placed among international suppliers, both in terms of quantity and price. The supply of finished cattle should rebou-
nd, and domestic and foreign demand is expected to increase in the coming years. Therefore, Brazil can be expected to
continue increasing its share in the global market.
62
PROJECTIONS FOR BRAZILIAN AGRIBUSINESS
Production
24%
Beef Cattle Herd
Domestic Consumption and Net Exports of Beef
1000
tons
Domestic Consumption Net Exports
Domestic Consumption
15%
Net Exports
66%
Brazilian Production of Beef
1000
tons
Variation from 2015 to 2026
Nota: *Comparison between the 2015 and 2026 - Projection for 10 years. Source: Outlook Fiesp Prepared by: FIESP/DEAGRO e MBAGRO
Beef CattleHerd
9% 1000
hea
ds
205,000
210,000
215,000
220,000
225,000
230,000
235,000
240,000
200,00020162015 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
2,000
4,000
6,000
8,000
10,000
12,000
020162015 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
2,000
4,000
6,000
8,000
10,000
020162015 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
63
OUTLOOK FIESP 2026
Regional Share in the Production of Beef2026
Total Production: 11.7 Million Tons2015
Total Production: 9.4 Million Tons
Share*:
North 21%
Northeast 10%
Southeast 21%
South 12%
Center-West 36%
Share*:
North 24%
Northeast 10%
Southeast19%
South 10%
Center-West 37%
Source: Outlook Fiesp Prepared by: FIESP/DEAGRO and MBAGRONotes: * The sum of shares above/below 100% is explained by the rounding method.
64
PROJECTIONS FOR BRAZILIAN AGRIBUSINESS
in 2026
BEEF
pasture areas
179.6 MILLION pasture areas in hectares
-3% reduction compared to 2015
1.30
stocking rate
heads by hectare
12% increase compared to 2015
Fonte : Outlook Fiesp Elaboração: FIESP/DEAGRO e MBAGRONotas: *Comparison between 2015 and 2026 - Projeção de 11 anos. ** A soma das participações, quando maiores/menores que 100%, é explicada pelo sistema de arredondamento.
domestic demand
8.9million tons
2026
7.8million tons
2015
15% increase compared to 2015
2.2 MILLIONnet tons of beef exports
66% increase compared to 2015
cattle herd
234.2 MILLIONbeef cattle heads
9% increase compared to 2015
Growth (from 2015 through 2026)
Share in 2026**
43%24%
28%37%
7%10%
13%19%
25%10%
beef production tons
11.7 MILLION
+2.0% increase p.a. or24% compared to 2015
production by region
South
North
Center-West
Southeast
Northeast
65
OUTLOOK FIESP 2026
After the outbreak of avian flu in the United States in 2015, when the country lost its sanitary status and felt its negative
impact on exports, no new cases were confirmed in 2016. Consequently, the country resumed sales to most markets.
However, because of the flu outbreak and other matters, some countries, such as China and Russia, are still banning the
US broiler, although they may gradually resume imports if no other cases occur and other pending matters are solved.
Nonetheless, new cases of avian influenza have been reported in Mexico, which means that the possibility of the virus
reappearing in the US is not ruled out, and this would positively affect exports in Brazil, the world’s largest broiler meat
exporter.
Notwithstanding, Brazilian shipments achieved good results in the first half of 2016, especially in terms of volume. On the
other hand, since the beginning of this year, the broiler industry has been severely hurt by corn price increases throughout
the country. The strong flow of corn exports in the 2015/2016 season, coupled with low yields in the first harvest and subs-
tantial losses in the second crop reduced stockpiles and domestic supply of the grain.
Despite the substantial growth in broiler meat export volumes, mainly due to a remarkable increase in shipments to China,
the high feed costs, without the corresponding adjustments to broiler prices, kept the industry’s profitability at negative
levels in the first half of 2016, leading integrators to file for corporate reorganization and reduce the breeding pace after
July 2016.
Furthermore, unlike 2015, when the domestic consumption of chicken meat grew at the cost of a beef consumption de-
crease resulting from the economic crisis, the good performance was not repeated in 2016, due to the deterioration of the
economy, with unemployment and inflation reaching even higher rates.
However, despite the negative scenario, prospects for 2017 are positive. On the demand side, the economy should improve
its performance and help consumption resume growth. Exports also tend to grow, while production costs are expected to
fall due to the corn production response to current stimulating prices. The good 2016 harvest season for corn in the United
States also helps to balance the scenario for 2017, with stable prices and profit margin recovery.
BROILER
16
66
PROJECTIONS FOR BRAZILIAN AGRIBUSINESSOUTLOOK FIESP 2025
Brazilian Production of Broiler
Domestic Consumption and Net Exports of Broiler
1000
tons
Domestic Consumption Net Exports
Domestic Consumption
20%
Net Exports
38%
Regional Share in the Production of Broiler2026
Total Production: 16.4 Million Tons2015
Total Production: 13.1 Million Tons
Share*:
North 1%
Northeast 4%
Southeast 20%
South 60%
Center-West 15%
Share*:
North 1%
Northeast 4%
Southeast 18%
South 58%
Center-West 20%
Variation from 2014 to 2025
Production
25%
1000
tons
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
020162015 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
2,000
4,000
6,000
8,000
12,000
10,000
020162015 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Source: Outlook Fiesp Prepared by: FIESP/DEAGRO and MBAGRONotes: *Comparison between the 2015 and 2026 seasons - Projection for 11 years. ** The sum of shares above/below 100% is explained by the rounding method.
67
OUTLOOK FIESP 2026
Production
40%
Brazilian Production of Eggs
Domestic Consumption and Net Exports of Eggs
1000
30-
doze
n bo
xes
1000
30-
doze
n bo
xes
Domestic Consumption
Net Exports
Domestic Consumption40%
Net Exports
65%
Share Regional in the Production of Eggs
2026Total Production: 136.6 Million 30-Dozen Boxes
2015Total Production: 97.6 Million 30-Dozen Boxes
Share*:
North 3%
Northeast 14%
Southeast 48%
South 23%
Centro-Oeste 13%
Share*:
North 2%
Northeast 13%
Southeast 39%
South 19%
Centro-Oeste 26%
Variation from 2015 to 2026
20,000
40,000
60,000
80,000
100,000
120,000
140,000
020162015 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
150,000
100,000
50,000
020162015 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Source: Outlook Fiesp Prepared by: FIESP/DEAGRO and MBAGRONotes: *Comparison between the 2015 and 2026 seasons - Projection for 10 years. ** The sum of shares above/below 100% is explained by the rounding method.
68
PROJECTIONS FOR BRAZILIAN AGRIBUSINESS
5.9 MILLIONnet ton exports
30-dozen boxes produced136.6 MILLION
in 2026
Source: Outlook Fiesp Prepared by: FIESP/DEAGRO and MBAGRO Notes: *Comparison between the 2015 and 2026 seasons - Projection for 11 years. ** The sum of shares above/below 100% is explained by the rounding method.
domestic demand
11.1million tons
2026
9.3million tons
2015
production by region
40% increase compared to 2015
20% increase (+1.6% p.a.)
38% increase compared to 2015
South
22%58%
North
31%1%
Center-West
63%20%
Southeast
10%18%
Northeast
19%4%
produced tons16.4 MILLION
+2.0% increase p.a. or 25%compared to 2015
BROILER
in 2026EGGS
per capita consumption(kg/inh./year)
49.644.82015 2026
11% increase
per capita consumption(dozens/inh./year)
18.114.02015 2026
30% increase
Growth (from 2015 through 2026)
Share in 2026**
69
OUTLOOK FIESP 2026
The recovery of the US swine herd, two years after the outbreak of the porcine epidemic diarrhea (PED), substantially incre-
ased the supply of pork in 2015 and, consequently, pushed prices down in the international market. This scenario remains
unchanged.
Despite the low prices, Brazil significantly expanded its exports to Mainland China from mid-2015 onwards, after the ope-
ning of that market, which accounts for half of all pork consumed in the world. In just over a year, China became the third
largest destination for Brazilian pork, only after Russia and Hong Kong, resulting in an all-time increase in the Brazilian pork
exports in 2016.
China’s increasing reliance on pork imports over the past two years is a result of the disincentive for local production from
2013 to early 2015. Those conditions strongly reduced the female swineherd and, consequently, led to a shortage of pork
meat and an increase in imports to supply domestic market demands.
From January to August 2016, China imported 900 thousand tons, a volume 150% higher than in the same period in the
previous year. Although import volumes in the last two years were quite significant, they were still a very small share in the
domestic consumption. Therefore, as Chinese per capita consumption continues growing, domestic production in China
may be unable to meet the full increase in demand, thereby boosting imports.
China’s domestic production of pork strongly depends on imported soybeans, although local corn is also used as an input.
Since Chinese corn costs are higher than in the world market, Chinese pork is often uncompetitive when compared to
imported pork. Nevertheless, China’s agricultural system is being restructured and domestic corn prices have dropped
significantly, which may boost pork production in that country.
Although, on the one hand, export growth heightened the Brazilian production pace, on the other hand high corn prices
made it impossible for the pork industry to have another memorable year in 2016, like the two preceding years, since prices
did not keep pace with the cost increase. Certainly, losses in the Brazilian domestic market would have been much worse
had the industry not been taking advantage of the current international conditions to sell its surplus production.
PORK
17
70
PROJECTIONS FOR BRAZILIAN AGRIBUSINESS
Furthermore, the recent opening of the US beef market may indirectly benefit our pork industry, since the US acceptance
of Brazilian controls over foot-and-mouth disease may help qualify Brazil to export to Japan, the world’s largest importer.
That country, as well as Mexico and South Korea, third and fourth largest importers, are currently open to pork produced
in the State of Santa Catarina, but are closed to other Brazilian states. The last two countries alone accounted for 24% of
global imports in 2015, with a volume of 1.6 million tons.
The Brazilian domestic market continues promising and, in 2017, it may already benefit from a more favorable economic
scenario, where production costs will be falling, especially in the second half of the year.
71
OUTLOOK FIESP 2026
Production
32%
Brazilian Production of Pork
1000
tons
Domestic Consumption and Net Exports of Pork
Regional Share in the Production of Pork
2026Total Production: 4.6 Million Tons
2015Total Production: 3.5 Million Tons
Share*:
North 0%
Northeast 1%
Southeast 19%
South 66%
Center-West 14%
Share*:
North 0%
Northeast 1%
Southeast 19%
South 60%
Center-West 19%
Variation from 2015 to 2026
Source: Outlook Fiesp Prepared by: FIESP/DEAGRO and MBAGRONotes: *Comparison between the 2015 and 2026 seasons - Projection for 11 years. ** The sum of shares above/below 100% is explained by the rounding method.
Domestic Consumption
23%
Net Exports
75%
1000
tons
5,000
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
020162015 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
3,000
4,000
2,000
1,000
Net ExportsDomestic Consumption
020162015 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
72
PROJECTIONS FOR BRAZILIAN AGRIBUSINESS
970 Knet ton exports
produced tons
4.6 MILLION
in 2026
domestic demand
3.6million tons
2026
2.9million tons
2015
production by region
+2.6% increase p.a. or 32% compared to 2015
23% increase (+1.9% p.a.)
75% increase compared to 2015
South
20%60%
North
Center-West
85%19%
18%0%
Southeast
37%19%
Northeast
6%1%
PORK
per capita consumption (kg/inh./year)
13.92015
15.82026
14% increasecompared to 2015
Growth (from 2015 through 2026)
Share in 2026**
Source: Outlook Fiesp Prepared by: FIESP/DEAGRO and MBAGRO Notes: *Comparison between the 2015 and 2026 seasons - Projection for 11 years. ** The sum of shares above/below 100% is explained by the rounding method.
73
OUTLOOK FIESP 2026
Milk market conditions have fluctuated considerably in recent years. In the international market, dairy prices were depres-
sed in 2016, as a consequence of the excess production since 2015 and the weak world demand.
According to a USDA forecast, even with historically low prices, world demand is not expected to grow. Yet, positive ex-
pectations are based on hopes of a more significant recovery of Chinese imports, which, so far, has not come true. China’s
resumption of milk powder imports in 2016 was relatively moderate compared to 2013 and 2014, and were insufficient to
exhaust external surpluses.
Regarding the global milk supply, there was a significant increase in response to the excellent prices achieved in 2013 and
early 2014. In Europe, with the end of the quota regime and market deregulation, producers benefited from good prices
and invested in production improvements.
Currently, however, the dairy industry crisis in Europe resulting from excess supply is leading the region to adjust to the
new market conditions. A sharp production decline in Australia, New Zealand, Argentina and Uruguay may favor an effec-
tive price recovery in the medium term.
Brazil, on the other hand, was an exception in the dairy chain in 2016, due to some market features that gained prominence
since the second half of 2015 and greatly damaged the industry’s profitability, such as higher feed costs driven by high corn
prices and also an increased labor cost.
In the scenario of increasingly expensive inputs and high finished-cattle prices in the same year, many producers increased
slaughtering of females, thereby reducing their herds. As a result, the Brazilian milk production fell sharply and prices rea-
ched historical highs, both to producers and to other links of the supply chain, to the point of standing out in food inflation
indexes.
Therefore, Brazilian milk prices have completely lost alignment with international market prices. Not even the increase in
imports, especially of milk powder, reaching volumes not seen since 2002, driven by an appreciated Real throughout the
year, was enough to fill the shortage in the domestic market, and prices remained high.
DAIRY PRODUCTS
18
74
PROJECTIONS FOR BRAZILIAN AGRIBUSINESS
Under the pressure of high raw material costs and consumers’ replacement of more elaborate and expensive products by
simpler ones, reflecting the aggravation of the economic crisis, the Brazilian production lines resorted to producing UHT
milk and, therefore, prices of this product remained pressured throughout 2016.
For 2017, a moderate recovery in the domestic demand is expected, either due to an expected improvement in the Brazi-
lian economy, or due to a probable price accommodation. Milk production should respond to the current good domestic
market prices and supply should increase, after the return of rains in the fourth quarter of 2016.
75
OUTLOOK FIESP 2026
Brazilian Production of Milk
Mill
ion
liter
s
Production
30%
Dairy Cattle Herd
1000
hea
ds
Regional Share in the Production of Milk2026
Total Production: 44.4 Million Liters2015
Total Production: 34.2 Million Liters
Share*:
North 5%
Northeast 11%
Southeast 34%
South 35%
Center-West 14%
Share*:
North 5%
Northeast 10%
Southeast 30%
South 41%
Center-West 15%
Variation from 2015 to 2026
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
020162015 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
22,000
21,500
21,000
20,500
20,000
19,500
19,00020162015 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Source: Outlook Fiesp Prepared by: FIESP/DEAGRO and MBAGRONotes: *Comparison between the 2015 and 2026 seasons - Projection for 11 years. ** The sum of shares above/below 100% is explained by the rounding method.
76
PROJECTIONS FOR BRAZILIAN AGRIBUSINESS
milk production liters44.4 BILLION
heads22.1 MILLION
in 2026
Source: Outlook Fiesp Prepared by: FIESP/DEAGRO and MBAGRO Notes: *Comparison between the 2015 and 2026 seasons - Projection for 11 years. ** The sum of shares above/below 100% is explained by the rounding method.
production by region
+2.4% increase p.a. or 32% compared to 2015
+0.1% increase p.a. or 1%compared to 2015
South
51%41%
North
8%5%
Center-West
40%15%
Southeast
13%30%
Notheast
14%10%
DAIRY PRODUCTS
per capita consumption(l/inh./year)
198.22026
164.52015
20% increasecompared to 2015
Growth (from 2015 through 2026)
Share in 2026**
77
OUTLOOK FIESP 2026
Little is said about the fish meat market in Brazil. Yet, fish farming may have achieved the best relative performance over the
last decade when compared to production of other animal proteins. This phenomenon was observed throughout the globe,
but in Brazil, it seems to have taken more dynamic contours than in most countries.
However, statistics on fish production and consumption in Brazil and in the world lack accuracy. In fact, different sources spe-
cialized on the matter have published varying production data. However, they all indicate the same upward trend in world
supply and consumption.
Since the early 1960s, the Food and Agriculture Organization of the United Nations (FAO) has conducted extensive surveys of
world production, import, export and consumption of freshwater and seawater fish. According to estimates of its Department
of Fisheries and Aquaculture, the global supply of freshwater fish grew 76% from 2004 to 2014, while the production of sea
fish remained stable in the period, with around 94.5 million tons. For Brazil, FAO estimates a 108% increase in freshwater fish
production, and a 3% increase for seawater fish production.
Those figures are impressive and reflect the per capita fish consumption throughout the country. Fish ranks fourth in meat
consumption by the Brazilian population, with an average of around 9 kilos per inhabitant/year, considering the total fish
production estimated at 1.41 million tons by FAO-OECD in 2015. Despite the strong growth, especially of freshwater fish, Brazil
is still a producer of little relevance, accounting for about 0.8% of total fish production in the world, falling short of its true
potential. Good water availability, a climate that allows year-round production in most part of its territory, and a large supply
of grains for fish feed make the country highly competitive for the aquaculture activity. However, in order to gain importance
in the global market, Brazil needs to improve farming technologies for native species such as prized Amazon River tambaqui
and pirarucu fishes, amend tax and environmental laws, and increase its share in the international market.
Growth estimates for the Brazilian fish market are quite promising. FAO’s latest Outlook1 projections indicate an expansion
of Brazilian fish farming by 6.0% per year, for the period from 2015 to 2025. Fostering the growth of aquaculture supplied-fish
is essential to meet the increasing consumer market, since the production growth of fish supplied by extractive fisheries is
highly limited.
FISH
19
1 OECD-FAO Agricultural Outlook 2016-2025
78
PROJECTIONS FOR BRAZILIAN AGRIBUSINESS
Despite the optimistic projections, the production of freshwater fish stagnated in 2016, due to several conditions that affected
production in different regions of Brazil, such as the drought that reduced dam reservoirs, especially in the Northeast Region.
Furthermore, like in the production of other meats, the increasing production costs resulting from corn crop losses (one of
the feed inputs) greatly reduced the profitability of producers, and ended up reducing their fish stocks. The economic situa-
tion was also unfavorable, due to the reduced demand for higher value-added products and to the high costs of the capital
needed to finance operations and new investments.
Another recurring challenge was the difficulty of obtaining environmental licenses, both for aquaculture properties and for
growing fish in hydroelectric dams. Commercial fish farming requires licensing for the use of water, for the construction of
tanks and for the placement of fish tank nets, and, depending on the relevant agency, this task has been increasingly difficult.
For 2017, modest or static growth is expected for the fish industry. However, on the aggregate, the design for the next de-
cade signals an upward trend in the Brazilian supply, with rates above the global average and above those observed in the
last ten years. FAO data indicate an increase around 6.0% per year in Brazilian freshwater fish production, for the next ten
years, while our forecasts are slightly more optimistic, at about 8.0% per year in the same period. Our forecasts are based on
the fundamentals of Brazil’s economic rebound, as pointed out in the macroeconomics chapter of this FIESP Outlook 2026.
Yet, it is essential to point out that we still lack consistent production data for all Brazilian states, as well as historical series
that would allow us to prepare projections in the same model as for other meats, year by year, and with regional details.
That is why we have not included them in this report. The Brazilian fishing industry’s increasing professionalization is an
indication that this matter tends to be resolved in the next few years.
79
OUTLOOK FIESP 2026
Fertilizer sales declined 2.0 million tons in 2015, mostly due to delays in the provision of credit to the agricultural sector at
a time of increased domestic prices and a depreciated currency. However, a recovery was achieved in the first half of 2016.
International trade conditions are favorable to Brazil, since international fertilizer prices are falling and exchange rates are
more convenient than in the second half of 2015.
Currently, international urea prices are close to those charged in 2005. From 2015 to 2016, prices of the main international
suppliers decreased approximately 35%, returning to their historical levels of around US$ 200 per ton.
Phosphate-based fertilizer prices have also dropped significantly. However, their current price levels, around US$ 350 per ton,
are slightly above the historical average prior to 2008, when prices were around US$ 285 per ton.
Potassium prices, currently around US$ 250 per ton, have been falling since the beginning of 2012, when the cartel of major
producers was disbanded.
Due to the balance between supply and demand for those inputs in the global market, there is little expectation that prices
will rise again in the short and medium term. Therefore, there are good prospects for sales in the coming years and the ferti-
lizer industry should be back to its long-term growth trend.
Consequently, 2017 can be a year of strong sales recovery, considering the improvements of the Brazilian economy after
the dissolution of the political crisis installed in the country in recent years. For the agricultural sector, the greater stability
expected for the exchange rate and the falling prices of inputs in the international market may be a promise that fertilizer
sales will recover.
However, logistic issues require a considerable amount of attention. The reduction in the second corn crop over the year
reduced exports and increased its domestic transportation to poultry and pork producers. Consequently, the number of
returning empty trucks was reduced in ports, thereby bringing difficulty to the transportation of fertilizers from ports to con-
sumer markets.
FERTILIZERS
20
80
PROJECTIONS FOR BRAZILIAN AGRIBUSINESS
Therefore, freight costs for the imported inputs increased, and thus raised the final prices for agricultural producers and redu-
ced the gains obtained from the lower international nutrient prices.
Investments in new fertilizer plants are uncertain, and, therefore, projections for domestic supply are hardly accurate.
The economic crisis, the financial situation of some companies and the excess supply, which led to a significant reduc-
tion in international prices, reduce the likelihood that Brazilian producers will expand production capacity.
On the other hand, new players have entered the market. The sale of Galvani’s control to Yara and the sale of Anglo American
assets, for instance, may unlock old projects. As in previous years, two scenarios will be considered in the projections: the
first contemplates only some investments already in progress and the second, more optimistic and possibly less realistic,
considers a broader resumption of investments in the fertilizer industry.
81
OUTLOOK FIESP 2026
SCENARIO 1
Imports Needed to Meet the Brazilian Demand for Fertilizers
Demand for Fertilizers by Crop2025
Consumption: 18.9 Million Tons2015
Consumption: 13 Million Tons
Share*:
Cotton 5%
Rice 6%
Sugarcane 15%
Wheat 2%
Bean 1%
Corn 24%
Soybeans (grain) 36%
Co�ee 3%
Orange 1%
Other crops 4%
Share*:
Cotton 5%
Rice 5%
Sugarcane 13%
Wheat 3%
Bean 1%
Corn 20%
Soybeans (grain) 37%
Co�ee 3%
Orange 1%
Other crops 13%
Production NPK
98%
NPK N P K2015
81%
2025
71%
2015
81%
2025
73%
2015
60%
2025
46%
2015
99%
2025
92%
82
PROJECTIONS FOR BRAZILIAN AGRIBUSINESS
Source: Outlook Fiesp Prepared by: FIESP/DEAGRO and MBAGRO Notes: *Comparison between the 2015 and 2025 seasons - Projection for 10 years. ** The sum of shares above/below 100% is explained by the rounding method.
FERTILIZERS
NPK
growth 44% growth 18% growth 58% growth 50%
18.9N
4.2P
7.0K
7.8 46% increase Soybeans7.0
21% increase Corn3.8
21% increase Sugarcane2.4
Rice
0.925% increase
6% increase
Cotton
0.9
domestic demand(million tons)
(million tons)
domestic demandNPK in 2025 main crops
NPK
71%N
73% P
46%K
92%
dependence on imports (imported nutrients’ share)
IMPORTED
NPK
growth98%
growth65%
growth98%
growth179%
6.0N
1.2P
4.0K
0.8national production (million tons)
Southeast
27%20%
Northeast
125%10%
South
19%28%
Center-West
60%37%
North
98%5%
domesticconsumption ofNPK by region
in 2025
Growth (from 2015 through 2025)
Share in 2025**
SCENARIO 1
83
OUTLOOK FIESP 2026
Production NPK
40%
2025Consumption: 18.9 Million Tons
2015Consumption: 13.1 Million Tons
Share*:
Cotton 5%
Rice 6%
Sugarcane 15%
Wheat 2%
Bean 1%
Corn 24%
Soybeans (grain) 36%
Co�ee 3%
Orange 1%
Other crops 4%
Share*:
Cotton 5%
Rice 5%
Sugarcane 13%
Wheat 3%
Bean 1%
Corn 20%
Soybeans (grain) 37%
Co�ee 3%
Orange 1%
Other crops 13%
Source: Outlook Fiesp Prepared by: FIESP/DEAGRO e MBAGRONotes: * The sum of shares above/below 100% is explained by the rounding method.
NPK N P K2015
81% 81%
2025 2015
81%
2025
77%
2015
60%
2025
61%
2015
99%
2025
100%
Imports Needed to Meet the Brazilian Demand for Fertilizers
Demand for Fertilizers by Crop
SCENARIO 2
84
PROJECTIONS FOR BRAZILIAN AGRIBUSINESS
NPK
81%N
77% P
61%K
100%
dependence on imports (imported nutrients’ share)
IMPORTED
NPK
growth 44% growth 18% growth 58% growth 50%
18.9N
4.2P
7.0K
7.8
domestic demand(million tons)
reduction-20%
NPK
growth40%
growth42%
growth47%
4.3N
1.1P
3.0K
0.2national production (million tons)
46% increase Soybeans7.0
21% increase Corn3.8
21% increase Sugarcane2.4
Rice
0.925% increase
6% increase
Cotton
0.9
(million tons)
domestic demandNPK in 2025 main crops
27%20%
125%10%
19%28%
60%37%
98%5%
FERTILIZERSin 2025
domesticconsumption ofNPK by region
Southeast
Northeast
South
Center-West
North
Growth (from 2015 through 2025)
Share in 2025**
Source: Outlook Fiesp Prepared by: FIESP/DEAGRO and MBAGRO Notes: *Comparison between the 2015 and 2025 seasons - Projection for 10 years. ** The sum of shares above/below 100% is explained by the rounding method.
SCENARIO 2
85
OUTLOOK FIESP 2026
Over the ten-year projection period, Brazil will need to expand its cultivation areas by 3.4 million hectares, an increase of only
1.4%. The addition will be much smaller than that achieved in the past decade. Agriculture is expected to grow by about 8.0
million hectares (14%), and 57% of that increase should take place in current pasture areas, which, in turn, will lose 4.5 million
hectares.
The reduced demand for new areas is explained by productivity gains and better use of some planted areas, where more
than one crop is grown per year, in addition to a cropping area increase at the expense of pasture areas, as mentioned above.
Therefore, our projections indicate that, in order to meet Brazilian and global food demand, Brazil must increase its grain
production by 46.5%, while the area used for such purpose will grow only 14% over the next decade.
The combination of productivity, intensive use of land and use of pasture areas to grow crops has allowed Brazil to meet the
demands for food, fiber and energy with a minimum cultivation area expansion, which will be increasingly restricted due to
environmental requirements.
In this regard, the New Forest Code is highly important. On the one hand, it maintained the rules on legal reserve requi-
rements for properties established by the previous legislation, on the other hand, it provided farmers with alternatives to
facilitate compliance with such rules. The alternatives include the possibility of offsetting their obligations by maintaining
legal forest reserves outside their properties, according to standards set forth in State Environmental Regulation Programs.
Farmers are allowed, for example, to use areas that are less productive or less suitable for cultivation in order to comply with
reforestation requirements. Those measures facilitate and encourage the agricultural sector to comply with environmental
regulation and reduce negative impacts on the supply of agricultural products.
Among agribusiness segments, the sugar-ethanol industry stands out for its meager agricultural productivity gains, similarly
to what occurred in previous periods. The industry has been facing heavy challenges due to both the economic and financial
problems that have limited the companies’ investment capacity and the new technological requirements relative to environ-
mental and labor issues. New technologies fostered the mechanization of field operations, although the solutions were not
always properly adjusted and some crop productivity was lost.
LAND USE
21
86
PROJECTIONS FOR BRAZILIAN AGRIBUSINESS
However, the Brazilian sugar industry should recover at least part of its investment capacity due to good market conditions.
Productivity indexes are expected to improve, and thus contribute to decrease the demand for new cultivation areas.
The discussion about the purchase of Brazilian lands by foreigners is another factor that may interfere in land market
dynamics. In practice, the current regulation restricts the purchase of agricultural properties by foreigners, although this
issue is expected to be reviewed by the Congress soon. Although we do not intend to further discuss the subject here, our
conclusion is that if restrictions are reduced, the inflow of foreign capital into production will have an impact on the land
use dynamics due to the greater volume of investments.
87
OUTLOOK FIESP 2026
Pasture Area by Region
Area
(100
0 ha
)
Plantation Area (first crop) by Region
Area
(100
0 ha
)
Agriculture and Livestock Production Area by Region
Area
(100
0 ha
)
North Northeast Southeast South Center-West
North Northeast Southeast South Center-West
North Northeast Southeast South Center-West
260,000240,000220,000200,000180,000160,000140,000120,000100,000
80,00060,00040,00020,000
002016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
200,000
180,000
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0002016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
70,000
60,000
50,000
40,000
30,000
20,000
10,000
002016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
002016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
88
PROJECTIONS FOR BRAZILIAN AGRIBUSINESS
hectares of land used for crop-livestock production in 2026
244.4 MILLION
hectares used for cultivation (1st crop)
64.8 MILLION
in 2026
Fonte : Outlook Fiesp Elaboração: FIESP/DEAGRO e MBAGRONotas: *Comparison between the 2016 and 2026 seasons - Projection for 10 years. ** Considering corn (2nd crop).dry beans (2nd and 3rd crops) and wheat.
expansion of 8.0 million hectares compared to 2016
hectares of pasture areas
179.6 MILHÕES
will be the demand for new areas until 2026
342 thousand hectares per year
LAND USE
share of second crops**in Brazil’s total grain production in 2026 33% example: 73% of corn will be produced in the second crop
reduction of 4.5 million hectares comparedto 2016 (land to be used for cultivation) 89
3ª capa CMYKCMYK
2026PROJEÇÕES PARA O AGRONEGÓCIO BRASILEIRO
FIESPfiesp.com.br/outlook
2026
PR
OJE
ÇÕ
ES
PA
RA
O A
GR
ON
EG
ÓC
IO B
RA
SIL
EIR
OFIE
SP
CMYKCMYK4ª capa 1ªcapa