RIO DE JANEIRO, BRAZIL – The cost of agricultural commodities in Brazil has reached record levels in the first months of 2022. Product prices are affected by economic, natural, health, and war-related factors, such as high inflation, the water crisis in the south of the country, the Covid 19 pandemic, and the war in Ukraine.
The results come from a technical note by economists from the Institute of Applied Economic Research (Ipea), published Thursday (28) and signed by researchers such as Ana Cecilia Kreter, specialist in national and international agriculture, and José Ronaldo Souza, director of macroeconomic policy at the institute.
The National Utility Company (Conab) and the Center for Advanced Studies in Applied Economics (Cepea / USP) also participated in the survey.
Under the pressure of the war in Eastern Europe, corn prices increased both in the domestic and international markets. In absolute terms, the bag of the commodity reached R$100 (US$20) in the first quarter of the year – a record in the historical series of Cepea/USP, which began in 1996. For comparison, in the same period last year, the same bag cost about R$85.
“Ukraine is one of the main suppliers of corn in the world and has a great weight in marketing this product. It is expected that the price will increase even more if the confrontation continues for a long time,” explains Ipea director José Ronaldo Souza.
Like corn, the price of wheat is being pressured by the war in Europe, which is impeding the flow of agricultural commodities. While Ukraine accounts for a large share of corn exports, Russia is the world’s largest wheat producer.
Souza told CNN that Brazil is among the countries that consume the most Russian wheat. According to him, it is the only agricultural product that the country cannot grow itself and therefore relies on imports. In Brazil, the cost of this commodity increased by almost 19% in just one year.
“Russia has had a good relationship with the increase in the price of wheat in recent months. And this has a direct impact on Brazil since we are a large consumer of this commodity, especially for the production of pasta and bread,” said the researcher.
With the highest values of the series started by Cepea in 1997, the soybean bag in Brazil is close to R$200, 15% higher than the same period last year. The high cost of the input was mainly caused by the lack of rain in the south of the country, which was the most intense in the last 90 years, according to meteorologists heard by CNN.
For the director of Ipea, the problems experienced in his country with the product have implications for agriculture worldwide. Souza cites that the value of the commodity in the international market is outpacing Brazil’s significant gains, with an increase of nearly 19% in 2022.
“The product most affected by the drought in the south of the country was undoubtedly soybean. The production losses were immeasurable and had global reverberations. Prices were affected by heated domestic and international demand and lower supply in South America, which Brazil could not deliver,” the economist said.
The cost of coffee rose 5.5% when comparing the last quarter of last year to the first three months of 2022. However, throughout last year, the product had the highest growth among agricultural products in Brazil, with a 105% increase in the domestic market.
“Last year there was a lot of frost in Brazil, especially in coffee-growing areas. This severely affected the harvest for 2022. Being one of the main exporters of the product, stocks remain low in our country and around the world,” José Ronaldo Souza pointed out.
Finally, data compiled by Ipea show that the price of cotton in Brazil has increased by almost 50% in the last 12 months. Currently, a bag of the commodity costs R$7.27. Like coffee and corn, the cost of cotton recorded its highest level since 1996, the beginning of the historical series.
With information from CNN Brazil