Brazil’s Agricultural GDP Drops 1.28% in Q2, Yearly Decline at 3.5%

Brazil’s agricultural sector’s GDP fell by 1.28% in the second quarter of 2024. This decline has led to a total decrease of 3.5% for the year so far.

The drop may reduce the sector’s contribution to the country’s overall GDP. The Center for Advanced Studies in Applied Economics (Cepea) at Esalq/USP conducted a study on this trend.

They collaborated with the Brazilian Confederation of Agriculture and Livestock (CNA) for this research. Their research shows that price cuts, ongoing since last year, have caused this contraction.

Both the agricultural (-1.22%) and livestock (-1.20%) branches have felt the impact of this decline. The negative result also stems from lower production forecasts for key crops in 2024, such as corn, soybeans, and wheat.

These crops are part of the primary segment, which has seen a 5.11% drop in the first half of the year. The input segment of the agricultural GDP has decreased by 8.13% in the first six months.

This decline is mainly due to an 11% drop in the agricultural branch. Fertilizer, pesticide, and agricultural machinery industries have faced pressure from falling prices and production.

Livestock Sector Resilience Amid Economic Challenges

On a brighter note, the livestock sector still shows a 0.5% increase for the first half of 2024, despite the second-quarter decline.

This growth comes from positive performances in the agroindustrial and agroservices segments, which saw increases of 5.29% and 3.78% respectively in 2024.

Cepea/USP and CNA predict a 6.8% decrease in the total GDP value by the end of 2024. They estimate R$ 2.5 trillion ($446.43 billion) compared to R$ 2.68 trillion ($478.57 billion) in the previous year.

This projection suggests a split of 1.74 trillion ($310.71 billion) in agriculture and 759.82 billion ($135.68 billion) in livestock.

Based on these figures and the overall Brazilian GDP trends, experts estimate that the sector’s share in the economy will be around 21.8% in 2024.

This represents a decrease from the 24.0% recorded in 2023, indicating a shift in the agricultural sector’s economic influence.