Investments and innovation heating up in the farm sector

After stepping on the breaks in 2015, when even spending on basic inputs shrank amid political turbulence and the economic crisis, the rural producers of the country didn’t wait for the storm to dissipate and returned to investment. They resumed activity in 2016, even with another worrisome retreat of the Gross Domestic Product (GDP) and a damaging failure of the grains and conilon coffee harvests, repositioned Brazilian agribusiness on the path of growth and gains in efficiency.

This doesn’t mean, obviously, that the different segments that compose the sector have remained unaffected by the problems that, among other deleterious effects, increased farm indebtedness, squeezed profit margins and continued to generate requests for bankruptcy protection among agribusiness. Even if there was unbridled spending in expansion plans. But, even though they were concentrated on their foundational business, the sectoral spending brought surprises for having stimulated innovations.

One of the thermometers of this recovery is rural credit disbursements, which are subsidized by the Treasury. Data from the Central Bank shows that the disbursements for investment reached R$13.9 billion from July 1, when the 2016/17 Safra Plan took effect, until the end of November, 5.3% more than in the same period of the previous cycle.  The increase was stimulated by borrowing from Moderfrota, a financing line destined to the acquisition of farm equipment, which “earned” another R$2.5 billion – there were R$5 billion initially – to meet the reheating of demand.

According to the National Association of Automotive Vehicle Manufacturers (Anfavea), between July and November, 21,700 tractors and combines were sold in Brazil, almost 20% more than in the same period in the previous year. And the entity believes that the recovery will proceed in the beginning of 2017, above all in the area of combines. It’s worth recalling that the country is preparing for a record harvest of more than 210 million tonnes of grains in 2016/17, almost 15% more than the volume registered in 2015/16.

Even before the Harvest Plan for 2016/17 took effect, there were already visible signs that investment had already begun to react, considering the activity in the seeds and fertilizers markets, in the first half of the year showed a new dynamic.  Stimulated by the favorable terms of trade for agriculture, due to the exchange rate and high prices in soybean, corn, sugar coffee and orange juice markets, among others, the sales of fertilizers reached 31.4 million tonnes in the first 11 months of 2016, 11.4% more than in the same period in 2015, according to the National Association for Distribution of Fertilizers (Anda).

And, if in the basic inputs investments resumed increases, in innovation it wasn’t much different. One of the most relevant indicators that conditions are ripe for the proliferation of new tools directed toward agribusiness appeared in December, with the release of the first Census Ag Tech Startups Brasil, carried out Esalq/USP and by AgTech Garage, de Piracicaba (São Paulo).

The survey showed 76 startups working in the development of innovative technologies to resolve bottlenecks in the sector. In 2011, there were only 9. And, at the moment, there are dozens more developing.

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