10 Trends that Will Impact Brazilian Agriculture in the 24/25 Season

At this exact moment, in February 2024, we find ourselves in the final phase of the Brazilian soybean harvest, a crucial moment that will serve as the foundation for our preparation and planning to inform our projections and analyses for the next agricultural season. 

Situated in the southern region of Mato Grosso do Sul, covering 40 out of 78 municipalities, we utilize advanced technologies to meticulously map nearly 250,000 hectares of soybean plantations, from planting to harvesting. Daily, we closely monitor the development of crops and share this valuable information with our farmers. Up to this point, we had harvested about 32% of the total soybean area, achieving an average productivity of 53 bags per hectare, compared to 60 bags per hectare in the previous harvest (2022/2023). 

Although we observed an 11% reduction in productivity compared to the previous year, it is important to note that this number is significantly higher than the disastrous average of the 2021/2022 harvest, which recorded an average of only 35 bags per hectare in our region. 

The data presented were primarily collected from farmers employing advanced agricultural practices and achieving high levels of productivity. However, these numbers reflect the challenges that farmers will face this year in balancing their books, especially considering the low soybean prices and high production costs they have incurred. Additionally, the prospects for the subsequent harvest, which includes second crop planting, mainly composed of corn, wheat, or grasses for livestock feed, are also a cause for concern. 

In the table below, we present the results of our real-time monitoring of the 2021/2022, 2022/2023, and now 2023/2024 harvests, providing a detailed view of the performance of our region and highlighting critical observation points for our analysis. I strongly believe that this scenario is unfolding in most Brazilian regions, reinforcing the challenges we will face this harvest and in subsequent ones.

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With outcomes like these, and in a scenario marked by a multitude of variables, projecting trends in the agricultural sector becomes a notably challenging task. The influence of factors such as climate instability, geopolitical crises, and costs associated with the operational environment – the so-called “Brazil cost” – exerts a significant impact on the market and all aspects related to production, profitability, marketing, and risk mitigation for Brazilian farmers. 

In this article, grounded in historical data and real-time analysis of this year’s performance, I share with you the trends that I believe will guide the upcoming 2024/2025 harvest.

  1. The Need for Cost Rationalization: Brazilian farmers will need to adopt a highly rational approach for the upcoming harvest. Commodity price trends indicate few significant changes, highlighting the need to rationalize crop input purchases, investment in new areas, and equipment acquisition. While traditional expenses will decrease, the demand for more technology and information will be crucial for this rationalization. The reintroduction of barter as a form of exchange, investments in software for machinery upgrades, the use of generics for pest and disease control, and the preference for fertilizers with domestic raw materials are emerging trends. In the tractor and equipment sector, despite the existence of an old fleet in the Brazilian market, the need to use old tractors as part of payment for fleet upgrades will significantly increase this market in the coming years.
  2. Smaller Expansion of Cultivated Area: Except for crops like cotton and sugarcane, which may see an increase in cultivated area due to more favorable price conditions, a reduction in the expansion of areas dedicated to soybean and corn cultivation is expected. This will drive farmers to seek greater efficiency and productivity on their lands, opening numerous opportunities for technology companies.
  3. Increased Use of Biological Products: Brazil is already a strong advocate of conservation agriculture techniques such as no-till, inoculant use, cover crops, and crop rotation. This leads to a significant acceleration of regenerative agriculture concepts, resulting in an increasing search for soil biodiversity and regeneration. In recent years, the soybean inoculant market, i.e., the use of bacteria to aid in nitrogen fixation in the soil, has increased fourfold, and the biologicals market is growing at double-digit rates annually.
  4. Judicial Recovery and Financial Challenges: This plague called judicial recovery in agribusiness recurs periodically. While it may be a necessary mechanism to prevent some companies from going bankrupt, we have seen during periods of low profitability the excessive use of this tool induced by facilities that over time, farmers will realize are not so easy. The judicial recovery process is painful and difficult, and many farmers enter it without knowing the real pain of this entire process.
  5. Expansion of Digital Technology Use: In times of cost rationalization and maximizing the potential of existing land, farmers will make more widespread use of digitized solutions in agriculture, especially basic-level ones that are easy to implement and accessible. The goal is to allow farmers to determine precise quantities of seeds, agrochemicals, and fertilizers, optimizing quality and productivity. Increased connectivity in the field is urgent – more connectivity, more information; more information, more rationalization; more rationalization, more efficiency in the production system.
  6. Evolution of Agricultural Market Retail: Brazilian agricultural retail is resembling what happened in traditional retail. Large consolidators did not understand regionalization, created heavy and hierarchical structures, and ventured into areas they did not know, increasing risk. With this, vertically integrated cooperatives and regional distributors, familiar with the region, grew and began more targeted expansions. This opens a huge opportunity for specialists focusing on biologicals, seeds, and specialized nutrition, as well as for freelance consultants who have started to dominate the purchasing process by forming purchasing groups or franchisees.
  7. Scarcity of Qualified Labor: Technological advancements and the demand for agronomic knowledge generate a growing need for qualified labor. From agronomists to tractor operators, the need for more skilled labor has become necessary, increasing the competition for these professionals, raising hiring costs and turnover, representing a significant challenge for the sector and an opportunity for new modes of education.
  8. Intensification of Competition: With less regulation and ease of generic registration, market consolidation with large cooperatives and distributors seeking better supplier management, new business models with agronomists selling directly to farmers, and weak barriers to entry for biologicals and specialized nutrition, competitiveness will intensify. International companies are entering in the crop inputs market massively and will bring a wider range of offerings to the market. 
    The positive point: the farmer is the biggest winner, having more options and more possibilities for cost reduction.
  9. Challenges of Protectionism: Despite Brazil becoming an agricultural powerhouse and our efforts to open markets, our competitors are creating arbitrary rules to protect their agriculture. Programs like “From Farm to Fork,” the banning of essential products for Brazilian farmers like glyphosate (essential for no-till farming), increased import tariffs, adoption of stricter environmental criteria labeling Brazilian agriculture as unsustainable, combined with intense NGO action to weaken the image of our agriculture, pose significant challenges for our farmers. This will require investments in certifications and standardizations, potentially increasing costs.
  10. Energy Transition: We will see a significant increase in the offering of innovations in the drives of agricultural machinery and equipment, which could be accompanied, or even replaced, by fully electric or renewable fuel-driven solutions such as biodigesters or ethanol. Additionally, farmers, in search of additional sources of income for their properties, will invest considerably in solar and wind energy, reinforcing our vocation to produce clean, renewable, and sustainable energy.

In summary, the outlook for Brazilian agriculture in the next season is marked by uncertainties but also by great opportunities. 

Technological advancement and the pursuit of efficiency will be essential to address challenges and drive sustainable growth in the agricultural sector. With abundant natural resources, an influx of capital from various sources, and new models to offer more qualified labor, Brazil will be prepared to further strengthen its position as a global leader in agribusiness.

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