The main reason for the changing situation is the
severe drought this year in farming areas of North America. This has of
course led to drastic reductions there in the production of important
crops of all kinds. One major example is corn (maize) an absolutely
vital food for both humans and animals and one of the five main crops
cultivated world-wide. There’s been nearly a fifty per cent drop in
American output this year, due to the weather conditions there. Another
important crop seriously restricted is soy (soya or soybeans) almost as
vital as corn, with a one-third fall in production in the US.

Needless
to say all this has had a severe knock-on effect on food prices
worldwide, with many of the world’s poorest people bearing the brunt of
the increases. According to the United Nations, world food prices
experienced a six per cent rise overall in July this year. A huge amount
for just one month.

Brazil has managed to redress the shortages
to a considerable extent, without such severe weather conditions as the
US and its own exports boosted by increased demand from countries such
as China. Evidence of this points to the fact (according to the
International Grains Council at least) that Brazil will overtake the USA
as the world’s biggest soy producer this year.

Corn (maize)
producers in Brazil are also seeing record growth in sales as they
strive to fill the gap caused by widespread ruined harvests in their
northern competitor. A significant feature is that this year, for the
first time ever, the USA is actually importing corn from Brazil.

All
this increased activity in Brazilian agriculture is of course due to
the misfortunes of the North Americans, a situation that is regrettable
for them. However, it is certainly good news for the southern hemisphere
BRICS nation. According to Luiz Antonio Pinazza, the President of
Brazil’s ‘Sectoral Chamber of Agricultural Inputs (‘CSIA’); “The US
situation has created an atmosphere of euphoria in our own countryside”.
However, so far the main beneficiaries of the boost seem to be the
large food producers in Brazil with working class and middle class
consumers much less enthusiastic over rising prices.

None the
less, as regards providing opportunities for domestic or foreign short
term investment or long term investment in Brazilian agriculture, the
present situation is an attractive one. In the long term the private and
public sectors both say that the benefits will ‘trickle down’ to
everyone. In any event the view is that the general market economy in
Brazil will benefit.

This is especially remarkable when one looks
at the Government’s recent easing of restrictions in developing new
agricultural land, especially in the rainforest areas. This is a
controversial measure, to be sure, but one that President Dilma Rousseff
and her government say is economically necessary. Environmentalists and
conservationists don’t agree and say that the steps are actually not
needed. The investment community in Brazil and well a Investment News
websites tend not to sympathise with them and general investment in
Brazil continues to grow year after year and with the upcoming Fifa
World Cup in 2014 and the Rio Olympics in 2014 there has never been a
better time to invest in Brazil and turn a modest profit.

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