Bianca Paiva
Reporter - Agência Brasil

Brasília - In the last three years the Gross Domestic Product (GDP) of the agribusiness sector has registered a 6.24% decline, equivalent to US$ 14.307 billion (R$ 33.12 billion). The Brazilian Confederation of Agriculture and Livestock-Breeding (CNA) estimates that this year's agribusiness GDP will amount to US$ 229.274 billion (R$ 530.77 billion), 1.28% less than last year's total of US$ 232.237 billion (R$ 537.63 billion).

According to Getúlio Pernambuco, technical counsellor with the CNA's National Cereals, Fibers, and Oilseeds Commission, this year's reduction in the agribusiness GDP is the result of the overvalued exchange rate and the increase in production costs. "Most of the products are being sold for prices that don't cover production costs, and this is determining the negative income performance for 2006," he explained.

The CNA goes on to report that it expects the GDP of the agricultural and livestock-breeding sector to fall to US$ 63.849 billion (R$ 147.81 billion) this year, 15% less than the US$ 73.283 billion (R$ 169.65 billion) recorded in 2004. Last year's GDP totaled US$ 66.108 billion (R$ 153.04 billion). The counsellor singled out the increase in production costs due to items such as fertilizers and pesticides to combat Asian rust. "These costs were small in 2004 and 2005, but producers greatly increased the amount of pesticides they used this year."

Pernambuco went on to note that the cost of fertilizers derived from petroleum increased both in dollars and reals, as petroleum prices climbed on the international market.

The CNA also announced today (29) an estimated 2.2% decline in the Gross Value of Agricultural Production (VBP) in comparison with last year's figure of US$ 75.637 billion (R$ 175.1 billion). This indicator registers gross receipts for the 25 most important agricultural products, and 2006 will be the third consecutive year in which, according to the Confederation, smaller revenues will further limit producers' ability to repay their debts as well as invest.

The decline in the VBP was led by livestock products, down 6.8% in comparison with last year. For agricultural goods of plant origin, the VBP rose 1.1%, in consequence of the prices of oranges, coffee, and tobacco.

Translation: David Silberstein