Since President Luiz Inácio Lula da Silva was sworn in on January 1, 2023, attention turns to the campaign promises, which permeate various economic sectors. Specifically in agribusiness field, known to be the engine of the Brazilian economy in the external sector, Lula committed himself to the "strengthening of agricultural production, on the fronts of family agriculture, traditional agriculture and sustainable agribusiness", and with the "development of the agro-industrial complex".

Given the guidelines of the new government, it is essential that agribusiness agents, whether producers, investors, traders or even final consumers, be aware of the changes and set their expectations.

To monitor the evolution of the scenario in 2023 and evaluate the prospects for the future, we present some points that deserve attention.

Expectation of growth of agribusiness GDP

The Brazilian Institute of Economics of the Getulio Vargas Foundation (FGV–Ibre) projected an 8% increase in agribusiness GDP in 2023 – the largest growth since 2017. The Confederation of Agriculture and Cattleraising of Brazil (CNA), more modestly, predicted a growth of up to 2.5% for the GDP of the sector in the same period.

One of the main factors for the high projections is the expectation of a record-breaking grain crop in 2023. According to the Brazilian Institute of Geography and Statistics (IBGE) calculations, the perspective is for an increase of 12.6% in relation to the 2022 result.

The optimistic expectations are also based on the launch of the 2022/2023 Crop Plan. The plan, released by the previous federal government on June 29, 2022, provides for the availability of R$ 340.88 billion for the sector by June 2023 – an increase of 36% compared to the previous Crop Plan. The resources are allocated not only for costing and marketing, but also for investments in general.

Environmental policy and surveillance

After years of more flexible and liberal environmental policy, the expectation is that the new management will strengthen environmental preservation agencies and combat illegal extractive practices.

The new government published Decree no. 11.373/23, which determines the transfer of 50% of the amounts collected with the application of fines by the Federal Government to the National Environment Fund (FNMA). Until the enactment of the Decree, only 20% of the resources went to the FNMA. The rest was split up among the Naval Fund, Municipal and State funds for the environment, and other related entities.

In addition, one of Lula's campaign promises is to establish international cooperation for the preservation of natural resources. Agreements are expected to be announced over the coming months with international agencies to ensure more resources for forest protection. The first signs of the resumption of international cooperation came with the announcement of the return of resources from Germany and Norway to the Amazon Fund.

From the point of view of agribusiness, it is essential that producers are up to date with environmental regulations, including keeping registers and information updated before federal and state environmental agencies, in order to avoid fines and other sanctions.

Changes in georeferencing technical standards

The National Institute of Colonization and Agrarian Reform (INCRA) published new rules for georeferencing rural properties, in force since December 30, 2022. They are mandatory for dismemberment, remembrance, land parceling or transfer of rural properties from areas above 100 hectares.

The rules allow the inclusion of new survey methodologies, such as remote sensing using drones. INCRA states that these procedures will not immediately affect rural property owners and may generate savings for the professionals responsible for georeferencing work.

This movement symbolizes a modernization of the techniques of enrollment and registration of rural properties, besides helping to avoid problems of demarcation and overlap of land and other obstacles related to possession.

In relation to rural properties that are not yet georeferenced, it is essential that the person responsible for the property provides georeferencing, to ensure and confirm the corresponding perimeter and area. For regularization before INCRA, it is necessary to observe the deadlines for each total area described in Decree no. 9.311/18, which establishes that all rural properties must be georeferenced by November 20, 2025.

Ministerial organization and public priorities

One of the first acts of the new administration established a ministerial reorganization concerning the agrarian affairs through Decree no. 11.338/23. The Ministry of Agriculture, Cattleraising and Supply (MAPA) was dismembered and its agrarian competencies were divided with the Ministry of Agrarian Development and Family Agriculture, recreated under Lula’s government.

This change demonstrates an interest in supporting small producers and settlements, reinforcing their importance in the agribusiness production process.

So far, there has been no relevant movement in the ministries and there is no expectation of any action to the detriment of monoculture for export, a relevant part of the production of Brazilian agribusiness. On the other hand, it is expected a boost in credit for small producers and, eventually, the expansion of social programs aimed at strengthening the production of family agriculture.

Conclusions and expectations

In these early days of the new government, the scenario is more of optimism than skepticism. Measures that are very relevant and impactful for the sector are under discussion (tax issues, for example).

In the coming years, the agents that operate in agribusiness should be mainly focused on the execution of the campaign promises of the new government. It is known that investment in agribusiness is inseparable from the Brazilian economic matrix. Investing is primordial and necessary.

In practical terms, the government, although committed to promoting family agriculture and encouraging the modernization of agro-industry, is already under pressure to show practical results. It will take some time to implement the measures that will make these policies effective.

From the market's point of view of expectation, there is some optimism about the rise in agribusiness GDP (based on a record harvest in 2023), which causes a ripple effect in all sectors linked to this industry. The confirmation of this optimism, however, is tied to a combination of factors ranging from favorable weather conditions to the serious and efficient implementation of economic and government policies.