The agricultural economy is an area of great importance for society as a whole, although many people have no idea about it. And it is with the knowledge developed in this field of study that practices for growing, selling and distributing food can be created that optimize the supply of cities and countries, for example.
The agricultural economy is, therefore, a complex topic that has everything to do with social well-being, the economy and job creation. To know a little more about it, continue reading. This article brings the most relevant information on the subject, check it out!
What this article covers:
What is agricultural economics?
Agricultural economics is the area of knowledge, within economics, in which various aspects related to agriculture are considered. It studies the fundamentals that underlie the practices and methods used in growing food and how they should be distributed in society.
In this context, the agricultural economy exists to solve questions about how we should use arable land in an optimal way, in addition to providing guidance on work in the field and the financial resources necessary for this activity to be carried out.
As agricultural development is of great importance for any society, the agricultural economy, in turn, is a subject that is also very relevant, especially with regard to the economy.
How is the agricultural economy in Brazil today?
Brazil has had agribusiness as its main economic activity for a long time (since the 19th century). This makes the well-being of this sector fundamental for the balance of national accounts. In this context, the scenario of the Brazilian agricultural economy has shown fluctuations in recent semesters.
Accordingly with Cepea (an economics study center linked to USP), the biennium 2020 and 2021 was one of the best in the national historical series. In the first half of 2021 alone, for example, the sector’s GDP grew by more than 14%, a very expressive number.
Earlier this year, however, the numbers showed a small drop. From January to March 2022, Brazil’s agribusiness GDP decreased by 0.80% (which in cash represents around R$20 billion). The causes of this drop are mainly associated with the rise in the price of basic agricultural and agroindustry inputs.
What factors limit the development of the agricultural economy?
Some things, of different nature, can contribute to the limited development of the agricultural economy. See some examples, in the topics below, of things that can negatively influence the sector and hinder its growth:
As agribusiness depends a lot on good weather conditions and the absence of pests, these factors influence production fluctuations in the field and their economic results.
bad economic policies
Another point that prevents the agricultural economy from having better results is the lack of policies that facilitate this. Things like very high interest rates, inflation and lack of adequate infrastructure are relevant in this context.
The tax system practiced in Brazil can also be considered a limiting element of the agricultural economy, mainly because the taxes charged here are not compatible with those of competing countries. This, in turn, makes many foreign products cheaper than domestic ones.
How to benefit from the Brazilian agricultural economy in investments?
A striking feature of the agricultural economy is that its scope for investment is considerably wide. It is possible to put money into the sector and obtain returns in different ways. These are some of the best options for those interested in the area:
- Agribusiness Letters of Credit (LCA);
- Fiagro Investment Funds;
- Agricultural Receivables Certificates (CRA);
- Common shares in companies of the sector;
- Real Estate Investment Funds (FII).
These are the most suitable alternatives for those who want to invest. But be aware: each one has its own dynamics and mode of operation, that is, the returns and stability of the business can vary greatly from one to another. The best thing, in this case, is to research in more depth to know where to safely put money.
Now that you know how the agricultural economy works and a few more bureaucratic details, you can look at national productions with different eyes and benefit even more from the domestic market.