Brazilian agribusiness faces shrinking global demand

Rio de Janeiro - Production in Brazil's agri-industrial sector fell 3.9 percent in the first half of the year compared with the same period of 2011, a statistics agency said.

The decline is mainly attributable to a decline in international demand for Brazilian beef, sugar and ethanol, the IBGE statistics agency said Tuesday.

Most of the damage came in the second quarter, when agri-industrial output plunged 9.9 percent after posting growth of 4.2 percent in the January-March period.

Primary agricultural goods were down 5.9 percent, while forest products were up by the same percentage and the agri-chemical sector, including pesticides and fertilizer, expanded 27.4 percent.

Production of refined sugar and sugar-based ethanol dropped 32.4 percent and tobacco output fell by 16.9 percent.

Despite the downturn, the IBGE maintained its projection that Brazil's harvest will grow 0.4 percent this year to 160.7 million tonnes. And while agri-industrial exports declined in volume in the first half of 2012, they rose 3.7 percent in value to $44.8 billion.

Agribusiness is a key element in Latin America's largest economy.