The 10 percent annual increase in 2012 imports underscores the lack of long-term planning in Brazil, which has long been the top supplier of coffee, sugar and orange juice and more recently become a vital source of soybeans, beef, chicken and corn to the world, Fiesp said.

Brazil's agricultural exports have almost single handedly guaranteed the country a healthy trade surplus over the past decade. But the growing need for technology to improve yields under tighter environmental oversight for farmers and ranchers is chipping away at this net surplus.

The domestic market is not producing enough needed fertilizer, agrichemicals and high-tech equipment to meet growing agricultural production.

Brazil registered a trade deficit of $186 million in November as imports reached their highest daily average for the year, reversing a surplus of $571 million a year ago. Over the first 11 months of this year, Brazil has a surplus of $17.2 billion, down from $17.4 billion a year earlier.

The Latin American farming powerhouse is recognized by the United Nations' Food and Agriculture Organization (FAO) and the Organization for Economic Cooperation of Development(OCDE) as a principal supplier of food to the world.

But at a time when growing demand for crops and drought in the United States, South America, Europe and Asia has driven food prices to record levels, Brazil is becoming increasingly dependent on imports to raise its agricultural production.

In the past five years, imports by the farm sector rose to $18.5 billion from $8.3 billion worth of fertilizer, agrichemicals, machinery, capital goods and animal feeds and medicine, Fiesp said. Fertilizer imports alone have more than doubled from 2007 to $10.9 billion.

The farming giant imports 71 percent of its basic fertilizer needs including potash, nitrogen and phosphate.

"The farm inputs sector is an overall importer and will continue to be," Antônio Carlos Costa, Fiesp's head of agribusiness, said. "But it's important to note the consequences of increased dependence on foreign goods."

Imports of agrichemicals to fight pests and fungus were up 10 percent in 2012 from last year at $4.5 billion. Machinery and capital goods imports were up 11 percent at $1.8 billion. Animal husbandry product imports were up 15 percent at $333 million.

For Brazil to produce more of these goods at home, more investment will be necessary. Slower growth in China and the United States with Europe slipping into recession is not exactly inspiring to the so-called animal spirit of investors.

Brazil's left-leaning government has also shown its willingness to intervene in the local market to try to manage the economy in ways that have made investors skittish of late.

"We need to study the possibility of generating some of this value in the country, in a way that is natural and competitive," Costa said.

Brazil has boosted its revenues from farm exports by 400 percent over the past decade, according to the National Agricultural Confederation. Exports of local agricultural goods grew 3.1 percent from January through October to $67.3 billion. (Reuters)