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Corn+Soybean Digest

Brazil Keeps On Booming

(Editor's Note: In mid-January, The Corn And Soybean Digest escorted 25 travelers on a bustling two-week tour of Brazil. Here are some of the highlights from that fact-finding excursion.)

While the threat of Asian soybean rust has put a scare into U.S. farmers, it's barely a blip on the radar screen for Brazilian growers. Their solution for this deadly disease: spray and forget it.

To a large extent, that's how frontier-like farmers there react to adversity. They hit it head on and keep going.

“We spray at the R4 and R6 stage,” says Eloi Marchett, owner of Carolina Farms at Rondonopolis. “It's expensive, but those who didn't spray last year lost 50-60% of their crop.”

Spraying runs about $20-22/acre and Marchett says he now factors it into the cost of production on his 62,000 acres in Mato Grosso. This Brazilian state is roughly the size of Texas and Kansas together and is expected to produce 60% of Brazil's ag products within 12 years.

Built in 1976, Carolina Farms averages 55- to 60-bu./acre beans and 75-bu./acre corn. Annual rainfall averages about 60-65 in. Corn is planted immediately after soybean harvest, about March 1. Any later and it doesn't mature before the dry season starts about July 1.

As you read this, Chris Ward, who grows soybeans and cotton on 14,000 acres near Rondonopolis, is in the heat of soybean harvest. If all goes well, he'll harvest about 50- to 55-bu./acre beans. They'll be shipped nearly 1,000 miles by truck to a port at Santos, near São Paulo, on the Atlantic Ocean. Some will be shipped via rail. During peak harvest months of March and April, truck drivers will likely wait as much as a week to unload.

If Ward ships north, toward a port on the Amazon, he's looking at nearly 1,500 miles, much of that trek on treacherous, over-trafficked roads.

“Twenty-five years ago this was strictly cattle country,” says Ward. “Now I'm developing 28,000 acres on another farm and it's going into beans and cattle. I think cattle prices are coming back.”

A New Zealand native, Ward is strictly in the commodity soybean business and has a 2.5-million-bu. storage facility. He's also in the process of trying to secure capital to build his own biodiesel plant. He hopes to lower diesel costs and avoid paying taxes. Diesel costs him about $2.30/gal.

These two farmers epitomize the entrepreneurial spirit and attention to bottom-line costs that farmers in this region have.

What U.S. Farmers Say About Brazil

“It sure takes a sense of adventure and energy to farm there (Brazil),” says Lyle Hovland, a touring traveler from Rothsay, MN, who grows 3,000 acres of corn, soybeans and wheat. “I expected the roads to be worse, but they weren't that bad. They just need more of them.”

Overall, Hovland was impressed by their level of research. “They're equal to or ahead of us,” he says. “Fields are clean and erosion is under control.”

As current chair of the Minnesota Grain and Feed Association board, Hovland especially liked the Brazilians' co-op philosophy. “They're more socially conscious than I thought. They provide education and health care to members, not just inputs.”

Hovland does envy their weather — rainfall, heat and humidity. “There's no lack of rain or fear of frost,” he points out. “We're always on a deadline to get in early to avoid frost at the end of the season. There, they can use less equipment because they have a bigger cropping window.”

The overriding question Hovland and others on the tour had: Where do Brazilian farmers get their capital? Some signs point to outside investors, even government corruption, but the answers remain cloudy.

James and Lorie Perkins, Howard, KS, were surprised by the massive size of farms in Mato Grosso — and its huge grain handling systems. “I'm from southeastern Kansas and I've never been in fields that big,” says James. “There are crops as far as you can see.”

The Perkins, who farm in a partnership that includes 2,400 acres of corn, soybeans and milo, plus cattle, don't believe Brazilians have any real advantages over U.S. farmers.

“We each have our own problems to deal with,” James says. “They have economies of scale in Mato Grosso, but they have a problem in getting grain to market.”

Still, James says the country intrigues him enough that he'd entertain the idea of moving there, if he could find the finances. “In fact, I'd like to send my son, Michael, and his wife, Mandy, there to take a look. He's studying to be an agronomist and would like the adventure of it,” he says.

Jim Call, Madison, MN, traveled to Brazil to see how farmers there were expanding livestock production. Would they be staunch competitors for the U.S.?

“They are gearing up with livestock, but not as fast as I thought. Things move slowly there,” Call says. “I was amazed, though, at all the trucks. They move grain 1,000 miles and don't think anything of it.

“Their economy seems to be going in the right direction,” he adds. “As they develop a middle class, they'll be using more of the commodities they produce.”

Call was impressed at how easily Brazilian farmers adapt to change, especially when they switch from one crop to another — and double-crop — if they can make a buck.

“There's a lot of country pride there, too,” he says. “I'd sure like to see more of that here in the U.S.”

A Look At Corn/Soybean Production Costs

Figuring accurate costs of production in Brazil can be a challenge. Like the U.S., costs vary depending on what region of the country you're analyzing. Some of the best figures available come from Embrapa, a government entity comparable to USDA.

At right is a look at yields and production costs for the state of Mato Grosso do Sul, directly below the newer frontier area of Mato Grosso.

According to Embrapa, nearly 60% of Brazil uses no-till; 70% in the state of Mato Grosso do Sul. Also, it reports that Mato Grosso do Sul has nearly doubled agricultural production since 2000. Besides a host of fungal diseases, about 60% of the state has Asian soybean rust, first discovered in 2001. Crop specialist Geraldo Augusto de MeloFilho predicts that they'll have a resistant variety within five years. Currently, they have about 10 chemicals available for control.

Additional information, in English, can be found at Embrapa's Web site:

Mato Grosso do Sul Crops — 2003
Crop Area (1,000 acres) Yield Production (1,000 tons)
Soybeans 3,528 42.50 bu./acre 4,092
Corn (1st Season) 298 88.60 bu./acre 666
Corn (2nd Season) 1,473 64.50 bu./acre 2,404
Cotton 110 1.34 tons/acre 159
Rice 123 1.94 tons/acre 238
Wheat 225 0.75 tons/acre 168
No-Till Production Cost/Acre Mato Grosso do Sul — 2003/04
U.S. $ % of Total Cost U.S. $ % of Total Cost
Fixed Costs 41.18 25.79 46.09 24.76
Variable Costs 118.47 74.21 140.00 75.24
Inputs 86.54 54.22 95.77 51.46
Machinery 11.17 6.99 12.44 6.68
Other 20.76 13.00 31.79 17.10
Total Cost
(Fixed + Variable)
$159.66 100.00% $186.08 100.00%
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