Rui Ottoni Prado wants the Brazilian government to get more aggressive in farm credit. The farmer and agricultural association leader from Mato Grosso state says the ABCDs (ADM, Bunge, Cargill, Dreyfus) currently handle from 30% to 40% of all crop financing in Brazil. That makes them, he says, the main source of financing for planting the soybean crop.
And until they do, he says the processors ought to step up more aggressively.
But this year, the processors are less aggressive in offering the loans made against beans in the ground. As a result, Prado says farmers have cut back on both fertilizer use and planted area for soybeans. He guesses the planted area will drop by 3% this year, and total soybean production will be down by 10%.
“Production costs have gone up a lot and farmers are in the red,” Prado says. “That's why we're going to ask the administration for more credit.”
He adds, “We needed to have a greater show of responsibility on the part of the trading companies, which have pulled back at a difficult time.”
TO GIVE YOU an idea, the Gazeta Mercantil newspaper reports that last crop year it cost R$8.54 billion to plant Mato Grosso's soybeans, corn and cotton. Of that expense, about R$1.7 billion was self-financed; R$730 million came from official government credit programs; and R$6.13 billion was provided by multinational soybean processors. Crushers financed an estimated 80% of planting costs last year. This year, they're down to 53%, says the newspaper.
The fact that times are, well, “difficult,” is borne out in the numbers. In November, Conab, the Brazilian agency that tracks agricultural production data, said soybean production could be down as much as 3%. That's after the agency — before the credit crisis — had soy production up by 3.5% or so.
CAN'T LIVE WITH 'EM…
At about the same time farmer-leaders like Rui Ottoni Prado were practically begging for the processors to come back to the table to finance planting, the Rio Grande do Sul state legislature — far to the South of Prado's farm — unanimously approved a committee report recommending nationalization of potash and phosphorus mines as well as indictments against Yara, Bunge and Mosaic for price abuse.
Such steps might be a long way off, and the vote could well amount to more of a statement of discontent than a plan for action. But you get the idea of how agriculture feels about fertilizer price increases of late. And in a country as reliant as Brazil is on farming, that worry extends to the society as a whole.
State representative Gilmar Sossella says, “We need to reduce the cost of agricultural production and put cheaper foods onto the worker's table.”
James Thompson is a writer and marketing consultant based in Uberaba, Brazil, a center of soybean, corn, cattle and sugarcane production. You can contact him at email@example.com.