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Corn+Soybean Digest

Investing In Brazil

Between the end of the U.S. Civil War and the abolition of slavery in Brazil, in 1888, a wave of U.S. immigrant farmers arrived in Brazil to take up cotton farming. Today, according to one estimate, up to 80 farm families from the U.S. have invested their time and money in Brazilian production - though for very different reasons.

Some of the first to arrive were Mennonites from the U.S. As other Americans got here, they tended to set up farming nearby, where English was already being spoken. The bulk of these U.S. farmers live in and around the town of Rio Verde, in the central state of Goias, growing soybeans and other crops. But at least one has moved out to the edge of the growing soybean production belt, in the state of Bahia.

"Living on the frontier is not easy," says former North Dakotan Todd Topp, 33, who raises soybeans, corn, irrigated coffee and tropical fruits near the unincorporated town of Luiz Eduardo Magalhues. But, he adds, the sky is the limit.

"The (state of) Bahia government says there are about 17 million hectares (roughly 7 million acres) of arable land in the state," Topp says. Five million of those hectares are designated 'prime' farmland, meaning there's good rainfall. Of those five million hectares, only one million are being farmed. The soybean production trend is moving toward Brazil, Topp says. "In terms of growth, it's like the U.S. in the 1950s."

The rain forest, meanwhile, lies far to the north of the area of Bahia where Topp farms. Clearing land for production is often a mere matter of disking down the high savannah grasses and termite mounds. There aren't many trees to uproot.

Among the challenges are high-acid soils throughout Brazil. Topp puts down about 5 metric tons of lime per hectare, which lasts three years. Weeds weren't an issue at all for his first three years, and even today the narrow leaf grasses he combats are "not a major problem."

Topp and his wife moved to Brazil in 1990, but still return to North Dakota once or twice a year. They started farming near other Americans at Rio Verde, then moved to Bahia four years later. Mastering Portuguese is one of the key challenges U.S. farmers face when not near other Americans. Topp says he spent "a lot of rainy days in the hired men's houses," practicing the language.

Another challenge is the constant work. Although Topp only harvests one soybean crop (1,500 acres) a year, he has 250 hands to supervise, working 375 acres of coffee, 150 acres of corn and 450 acres of passion fruit, papaya and other fruits, aside from his beans. There's no winter letup in activity in the tropics.

Additionally, farmers face high interest rates (reaching more than 40% early last year) and "an economy where you don't know what will happen one day to the next."

In 1990, for example, the Brazilian government temporarily confiscated most cash bank accounts in an effort to knock out hyperinflation. The arrival of relative economic stability six years ago has helped. Inflation for 1999 was projected to come to less than 10%. And international banking organizations are predicting up to 3% economic growth for Brazil in 2000, despite last year's devaluation.

The January devaluation of Brazil's currency, the real, has helped, says Topp. While the nearly 40% markdown in the value of the currency increased the relative costs of fuel and other inputs, it's expected to help export sales by lowering the cost of Brazilian goods on international markets.

According to Topp, "margins are still good" for soybean farmers in Brazil. And, he says, "you've got a labor supply that's willing to work."

As a result, he says, "we're raising beans at world price levels, not at subsidized price levels."

It's impossible to tell whether we will see a second wave of U.S. agricultural immigration to Brazil. For a U.S. farmer to be successful here, Topp says, stamina is important. "And," he adds, laughing, "being crazy helps." ?

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