Brazil's Rise in Soy, Corn Production Consequential for Iowa Farmers

Brazil’s rise in soy, corn production consequential for Iowa farmers

By Aaron Putze, APR aputze@iasoybeans.com

Enormous swaths of land in central Brazil, once referred to as a “green desert,” have sprung to life. The transformation has elevated the country of 210 million into an agricultural supercenter holding long-term consequences for Iowa farmers.

Travel through Mato Grosso, as a delegation of Iowa Soybean Association (ISA) farmer leaders did in February, and you’ll witness the equivalent of multiple U.S. growing seasons happening simultaneously.

Stand at an intersection in the heart of the Brazilian state and you’ll see soybeans being harvested by a fleet of 10 John Deere combines outfitted with 45-foot drapers. Glance to the left and a four-wheel-drive tractor with a 24-row planter is seeding second-season corn. Behind you, a field of cotton is maturing.

And to your right, more than 12,000 acres of sugar cane are readying to be harvested and processed into ethanol and food and beverage sweetener.

Welcome to Brazil, home of 24/7, 365 days-a-year agriculture.

“I’m proud of what I do, but it’s difficult not to feel like I’m a failure when seeing the country’s modern and diversified farming operations,” says ISA Director Warren Bachman.

Some say Brazil has two seasons – one rainy, the other dry. In reality, it has just one, and it’s called the growing season.

“I’ve never seen anything like it,” says Robb Ewoldt, a farmer from Davenport. “The sheer enormity and pace of activity boggles the mind. You can’t even believe it when you see it.”

Ewoldt, who serves as ISA president, and Bachman of Osceola, participated in a two-week tour of Brazil in February. Stops included farms, commodity storage and processing facilities and biofuels plants and time navigating the country’s inland waterways. Ewoldt and Bachman were joined by fellow directors Tim Bardole of Rippey and Brent Swart of Spencer, and CEO Kirk Leeds.

Iowa Soybean Association directors (from left) Brent Swart (Spencer), Robb Ewoldt (Davenport), Tim Bardole (Rippey) and Warren Bachman (Osceola) give the thumbs-up after harvesting soybeans with Bom Futuro in western Mato Grosso.

Ag mecca

Mato Grosso, the heartbeat of Brazilian agriculture, boasts a land area equivalent to Iowa, Nebraska, Minnesota, Illinois, Ohio and Indiana – combined – and farm productivity even more prolific.

Entrepreneurs from the country’s southern regions migrated north almost 35 years ago, drawn by seemingly endless tracts of Cerrado and abundant natural resources. Land thought to be inhospitable for food production quickly became productive with the use of fertilizer, modern farm equipment, ingenuity, growing global demand for protein and, at times, favorable government policy.

Today, Mato Grosso and its 7,000 farms are prolific producers of soybeans, corn, cotton, sugar cane, popcorn, sunflower, cattle, pigs, and assorted vegetables and fruit.

Despite being just one of 26 Brazilian states, Mato Grosso accounts for nearly 26% of the country’s acres planted with soybeans and roughly 30% of an estimated 4.7 billion bushels of soybean production. Almost 60% of the output is exported.

Mato Grosso also ranks first in cotton production, second in corn and leads the country in beef production, with 28 million head.

Nearly every acre of corn and soybeans produced in Mato Grosso is no-tilled.

“Many of the farms of any size and consequence are new farms – 20, 30, maybe 35 years old,” Swart says. “They don’t have bad habits to break. They’re modern, business minded and focused on growth, sustainability and diversification.”

The intensity of agricultural production in Brazil has brought increased scrutiny from the global community, says ISA CEO Kirk Leeds, particularly on the topics of environment and energy conservation.

Environmental concerns

Despite efforts to forgo tillage and generate more solar power, the state’s environmental scorecard is mixed.

Nearly 40% of the Amazon rainforest is in Brazil. The ecological wonder is often referenced as the world’s “lungs” as it’s responsible for producing almost 20% of the planet’s oxygen. Since 1970, one-fifth of the Brazilian rainforest has been repurposed. Native Cerrado is also being converted into pasture for cattle production. Then, three to four years later, that pasture transitions to row crop and sugar cane production. Rising commodity prices have spurred demand for quality farmland in Mato Grosso, which can fetch the U.S. equivalent of $10,000 per acre.

In 2001, the Brazilian government mandated that land developed from the Cerrado for agricultural purposes must maintain 20% in a legal preserve. That requirement increased to 35% two years ago and can be as much as 80% if heavily forested.

“There’s clearing of the Cerrado and rain forest happening, but to a lesser extent than what is often reported or perceived,” Ewoldt says. “When you’re required to leave 35% to as much as 80% of land in permanent conservation depending on your location, it becomes increasingly cost-prohibitive to farm.”

A rise in corn production and continued challenges with infrastructure also headlined the ISA leaders’ trip to Brazil.

To date, corn has been relegated to second-crop status in Brazil. But that’s changing as grain production in Mato Grosso now exceeds that of its oilseed counterpart.

“It’s really been used primarily as a cover crop as farmers have only wanted to break even with corn production,” Leeds says. “Now, corn might become a major crop in Brazil as profits increase. That creates challenges for U.S. farmers as we don’t get to plant two major crops in the same year on the same acres.”

Mato Grosso’s transformation to a leading corn producer is a trend U.S. farmers must pay close attention to, Leeds adds.

Corn is planted in Mato Grosso immediately following soybean harvest. Brazil’s tropical climate allows for year-long growing seasons.

Insights captured from ISA leaders’ conversations and observations.

“A big difference between U.S. and Brazilian soybean farmers is the amount of leeway they have in saving seed; my hunch is that they also don’t pay near as much in tech fees as U.S. farmers, which helps lower their cost of production considerably.” - Tim Bardole

“There’s clearing of the Cerrado and rain forest happening, but to a lesser extent than what is often reported or perceived. Most of what’s being converted to row crop production is pasture ground. But when you’re required to leave 35% to as much as 80% of land in permanent conservation depending on your location (the percentage increases the closer you get to the Amazon River), it becomes increasingly cost-prohibitive.” - Robb Ewoldt

“One thing we didn’t see was rail. We’re used to crossing railroad tracks in every town; but it’s just absolutely not there in Brazil … at least not yet.” - Warren Bachman

“Many of the farms of any size and consequence are new farms – 20, 30, maybe 35 years old. They don’t have bad habits to break. They’re modern, business minded and focused on growth, sustainability and diversification.” - Brent Swart

“Long-term, Brazil must reconcile issues in their ag production methods with changes in consumer preferences. Given the tropical climate and soil, Brazilian farmers must use a considerable amount of fertilizer and pesticides. This is occurring as consumers become increasingly concerned about chemical usage in farming and demand ‘clean’ food. Perhaps this is one more reason you’re likely to see corn acres increase as it’s an ideal way to break pest and disease cycles.” - Kirk Leeds