South America Calling
Alastair Stewart South America Correspondent

Wednesday 08/07/13

Brazil and Farm Growth

Brazil is important to grain markets, not only because of the massive crops it now produces but also because it is where the next acre of soy and corn will be planted to meet global demand for feed and food over the next decades.

Area will grow here, rather than elsewhere, because the South American country is the only major grain producer with significant land resources still available, according to common thinking.

Brazil has 200 million acres of land that can be converted into grain production without touching the rainforests, government and industry claim.

But recent studies indicate the real figure may be smaller, and technology will be as important as physical expansion in boosting local production over the next decades.

According to data compiled by Embrapa, the Brazilian state crop research agency, agricultural area actually fell 12% between 1985 and 2006, although acreage was still a princely 815 million acres

And area keeps on diminishing amid tighter environmental regulations, growing indigenous reserves and demands from logistics projects.

Meanwhile, after aggressive expansion in grain planting across the Cerrado over the past two decades, many of the easy acres in the frontier regions have now been planted.

"Ten years ago, there was ample area to expand in all the major farm frontiers. With the growth in planting and greater restrictions, scope for growth is now restricted in frontier areas like western Bahia (in the eastern Cerrado)," said Evaristo Eduardo de Mirando, an Embrapa researcher.

Still, there remains plenty of pasture for soybean farmers to expand on, you may say. But the reality is that much of it is not suitable for grain production, according to a survey compiled by Agroconsult, a local farm consultancy.

Of Brazil's 440 million acres of pasture, only 17.8% sits above 500 meters (1,640 feet), which is seen as ideal for grain farming. Meanwhile, some 7% is on steep slopes, which would preclude conversion to row crops, the consultancies estimate.

Furthermore, a fair portion of the suitable pasture is in scattered isolated regions, which makes it difficult, and expensive, to transport grains to port.

I am not saying Brazil won't be able to meet demand for extra production over the next decade.

But its ability to satisfy future customers has as much to do with the adoption of technologies that will increase the usage and yields on existing farmland as physical expansion.

Over the last decade, the adoption of double cropping across large parts of Brazil's south and center-west over the last decade has been more important to the expansion of grain production than the conversion of degraded pasture.

There is still plenty of scope to expand area on which corn directly follows a summer crop of soybeans and more area will become available, if farmers master the technology for a third planting of pasture, or other crops, after the second-crop corn over the coming years.

The success of planting corn after soy means that the oilseed is now the dominant summer crop across most of Brazil, even driving out sugarcane in some areas.

The soybean has risen to dominate the Brazilian farm sector on the back of surging Chinese demand. The appetite for the oilseed from the Middle Kingdom, which has made Brazil the world's No. 1 agricultural exporter, will likely grow further over the next decade and the soybean should continue to dominate, although meat production will likely gain greater prominence, analysts say.

(AG)

Posted at 2:57PM CDT 08/07/13 by Alastair Stewart
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