Brazil has huge potential in crop output

Improving pastures would free up 99 million acres for crops. Canadian farmers 
plant 74 million acres of crops

CHICAGO, Ill. — There is staggering potential to expand corn and soybean production in Brazil, says an economist.

The country has 400 million acres of underused pastureland, a portion of which could and likely will be converted to crop production in the coming years, said Renato Rasmussen, Brazil economic analyst for Rabobank.

“Even though we have so much pastureland, it’s extremely underused,” he told delegates attending DTN’s Ag Summit 2015.

The national average is less than one animal per acre of pastureland.

“It’s one of the lowest yields for cattle ranching in the world,” said Rasmussen.

“If we could take this number from one animal per hectare (.4 animals per acre) to 1.3 (.5 animals per acre), we could free up almost 40 million hectares (99 million acres) for grazing production,” which would become available for crop production adding to Brazil’s existing 160 million acres of cropland.

To put that in perspective, Canadian farmers plant 74 million acres of grain, oilseeds, pulses and special crops a year.

“There is a lot of potential to increase grain production without having to deforest a single tree from the Amazon just by increasing (pasture) yields,” said Rasmussen.

It is starting to happen as growers increasingly embrace modern technologies. There are pockets in the southern portion of the country where farmers are averaging four animals per hectare (1.6 animals per acre).

The country is also making progress improving its transportation infrastructure.

Rabobank forecasts that Brazil’s southern ports will handle 70 million tonnes of grain by 2018, up from 60 million tonnes in 2013. The northern ports will export 28 million tonnes, up from nine million tonnes. As well, many inland highway and waterway projects are already underway.

“There is a lot happening in Brazil at this moment that is really going to enable us to continue to expand our exporting capacity,” said Rasmussen.

However, transportation problems will continue to be a bottleneck for the foreseeable future.

Crop prices in Mato Grosso in the central part of the country are typically 15 percent below the Chicago price and can dip as low as 25 percent below during harvest due to transportation bottlenecks be-cause the state’s prime soybean growing area is 2,000 kilometres from port.

“This lack of logistics infrastructure is compounded by the lack of warehousing,” said Rasmussen.

Some areas of the country do not have the ability to store even 20 percent of local crop production.

“The trucks really become moving warehouses,” he said.

Farmers are also confronted by macroeconomic factors such as rising government debt, high taxes and interest rates, soaring inflation and lacklustre economic growth rates.

Brazil’s weak currency boosts farm revenues but increases input costs.

However, there is tremendous potential to expand crop production and boost exports.

Rasmussen said North American farmers shouldn’t be afraid of increased exports from Brazil because the world is going to need more food from all of the main exporting regions.

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