Brazilian soybean production and acreage has exploded over the past few years of high prices.
Soybean stocks have grown and prices are lower this year, but a Brazilian agribusiness leader expects that will not slow the soybean boom in his country.
“This is a long-term transition,” said Antenor Barros Leal, president of flour milling company Predileto Alimentos, speaking during the Canadian Wheat Board’s Grain World conference.
“We have a huge stock of land, and very few countries in the world have such a stock of land.”
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Brazil’s expansion of soybean and corn acres is happening primarily on inland pasture that has never been broken. Tens of millions of acres of pasture have already been converted to cropland and tens of millions of acres more could easily be converted in coming years.
Farmers in Brazil made good money in recent years because of high soybean prices. That helped make up for expensive transportation and other infrastructure problems that the developing nation is coping with.
This year’s much lower soybean prices will hurt Brazilian farmers as much as they are hurting Canadian and American farmers, Leal said, but it won’t cause the agricultural economy to shrink.
“Everybody will lose some money, but as a whole, production will continue to increase,” said Leal.
Brazilian wheat production will also increase in coming years, Leal predicted. Since the government gave up control of wheat prices in the early 1990s, Brazilian production has increased from less than one million tonnes per year to five million tonnes.
But unlike soybean production, where Brazil is the second largest exporter in the world, domestically grown wheat will be almost entirely consumed locally and Brazil will continue to import large amounts from neighbouring Argentina, he said.
Even as wheat production expands, Brazilian consumption is increasing.
“There will be room for everybody,” said Leal.
The scale of Brazil’s infrastructure problems can be seen in how its wheat farmers supply their own market, Leal said.
It costs $35 US to truck a tonne of wheat from Brazil’s growing area to Rio de Janeiro, versus $28 to transport a tonne of Canadian wheat by ship from Vancouver to Rio.
