South America’s soybean crops are in the driver’s seat these days when it comes to oilseed prices.
But a report released by the United States Department of Agriculture last week shows that Brazil, by itself, has the potential to virtually take over the world’s soybean export business in coming decades.
Its growth is already impressive.
Brazil is expected to produce 49 million tonnes of soybeans, compared to 43.5 million last year. Argentina expects 34 million tonnes versus 30 million last year.
Longer term, Brazil seems poised to turn the soybean industry on its head.
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“Previous estimates of the scope for possible agricultural expansion have been grossly underestimated,” said a USDA team that travelled around Brazil, talking to people and organizations representing Brazilian food production.
The group estimated that with investment in transportation infrastructure, genetically modified high-yield crop varieties and a switch from livestock grazing to intensive crop production, Brazil could increase its crop area by as much as 420 million acres.
That “is equal to if not greater than the total cropland resource in the United States,” the report states. It is equal to about five times Canada’s cropland.
And that is a conservative estimate, the report said, noting it does not include increased deforestation in the Amazon basin.
The report speculated that about half the increase in cropland could come from converting existing pasture and the other half from plowing virgin flatland, called cerrado, in central parts of the country.
Brazil already has world class seed genetics, but breeding institutions there are about to introduce varieties with the potential to boost productivity by 30-70 percent.
To develop the hinterlands and encourage migration inland from the crowded coastal area, Brazil’s government has an ambitious multibillion dollar plan to build highways and other infrastructure.
These developments should drive down costs of production and transportation, making Brazil an even stronger competitor on world grain markets, allowing it to capture more of the world oilseed trade.
Canada’s canola industry would do well to continue to try to distinguish canola as a premium product to avoid being submerged in the rising tide of South American beans.
