South America could overtake the United States within a decade as the world’s largest soybean producer, suggests the ConAgra Trade Group’s vice-president of Atlantic marketing.
And Todd Becker told the Grain World conference in Winnipeg last week that one of the countries leading that growth is Brazil, where vast tracts of land have the potential to go into soybean production.
“Potentially, I think it’s something down the road we have to watch carefully.”
Becker presented a chart that showed American soybean production climbing gradually, although erratically, during the past two decades.
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The same chart showed Brazilian soybean production climbing at a faster rate than American production during the past three years.
Several things are helping spur expansion in Brazil, including lower costs of production.
Becker said Brazilian producers can buy good cropland at about $250 (Cdn) per acre. They tend to use fewer inputs than their American counterparts and can buy inputs cheaper than American farmers can.
But Ron Gibson, senior vice-president of Chicago-based R.J. O’Brien & Associates, Inc., said Brazil is also reaping the benefits of improvements to its transportation infrastructure, including its railways and waterways.
He said that has accomplished two things. It has improved access to land that previously was not used for crop production and resulted in efficient movement of grain to port.
To put it in perspective, Becker said the entire U.S. corn belt could easily fit within Brazilian land that is suitable for crop production but not yet in use.
If Brazil remains a low-cost soybean producer, the day could come when there will have to be a shift out of soybean production in the U.S., Becker said.
“Right now it’s still status quo.”
Becker pegged South American soybean production at 60 million tonnes for the 2000-01 crop year, a jump of almost 10 million tonnes from a year earlier.
The ConAgra Trade Group put U.S. soybean production at 75 million tonnes for 2000-01, which is an increase but not as dramatic as the one forecast for South America.
The U.S. Department of Agriculture is also following the trend. While the USDA recognizes that South America could overtake the U.S. in soybean production, the department does not expect that to happen within this decade.
Production estimates
The USDA forecasts that by 2010, U.S. soybean production will be 88 million tonnes and South American soybean production will be 80
million tonnes.
“For 2010, we don’t have South American soybean production exceeding the U.S., but it’s getting a lot closer,” said USDA agricultural economist Mark Ash.
Ash said it’s hard to tell what the South American soybean expansion will mean to U.S. growers.
“We’ll probably just suffer lower prices for soybeans than we have in the past.”
It could also encourage growers to shift more of their land into corn production, but Ash said there are a lot of things that could come into play within the next few years, including changes to U.S. farm support programs.
The U.S. is currently the world’s largest producer and exporter of soybeans. Soybeans are the second highest in value among all U.S. crops.
Meanwhile, Argentina also has invested heavily in its transportation system, which has lowered grain transportation costs and made Argentine corn and wheat more competitive with American grain exports.
Highways have also been improved to allow shipments of grain on larger, faster trucks.
“It appears as though in South America they’ve got a comparative advantage coming along,” Gibson said.
