August 7, 2003

 

Soybean Production in Brazil Could Impact North Dakota Growers

Soybean production in Brazil is growing rapidly and will impact North Dakota producers, according to a study by an agricultural economist with the North Dakota State University Extension Service.

"Soybean production in Brazil has increased and exports have grown accordingly," says George Flaskerud, extension crops economist with NDSU. "The impact on U.S. markets has been pronounced."

Soybean production in Brazil grew from 18 million metric tons in 1987-88 to 51 million metric tons in 2002-03 according to statistics from USDA. During that same time period, soybean exports from Brazil grew from 2.7 million metric tons to 20.5. During that same time period, U.S. exports grew by only 5.2 million metric tons.

"The U.S. will likely continue to lose market share," Flaskerud says. "For U.S. producers, an expanding world demand is very important. For now, it would appear that world demand can accommodate the current pace of growth in Brazil at prices profitable to North Dakota producers. However, too rapid a pace of growth would be detrimental to all producers."

The Brazilian government has effectively promoted soybean production with a number of policies, Flaskerud notes. In the 1960s, free tracts of government land were made available in the Center-West portion of the country. During that same time period, public funding of agricultural research and experiment stations began with the establishment of the Brazilian Agency for Research on Agriculture and Animal Husbandry. The agency developed a tropical soybean that was critical to the expansion of production.

Brazil also eliminated many trade barriers during the 1990s. "The government essentially removed the export taxes on soybeans, soymeal and soyoil making them competitive in the world market," Flaskerud says. In addition, "The reduction or elimination of import barriers increased the beneficial imports of fertilizer, pesticides and machinery."

Flaskerud spent time in Brazil during February 2003 as part of his study. He visited the state of Mato Grosso and Mato Grosso do Sul that are rapidly growing soybean areas. "The farms were well-managed and applied the latest technology, Flaskerud says. "Most were very large with many employees who receive $200-$500 in wages monthly plus benefits. Because of that, farm equipment is relatively small considering the size of farms."

Flaskerud also looked at production costs. Per bushel, total costs were the lowest in Mato Grosso at $3.24 per bushel, followed by North Dakota at $4.59 and Iowa at $6.28. When freight costs to a major export location, such as Rotterdam, are considered, total costs per bushel are still the lowest in Mato Grosso.

In the future, Brazil could increase cropland by 500 percent. "The additional land could be developed by clearing new land and by converting pastureland," Flaskerud says. "Soybean acres in Brazil could at least triple, so it’s important that North Dakota soybean exports continue to grow and that world demand continues to increase."

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Source: George Flaskerud, (701) 231-7377, george.flaskerud@ndsu.nodak.edu
Editor: Rich Mattern, (701) 231-6136, richard.mattern@ndsu.nodak.edu