Osu Expert: U.s. Soybean Growers Up to Brazilian Challenge
Brazil has 100 million acres waiting for soybean development, but don't think that increased production will drown out Midwestern farmers, says an Ohio State University agricultural economist.
Donald Larson says Midwestern growers should be able to handle the challenge by doing what they've done all along: increasing yields, cutting costs and becoming more efficient.
"The United States is very competitive," Larson says. "The Midwest is competitive with most of the countries of the world."
Brazil's soybean boom began in its southern states in 1973 when skyrocketing prices made production profitable. Brazil went from very little production to 25 million metric tons annually today -- about half of the United States' annual production.
Brazil benefits from the reversed growing seasons of the Southern Hemisphere, giving its producers a niche in the world market, Larson says. Brazil harvests its crop when North American supplies are waning at spring planting.
With current world demand driving up prices, Brazil is expanding on 100 million acres in the center-west states. A research and development effort has produced seeds and inputs to raise yields to profitable levels on this region's less fertile soils.
Larson says the surge in world demand comes from two fronts. One is consumer awareness of the health potential of soybean products. Secondly, the world's consumers buy more meat and dairy products as their incomes rise. That creates good demand for livestock feeds, which are based on soybean meal as a protein food.
However, the center-west states are in Brazil's deep interior. Getting those beans to Atlantic ports is a challenge due to the lack of developed rail and barge networks to production areas 1,500 miles away. Brazil's transportation costs are three times higher from producer to port compared to the United States.
Larson says the United States is fortunate to have a well-developed river transportation system. He says Brazil will need to spend "a lot of money and a lot of time," to develop its inland transportion routes.
Brazilian agricultural economist Judas Mendes says Brazil has recognized its transportation problems and has made changes in the national constitution allowing for private participation in building up the infrastructure.