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R E P R I N T E D
W I T H P E R M I S S I O N F R O M
F A R M P R O G R E S S C O S . |
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Brazil:
90 million acres
or bust!
Competitors clear,
rake, burn and put down lime to make new farmland.
By J.T. Smith |
The
amount of farmland in some nations
continues to diminish with urban sprawl
— but not in Brazil. Like
pioneers of two centuries ago in the
United States, Brazilians are breaking
out virgin cropland with no end in
sight.
Bryce Myrick of Texas Farm Bureau
took a journey to two Brazilian states
in February and March, and made another
trip to see two other major agricultural
states during April.
Myrick was astonished, and in fact,
plans on making yet a third 2002 trip to
Brazil some time this fall.
In 1999, the Brazilian Agriculture
Department set a 10-year goal to increase
productive farmland by 90 million
acres. While there, this year, Myrick
asked an official if such a lofty goal
actually is achievable. The reply: "We’re
ahead of
schedule."
"This is land not owned by
the government, but individuals,"
Myrick notes. "These are old families
with old land grants — not farmers. But
such landowners are selling it to
individuals."
Myrick says the land buyers
represent two groups of people: One is
the people buying land who will actually
move to Brazil and live there. The other
group doesn’t plan to live there, but
will farm the rich land in a mild
climate with ample rain. |
Bryce Myrick, director of agricultural marketing education,
Texas Farm Bureau, Waco, has already made two extensive
journeys to major agricultural areas in Brazil this year, and
plans a third trip this fall. |
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The new "Brazilian" farmers could
be Europeans, Japanese or Americans.
This is especially true in Brazil’s
major agriculture-producing states of Bahia
in the northeast, and Mato Grosso in the
central-northwest.
"The United
States was basically settled east to west," Myrick reflects.
"Brazil was settled in the south, and now
everything is expanding to the north." |
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TEXAS/N.M. FARMERS
GET IN
Farmers from far West Texas and New Mexico
have bought sizeable acreage of Brazilian
farmland in recent years, Myrick
notes. In 1999, two brothers from Lovington,
N.M., bought 30,000 acres in Bahia.
Soon, three farmers from Denver City, Texas,
and Seminole, Texas, joined them in
Brazil by purchasing another 15,000 acres in
2000.
All five men knew one another through
their New Mexico and Texas farming operations.
The growing and harvesting seasons,
since they are just the opposite of here in
the States, work well for these men.
In Brazil, they will plant their
crop — such as soybeans — in October, and
aim to harvest during March, April and May.
Or, in double cropping, they will plant
October beans, harvest in March, immediately
plant corn, and harvest the corn in June or
July.
Usually, the Texas and New Mexico
farmers don’t go to Brazil all together, but
take turns seeing after one another’s
farming operations. But there’s plenty
of room, if they do all travel there at the
same time or overlap trips to their farms. The
group bought a spacious eight-bedroom, five-bath
home in Brazil. They paid $42,000 for it. |
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TIED DIRECTLY TO
CROPS
If you grew up in the Southwest, you may have
heard the age-old saying that something — or
someone — "isn’t worth a hill of
beans!"
But actually in
Brazil, the "worth" of this new
farmland is tied directly to the price of
soybeans. Land payments are made accordingly.
Myrick found this fascinating — and perhaps,
something which should be explored in
the United States in some creative financing.
"Land is
measured in hectares (a hectare is roughly
2.47 acres) and sold in sacs," Myrick
notes. "One sac equals 132 pounds of
beans."
In Bahia, raw land recently was selling
for about 30 sacs per hectare. "Beans
were bringing about 8 U.S. dollars per sac,
which means 1 hectare of raw land was selling
for about $240 — or for about $100 U.S.
per acre," Myrick explains.
Myrick notes there
are no Federal Land Banks or other such
institutions — common in the United States
— making loans in Brazil for farmland
purchases. "Most of the landowners carry
the note, usually for four years," Myrick
says.
Such landowners are paid in fluctuating
payment amounts, directly depending
on the price of beans. "For example, if
beans go up, the second-year land payment is
higher," Myrick says. "Then if beans
go back down, the third-year payment is
cheaper."
It’s a variable
payment rate tied to bean prices.
BEAN MANIA
CONTINUES
It’s no wonder the price of farmland in
Brazil is based on beans. The soybean surge
goes on there. Since 1991, Brazil production
of soybeans has grown from 18.5 million to
41.5 million metric tons (1.5 billion
bushels), or far more than double.
"Brazil’s
soybean yields per acre in 1991 were about 20%
below U.S. yields," Myrick observes.
"Today, Brazil’s yields are slightly
higher than the U.S. yields."
The land varies, of
course.
"It appears the
land in Bahia is not as productive as in the
state of Mato Grosso," Myrick says.
"But the infrastructure is better in
Bahia, and it is less expensive
to get crops to the ports."
Indeed, making
"new farmland" may be
easier than rapidly building a solid
infrastructure to handle
the dramatically increased crop production.
"For raw land, you must chain,
clear, rake and burn and then you need
about 4 tons of lime per acre to get it
into farmland," Myrick says.
The rainfall ranges
between 50 to 70 inches per year in
Bahia, and temperatures may occasionally
dip into the 40s, but there’s
never a frost. Row crops — or
pasture grass — grow prolifically. Farmers
may plant grass, run cattle
intensively for two or three years, and
then plow up excellent grass as part
of a rotation. |
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A
global community
Bryce
Myrick met more than adventurous fellow Texans and New Mexico
neighbors in his two extensive trips to Brazil
earlier this year. He cites just a few
examples.
PAUL
MIZOTE
JAPAN
Paul Mizote
farms south of Luis Eduardo, Bahia. He is from Japan, but has
owned the farm in Brazil for 18 years. He now
lives in Brazil. The Japanese native,
who still doesn’t speak a great deal of Portuguese (the
language spoken in Brazil), started with
2,500 acres. Today, he farms 16,000 acres, with 3,500
"river-irrigated." Mizote raises corn, beans and
dryland cotton.
"Japanese
farmers love cotton," Myrick allows.
Mizote uses
U.S. futures contracts and forward contracts to market his
crops and risk protection. He also had 80 test plots
(handpicked) to compare cotton.
Mizote plants
Delta and Pine Land cotton varieties, will spray about 10
times per year, with a total cost of production
of $400 per acre. But his yields have
averaged 1,780 pounds, or more than 3 bales per acre. Such a
yield made his breakeven price 22 cents
per pound. With the world market depressed, Mizote
sold his cotton for a mere 36.5 cents, but his low breakeven
point still made it profitable.
DOUGLAS
FERRELL
UNITED STATES
Douglas
Ferrell went from Pennsylvania to Brazil in 1976 with his
parents. But in 1981, Ferrell
bought 1,200 acres of established farmland in Mato Grosso
de Sol for $100 per acre. He soon expanded that to 7,500 acres
with corn, soybeans and grass. Now
"40ish" and living full-time in Brazil, Ferrell
bought an additional 25,000 acres of raw land
in 2000 for $30 per acre. (Ferrell now
farms next to a 70-family Mennonite family. They have fairly
small farms and many are renting land for about
$15 per acre).
THE
KUDESS BROTHERS
GERMANY
The four Kudess
brothers from Germany now farm 12,000 hectares north of
Posse, Bahia, after starting out in 1988 with
500 hectares. They are soybean and corn
producers, but soon plan to add some permanent grasses. The
past season wasn’t good for corn, with
excessive rains and not enough sunshine. Nevertheless,
one brother, Hans Kudess, says they will still net about $160
(on an acre) from their corn.
Whether native
Brazilians or immigrants, all the farmers in Brazil have
distinct cost advantages over U.S.
farmers, Myrick notes. Farm equipment is 60 to
70% of the U.S. price. (A $100,000 tractor in the United
States is $60,000 to $70,000 in Brazil).
Labor is cheap.
A tractor driver gets an average of 78 cents per hour and a
common laborer 50 cents. A "manager"
gets $1.40.
Roundup herbicide is $12.80 per
gallon, or about half the U.S. cost. ("Generic"
Roundup is $4.82). These costs were based on a
stop Myrick made to a chemical company
in Rio Verde.
Soybean seed
costs 17 cents per pound. Corn seed varied from 96 cents to
$1.36 per pound.
A good bred
young cow costs about $225 in Brazil.
Anyway you
examine it, Brazilian farmers have a distinct edge when it
comes to cost advantage. |
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Brazilian
farmers often will plant great forage, like this Tanzania
grass, the graze it intensively for just two or
three years, and plow it up for crops as part of a
rotation. Plowing up good grass might sound crazy in the
United States, but it’s common
in Brazil.
Brazil’s
soybean yields per acre just over 10 years ago were 20% below
the average U.S. yield. Now average bean
yields there have surpassed those here, and Brazil has more
than doubled that country’s soybean production since
1991 to 1.5 billion bushels today. |
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INFRASTRUCTURE
OBSTACLES
While such growing conditions might
sound like paradise to some farmer or
stockman from West Texas or southwest
Oklahoma, getting crops to the market is
not a Brazilian breeze. Infrastructure
problems remain enormous, Myrick
reports.
The government
chiefly stays out of the farmers’
business in Brazil, with far less
regulations than American farmers must
contend with. But Myrick repeatedly
asked Brazilians, as he traveled, what
"one thing" their government
could do for them? The reply was always
the same: "Better roads. Our roads
are very poor."
Consequently,
it seemingly takes forever to transport
ag production.
In Texas, roughly 50,000 pounds
would be the load limit on a typical 18-wheeler,
40,000 pounds in Oklahoma. "They
[Brazilian truck drivers] put 150,000
pounds on their trucks and head south to
the port 1,200 miles," Myrick
notes.
"On the
round trip, with potholes and so forth
all along the way, they may average 40
or 45 miles per hour. But when they
finally get to the port, the truck line
may be 30 to 45 miles long waiting to
unload!" he adds.
To
offset some of this southbound truck
congestion and road damage, some
Brazilian grain is being moved north
instead, put on barges and shipped out
on the Amazon River.
Meanwhile, the
Brazilians are hoping to deal more with
their infrastructure nightmare by
building a new railroad to stretch from
the southern to the northern part of
Brazil and cover thousands of miles
across the countryside.
Once the
infrastructure problems are solved,
Brazilian agriculture will be even more
competitive with the United States.
"They are
just increasing their agricultural
production every year — full
blown," Myrick assures. "And they
don’t plan to slow down, either. Brazil
is a formidable force for the future,
one that somebody will have to deal
with." |
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R E P R I N T E D
W I T H P E R M I S S I O N F R O M
F A R M P R O G R E S S C O S . |
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