South America always has intrigued me, because of its vast landmass and navigable rivers.
Brazil has been called a sleeping giant, with great agricultural potential, if its government could stabilize and provide incentives to those who would venture into the interior to carve farms and ranches out of the grasslands and scrub timber. I am going to take a look at the current status of Brazil's agricultural development and attempt to project the potential for future competitiveness over a two-week period beginning in mid-January. Here is what I know of Brazil's entry into the soybean export market and emergence as a major producer of crops and livestock.
Beginning in the 1970s, when U.S. soybean prices rose to record levels, Brazil was identified by Japan as the ideal place to diversify the source of their soybeans. Japanese investment brought a sizable area into production, in the Rio Grande del Sol region, around the city of Sao Paulo. Over the past 30 years, the huge interior state of Mato Grosso has seen development. To relate the size of this region to the United States, Mato Grosso covers 348,000 square miles, equivalent to Illinois, Indiana, Iowa, Wisconsin, Minnesota and Missouri combined. The U.S. farm bills of the 1980s, with loan rates above the cost of production in Brazil, gave the incentive for farmers to move into the interior. Now, the relative strength of the U.S. dollar has made it more attractive for Brazilian crops to be grown for export.
Technology has jumped from the United States to South America like a frog in Callaway County. Literally, every company that sells farm inputs or buys grain in the United States also operates in South America. Even the co-ops have done so, with Farmland Industries constructing an export elevator in Argentina, under the name of "Trade-a-Grain." Seed companies have found that they can bring hybrids or new varieties to market twice as fast by growing in the opposite season on the south side of the equator. From Americans who have seen the advancement of Brazilian agriculture, there comes a story about enterprising farmers who have built towboats, with recessed propellers to keep them from being damaged by logs, and who are pushing barges farther upstream by using Global Positioning Satellites (GPS) and depth finders to navigate the muddy rivers.
What does all this mean to American farmers? It clearly affects our competitiveness, in world markets. Brazil now can grow soybeans at a lower cost per bushel, transport them with improving navigation systems, sell them to buyers around the world and be paid in currency that is more valuable than their own. Did I mention that they are not at war with anyone, at the present?
Does this spell doom for the American farmer? I don't think so, but it certainly could make soybeans a less desirable crop for us to plant. It could cause a domino effect, in which loss of soybeans could complicate the crop rotation with corn. It could cause Congress to remove soybeans from a future farm bill and, if corn and soybeans can be grown in Brazil, what is to keep them from feeding hogs, cattle and poultry and sending the meat here? There are a lot of rural folks who would gladly send the concentrated hog and poultry operations there. Could we stand the hit on our agricultural infrastructure?
With these questions in mind, I am going to escape the cold and go to Brazil for two weeks in mid-January and hope to see the situation first hand. I traveled to that country in 1983, with U.S. Secretary of Agriculture John Block, but spent most of the time in meetings, in Brasilia. I don't speak the language and two weeks does not an expert make, but I have eyes and some perspective to view the situation objectively. This trip, I will spend most of the time in the interior and finish up in meetings with farmers and government people, in Brasilia.
Ken Goudy, a Canadian farmer-promoter, will be attempting to convince the Brazilians to cut production to benefit all of us.
Do you have a question about Brazilian agriculture that I may be able to ask while I am there? If so, write or e-mail me and I will put it on my list. Send your comment or question to: The Root Connection, 1305 Morphy, Great Bend, KS 67530, or e-mail firstname.lastname@example.org.