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Brazil’s Farmers Will Cut Corn Acres Significantly
Porto Alegre, BRAZIL -- When crop prices are so low, farmers always want reassurance of a profitable payout for their production.
In Brazil, that payout has become too low. As a result, farmers are prepared to cut corn production in half this year.
The South American country is about to finish harvesting a winter corn crop of nearly 97 million metric tons, according to the National Supply Company, and Brazilian farmers are also not happy at all with the cash paid.
In an exclusive interview with Agriculture.com during the first day of the 40th edition of Expointer, a farm show near Porto Alegre (Rio Grande do Sul), Paulo Bertolini, director of the Brazilian Association of Corn Growers, anticipated that in his view, the first crop (the one that is about to be planted in Brazil) would have a surface reduction of nearly 50%.
Brazil to Cut Corn Production
“This always happens. When one harvest does not pay well, most farmers reduce a lot of the surface. During the first crop, it is likely that the prices would be good again. Then, the second corn crop, which we used to call small crop (safrinha), will continue to be bigger than the first crop as a reaction and even because it is only grown in the states with more surface available,” Bertolini forecasts.
Other reasons mentioned for the smaller corn acres were the higher cost of debt in the country, more indebted farmers, and the high cost to grow corn. “In recent years, corn has been very expensive to grow. The volatility of the dollar ranged too much and politics was more unstable. Brazil’s reference interest rate set by its Central Bank has been dropping very recently, and the expectation is for it to reach the record low of 7.5% this year,” Bertolini says.
So far, the solution for the Brazilian corn surpluses has been export demand.
Also, Cargill has developed hybrid ethanol mills. That is, mills that can produce ethanol either from sugarcane or from corn. Brazil’s National Supply Company estimates corn ending stocks of 21.5 million metric tons.
“Brazil is relatively new to the corn export market. We have yet to create these markets,” Bertolini says. “Our largest and strongest markets, China and Saudia Arabia, want our fresh corn and their demand is new. Africa could be a nice partner, too. But the cases of Latin America and the Middle East countries are more complicated because they are already supplied either by the U.S. or by Argentina,” he adds.
Bertolini says Brazil reached a production of approximately 100 million metric tons three years earlier than expected by the Brazilian Association of Corn Growers, and 150 million metric tons would be produced in less than 10 years with more grain processed within the country and 40% of output going to DDGs. But he does not see any early solution for the coming problems.
“There was an improvement in the ports of Paranagua and Santos. But still, the roads and the scarcity of railways will remain for a while. The government has most things, and when it privatizes, it directs to very few specific companies. It will be very slow on this issue. And storage is still a problem. There is a lot of corn being stored on the ground, all over Mato Grosso today,” he says.
Bertolini believes Brazil is still competitive compared with the U.S. inside the farm gates because Brazilian farmers do not invest as much in irrigation or seeds due to the high logistical costs. “If the profit goes higher, there would be more money needed for continuous investment and the Brazilian farm price will not be that competitive as today,” he concludes.
Paulo Bertolini farms in Castro (111.8 miles northwest of Curitiba), in the state of Paraná, where he grows a surface of 2,400 acres in the summer split between soybeans, kidney beans, and corn. Bertolini uses half of the surface with corn and is set to plant by September 10.