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SF Special: Brazil’s Soybean Success Is Rooted in the U.S.
PORTO ALEGRE, Brazil — In a small way, soybeans have been growing in Brazil for nearly 120 years. Yet, the oilseed didn’t begin to transform the country until the late 1960s.
With the help of U.S. crop experts such as university agronomists and pathologists, the Brazilian soybean production, combined with its neighboring country, Argentina, has boosted South America’s output to the point that it now rivals that of the United States.
During this same time, Brazil has almost doubled its corn production. The Food and Agriculture Organization of the United Nations (FAO) says that nearly 40% of the food imports in the world come from Brazil.
Food production in Brazil was not always so prominent: The U.S. was a key partner in helping South American farmers maximize their corn and soybean yields.
Investors choose Brazil
In the 1920s it was documented by journalist Geraldo Hasse that the American missionary pastor Albert Lehenbauer brought soybean seeds to Brazil and guided farmers of German descent in the municipality of Santa Rosa, Northwest of Rio Grande do Sul. At the time, soybeans were used to feed hogs that gained weight at rates never seen before. It was only in 1949 that the soybean fields of Santa Rosa achieved 20,000 tons. The higher production sparked the construction of the first soymeal factory to process the beans in the region.
Other investments followed. In 1958, the first soybean processing plant was in the municipality of Esteio near the Association of Rio Grande do Sul Mills. Previously, most oils in Brazil were from cotton. The same institution had a campaign that pushed for more soybean planting and gave free technical assistance all over the state. Processors Anderson Clayton and Swift settled in the country.
In the 1960s, the Brazilian government started to give significant subsidies for wheat in order to make the country self-sufficient in that crop. At the time, wheat was just planted in the south of Brazil. Planting soybeans helped to improve the land and local farmers felt attracted to do so. In one decade, production of the oilseed jumped from 206,000 tons to over 1 million metric ton.
Change in Average Yields and Acres Planted to Soybeans from 1960 to 2018
Source: USDA, Embrapa
In 1970, the country had 90 million inhabitants and was a net food importer. Just one state, Rio Grande do Sul, had significant soybean production. In Sao Paulo, soybeans were planted by Japanese immigrants in home gardens with seeds distributed by the Agronomic Institute of Campinas (IAC).
Brazil Soybean Yields in 1970
|South||25.27 bushels per acre|
|Southeast||23.7 bushels per acre|
|Center-West||20.8 bushels per acre|
|Northwest and Northeast||16.3 bushels per acre|
In 1974, the Mississippi River flooded in the United States and generated millions of losses in grain. It was the event that opened the eyes of several investors and the government, then a military dictatorship aligned with the U.S. administration. Ceval Agro, now part of Bunge, and many other processing plants opened in the south in the state of Santa Catarina, according to the Bunge Foundation. A later millionaire soybean grower Olacyr de Moraes moved away from Sao Paulo to Mato Grosso to be one of the first farmers in the region.
It was in the same year of 1973 that the Brazilian government announced the creation of the National Agricultural Research Company (Embrapa). This research arm of the country’s Ministry of Agriculture was created to increase productivity for tropical agriculture and livestock. Soybeans were at the heart of this. Varieties from the temperate climate adapted easily to prairielands in southern Brazil, but yields were too low in other regions. Embrapa’s overall strategy was to bring more education about growing soybeans.
“Here you get one of the major reasons for the development of agriculture in Brazil. At this time, you had a handful of cities where you could get university studies related to agriculture and livestock like Porto Alegre (Rio Grande do Sul), Piracicaba (Sao Paulo), and Vicosa (Minas Gerais). Now, you have researchers and technical assistance as far as the state of Goias,” says Antonio Alvaro Purcino, a researcher at the Corn and Sorghum Division of Embrapa. Purcino holds a postdoctoral degree from the University of North Carolina.
Farmers from Rio Grande do Sul started to profit more and more with the oilseed. More land was available in Santa Catarina, where mostly hogs and poultry were raised; farmers called gauchos moved there. The gauchos also then moved to Southern Parana where wheat, soybeans, and corn grew similarly in that region’s temperate climate.
“The bad weather conditions in the United States generated poor production at the time and only Brazil could supply Russia’s demand then. Brazil had a very competitive currency and the price paid to the producer was more than three times what is paid nowadays. That all started with the wheat structure of storage and logistics of wheat co-ops,” says Luiz Pacheco, a market analyst now based in Curitiba, Parana. Pacheco was the first commercial manager of Coamo, the largest ag cooperativa in Latin America, and he says he was the first teacher of a grain marketing course of the country in 1976.
By the end of the 1970s, the farmers of Rio Grande do Sul were already settling in the state of Parana, but they saw a different story there, a story that repeated later in Mato Grosso do Sul and Mato Grosso, the largest soybean producing state today.
“In the 1970s, most seed varieties were imported from the South of the United States. The seeds known as Hag, Davis, and Bag, did not work out because the duration of the day in the North of Parana and the Center-West of Brazil is different from the U.S. South. The plants flourished right after they germinated. The cycle was too short and the plants didn't produce grain. A lot of pressure from producers came in,” according to Amelio Dall’Agnol, a researcher at Embrapa’s soybean unit in Londrina, Parana.
Dall’Agnol was one of a group of the first Embrapa researchers sent to the United States. He obtained a master’s degree in agronomy from the University of Florida in 1977 and a doctorate from the same university in 1980. Later, the researcher developed at Embrapa varieties that were less sensitive to more light hours in the day.
Brazil introduces corn
Despite the differing lengths of daylight hours between the U.S. and Brazil, the 1970s varieties imported from the U.S. South still helped jump soy production from 1.5 million metric tons to an impressive 15 million metric tons. Yet, the shortened cycle in Northern Parana and the then new agricultural frontiers of Mato Grosso and Mato Grosso do Sul opened the door for a different crop – corn – to be grown in the winter since the temperatures in those regions are high enough. It was the start of what today is called safrinha. Several regions also planted sugarcane in the summer and corn in the winter.
“Corn was a different industry compared with soybeans. At these times, corn was present in several regions of the country, but there were a lot of homesteaders and family farms producing with government intervention and help without a lot of technology. Soybeans, on other hand, started fully mechanized and were developed mostly by the private sector,” says the researcher of Embrapa’s intelligence and strategic relations department, Elisio Contini.
“But now a different tale was starting because corn was starting to integrate with the soybean production chain, first to attend the domestic market, but later also exporting and increasing efficiency,” adds Contini.
The commercial production of corn jumped from 8 million metric tons in 1975 to 82 million metric tons in the 2017/2018 season, while the yields jumped from 39.8 bushels per acre to 66.9 bushels per acre.
First setbacks and innovation in no-till
One of the first consequences of the popularization of soybean planting in the state of Parana was soil erosion, precisely in the region of Campos Gerais, near Curitiba. One farmer, Herbert Bartz, took the initiative to attempt to invent a solution for the problem. He traveled to Germany to look for any type of machine to end that problem with tillage. The ticket was paid in 10 installments, but was ultimately worthless. He found nothing. Afterward, he traveled to the United States to check the no-tillage system implemented by a farmer in the state of Kentucky. He then purchased a planter for U.S. $8,000 and asked for a loan in Brazil to pay it back.
Bartz was successful in his trial with the no-tillage system with all his soybean production. Soon, the farmer became known as the “crazy German” and the technique spread throughout Paraná to prevent erosion.
By 1987, the practice was being used by the majority in the state, and most farmers were modernizing their fleet of machinery. In 1992, the Association of No-Tillage Farmers was formed to spread the technique around the country.
“There was a significant change at this time to a less aggressive and conservationist approach to the soil. It was the time when farmers abandoned machines like plows and grids, planting directly into the wheat stubble,” says Augusto Guilherme de Araújo, an agricultural engineer of the Parana Agronomic Institute (Iapar).
Genetically Modified Organisms Arrive; Plagues Spread
Prior to the 1990s, very few international companies were involved in Brazilian agriculture. The rapid growth of soybeans in the country, however, attracted big investments from outsiders. Monsanto embarked in the push for no-till and offered products for that environment.
The first GMO soybeans entered Brazil illegally. The seeds were smuggled from Argentina and Uruguay to the state of Rio Grande do Sul in order to reduce costs with spraying, water, and diesel fuel.
Monsanto first launched a genetically-modified soybean cultivar in 1998. Still, a judicial battle initiated by advocacy groups limited its use until 2003, when there was a significant turn in yields and in several aspects of the country’s agriculture.
Brazil Soybean Yields in 2017
|South||50.55 bushels per acre|
|Southeast||49 bushels per acre|
|Center-West||41.63 bushels per acre|
|Northwest and Northeast||37.17 bushels per acres|
“From the beginning, the soybean industry was different from other crops. Unlike wheat and corn, soybeans received the support of the private sector. Private companies like Monsanto started to offer a whole package of inputs, instead of doing just individual purchases, and distribution generalized all over the country,” adds Contini. A survey from Celeres consultancy from 2017 revealed that, at that time, adoption of GMO soybeans and corn reached 92% of the agricultural production in Brazil.
Brazil soybean field showing soybeans treated for soybean rust next to beans not treated.
As the crops moved from a region with a temperate climate and planting surfaces increased year over year, this intensity produced erosion, new plagues, and diseases. The Asian Rust (Phakopsora pachyrhizi) first appeared in 2001. In the first seasons, the losses reached up to $8 billion, but those losses were gradually decreasing to less than $400 million with management and more product supply, according to the Ministry of Agriculture, Livestock, and Supply.
The caterpillar Helicoverpa armigera was also a downturn for soybean production in Brazil. First identified by researchers in 2013, the caterpillar destroyed over 50% of the fields that it infected and in the following year, caused losses of over $4 billion. That could be handled with beneficial insects and integrated pest management.
“In the early days of raising soybeans, nobody could have imagined that agriculture would become so hard. In the 1970s, when soybeans were planted under just temperate weather, common diseases were the acid canker or the bacterial prusta,” says Amelio Dall’Agnol.
Number of Soybean Farms in Brazil in 2017
Source: IBGE (Brazilian Institute of Geography and Statistics)
Farming In Brazil In 2019
Over the years, farmers from the southern part of Brazil ventured northward seeking cheaper land that needed to be developed. As a result, the average size of a farm in the north became much larger than in the south. Successful Farming visited with Brazilian farmers from the midwest, western, and southern parts of the country. These farmers share a bit of history of their farming background and their perspectives on farming in Brazil in 2019.
Alex Utida, 33 years old, Campo Novo dos Parecis, west of Mato Grosso
SF: What are the main characteristics of your property, regarding size, crops planted, rotation practices, and your soil nutrition methods?
Utida: My property has a total of 6,300 hectares (nearly 15,567 acres). I grow this total area with soybeans in the summer and rotate with corn and cotton in the winter. Nearly 2,000 hectares (4,942 acres) are planted with cotton and 3,000 hectares (7,413 acres) with corn. I use no-tillage and regular fertilizers. We also raise some cattle.
SF: How do you see Brazilian agriculture in general?
Utida: One of the big challenges that I see is family succession. That always will be a big thing. A lot of farms don't have a sucession plan, and that is a critical issue. Another thing I see that is very critical is that Brazilian farmers are very good and advanced a lot at production, but not very good in commercialization.
SF: You talked about farm succession. How was that in your case? Have you always lived and worked on the farm and then assumed the family farm?
Utida: No. In my case, my family was already in the business, but I was not into this since the beginning. I studied law outside of Mato Grosso, but later I got interested in the field. In our case, we were luckier than other people. I manage the farm with my two brothers.
SF: You also mentioned grain marketing as a big issue. What's your marketing strategy?
Utida: At the beginning of the year we set a range of goals. These goals are based on an expected productivity and revenue. At the beginning of the year, you have always 10% of profitability as a goal and 10% of loss as something expected to happen. And you always have more and more competition.
SF: Do you set price projections?
Utida: I get help from a lot of market consultants and use their projections. They are very reliable.
SF: And how do you compare Brazilian agriculture with other countries like the United States or Argentina? Is it hard to compete?
Utida: I think that our disadvantage, especially in our case of Mato Grosso, is that our infrastructure is poor. We do not have a lot of profitability because of our logistical bottlenecks. In the case of Argentinians, their problem is high taxes. In the United States, the issue is the rental hikes [most Brazilian farmers are landowners], and now they have the trade war with China that is currently benefiting us.
In the case of Brazil, we have to deal constantly with an unstable economic culture with the currency going up and down all the time, some tax coming out of nowhere, or new regulations regarding the environment.
SF: What can you tell about healthcare in the field of agriculture?
Utida: We have advanced a lot in terms of the protection of workers who work with agrochemicals. We do have some workers in our property. They are safe. Once you have insurance, you are safe. And I believe that we are healthier in the field than the city people.
Irini Perin, 55 years old, Ibirapuitã, North of Rio Grande do Sul
SF: What size of a farm do you operate and what is your crop rotation?
Perin: The property that I work has 200 hectares (494 acres). I plant soybeans on it.
SF: Do you own all of the land that you farm?
Perin: Nearly 70% of the land is mine and the rest is rented.
SF: What do you grow in the winter months?
Perin: I like planting soybeans because they are more profitable. In the winter, I like to plant white oats along with Sorghum sudanense. That helps my soil the most.
SF: What about wheat?
Perin: It has been more than five years since I planted wheat. It is a really hard crop in terms of plagues, and I don’t like the prices. It is really risky to plant corn considering the prices.
SF: What are your agronomic practices with soybeans? Do you start by having a good variety?
Perin: I get seeds generated by my own property and buy some seeds from neighbors. I use nearly 10 different varieties, but I like the ones I get from Pioneer the most. The highest yield I’ve achieved was 66.9 bushels per acre. I start planting in early November and harvest by early March.
SF: What are your average yields and other agronomic practices?
Perin: Well, one of the best things I did was to start using 330 pounds of calcium sulphate per hectare and zero aluminum. Prior to that, there was sulphur deficiency in my soil. The roots grow deeper. That boosted my yields by 8.9 bushels per acre. I use fertilizers a lot and no-till.
SF: And your average costs? What costs are increasing?
Perin: I have an average cost of 31.22 bushels per acre. Of course, all inputs are increasing. Seeds, fertilizers, and diesel are the worst.
SF: What about the machinery? Is your machinery updated?
Perin: You don’t really need to change your tractor often. I have a combine harvester with rotor and a planter that gave me very good distribution of plants. Every 10 years you have to change it. It is the time you have to pay for them [meaning the payment deadline]. The precision agriculture maps I used for the last 10 years have been very useful. The sprayer is what you need to change more often, every five years.
SF: What’s your marketing approach? Do you sell right after harvest?
Perin: Yes, most of the time I sell right after harvest to a nearby cooperative. The price has to be really bad for me to wait. I don’t have on-farm storage.
SF: How do you see agriculture in Brazil for now and the future?
Agriculture has become better each year. I’m really optimistic. Soybeans pay better every year.
SF: Is it easier than when you started farming with the use of a plow?
Perin: Absolutely! I started farming in the times when the plow was moved with the ox. We had a lot more work at those times. Now everything is much, much easier. I started farming as a very young kid, perhaps 8 years old.
SF: Who helps you farm? And how do you see your succession?
Perin: I have a 22-year-old son who studies business administration that is already helping me and probably will succeed me leading the business. He likes the farming work. We have to respect one’s will. My other son is 15, and I’m not sure if he has the will and the vocation.
Eduardo Peixoto, 59, Chapadao do Ceu, Mato Grosso do Sul
SF: Can you share the size of your operation, crops planted, rotation practices, etc.?
Peixoto: My total area is 2,400 hectares. I use 2,400 hectares (5,930 acres) of soybeans in the summer, followed by the safrinha with about 800 hectares (1,976 acres) of corn and 800 hectares (1,976 acres) of sunflower. In parts of it, there is some rice and some wheat and kidney beans that are not significant in amount. Soil fertilization is one of my most important investments. I add a lot of sulphur and nitrogen, though I cannot tell you the exact numbers. We use no-till and integrated pest management with biological control. We rely on the work of approximately 30 people here.
SF: What are your average yields?
Peixoto: I cannot be precise about the numbers with you. I get about 66.9 bushels per acre and believe that my neighbors have a lot of envy. Again, these numbers are just an idea. I would not tell my numbers precisely to any newspaper.
SF: Would you do more rotation?
Peixoto: The government should pay you more like they do in the U.S. and you would do more rotation. But here everything is a big crap. My cost gets over 44.6 bushels per acre because of the terrible roads we have here and all the agrochemicals. We should have climate insurance and price insurance fully sponsored by the government in all crops.
SF: How was farming when you started and how is it now?
Peixoto: I came here from Parana in 1982, after my family had left Rio Grande do Sul. I purchased this land with the small piece of land that I sold in Parana, plus a refrigerator. After a few years, I knew why it was so cheap. You see, the gas station is as far as 200 miles or more away. Since thousands of farmers came in and invested millions, I thought that roads would be better. We, from the private sector, even put a foundation here to assist with agronomics, and the government does not put in a single dime.
SF: The government does help with the subsidized credit for machinery and price support for corn. What kind of machinery do you use?
Pexito: I have about 30 New Holland combines, but do the math. I pay in tax about half of those combines, plus my income tax and many other taxes that nobody uses. Price support programs should be given to all crops. Don’t make me laugh.