Pluses and minuses of growing soybeans in Brazil, compared with the U.S.
Brazilian soybean farmers are expected to plant a record soybean crop this year, with an estimated 81.5 million acres, the ninth consecutive season of increased acreage. That compares with 85.1 million acres in the United States. As the worldwide export market becomes more competitive, it is becoming increasingly important for U.S. farmers to understand how this competition can affect demand.
One of the primary differences between soybean production in Brazil and the United States is the climate. The northern and central regions of Brazil have a tropical climate with regular rains and consistent temperatures that allow for higher yield. The climatic difference is both a blessing and curse for Brazilian soybean farmers, according to Gerardo Copello, Latin America business manager for AgriThority, an agricultural consulting agency.
“The tropical weather allows for enhanced growing conditions, which can boost yields up to 20 percent higher than the U.S. average, but it also creates ideal conditions for higher levels of pest and disease pressure,” says Copello. “Brazil’s southern states have a more temperate climate with frequent dry spells that can limit yields to 30 to 45 bushels per acre.”
Unlike the United States, access to affordable financing can be a problem for Brazilian farmers. Copello, who lives in Brazil and has an extensive background working with farmers and agricultural companies there, says Brazilians can expect to see interest rates of 25 percent to 35 percent on farm loans.
Another difference in Brazilian agriculture is in the size of the farming equipment. While the machinery is of similar quality to what U.S. farmers are running, it is generally smaller in size.
“Most U.S. farmers probably have 20 percent to 50 percent greater planting and harvest capacity than Brazilian farmers, due to the increased size of their equipment,” Copello says.
4. Transportation infrastructure
Brazil is making strides to improve its infrastructure to strengthen its export capabilities, but Copello says this is another area where the United States has a clear advantage over Brazil. When asked to compare the soybean transportation systems in each country, Copello says if the United States is considered a 10, he would rate Brazil as a 2.
“Shipping from the interior of Brazil, where most of the soybeans are grown, is highly inefficient due to poor roads and long distances to reach the country’s ports,” Copello says. “Bottlenecks and slowdowns are also common at Brazilian ports, which need improvement.”
5. International competitiveness
Analysts expect Brazil to increase its exports for the fourth straight year as the devalued real (Brazil’s unit of currency) makes Brazilian soybeans more affordable for Chinese buyers. As Brazil continues to make improvements to its infrastructure and adds new soybean acres, it will only solidify its position as a competitor to U.S. soybean production.