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BRAZIL’S SOYBEAN PRODUCTION POTENTIAL AND COMPETITIVE POSITION VS. U.S. Dr. Robert Wisner Iowa State University PowerPoint PPT Presentation


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BRAZIL’S SOYBEAN PRODUCTION POTENTIAL AND COMPETITIVE POSITION VS. U.S. Dr. Robert Wisner Iowa State University. SOURCES OF INFORMATION. 4farms in three states 2railroad companies 1barge company 2truck firms 1major grain company 1soybean processor 1wet corn miller

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BRAZIL’S SOYBEAN PRODUCTION POTENTIAL AND COMPETITIVE POSITION VS. U.S. Dr. Robert Wisner Iowa State University

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BRAZIL’S SOYBEAN PRODUCTION POTENTIAL AND COMPETITIVE POSITION VS. U.S.Dr. Robert WisnerIowa State University


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SOURCES OF INFORMATION

4farms in three states

2railroad companies

1barge company

2truck firms

1major grain company

1soybean processor

1wet corn miller

1export elevator

1port authority

2country elevators

3soybean seed producers

3livestock producers

1new farm storage facility


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HISTORY

  • 1971 U.S. devalues dollar

  • 1971-72 USSR buys huge amounts of U.S. grain

  • 1972-73 harsh El Nino reduces Peruvian fish meal

  • 1973 U.S. food companies, livestock feeders and consumers raise fears of running out of soy products

  • June, 1973, President Nixon embargos soybean and soymeal exports

  • 1973-74 soy importers buy land in Brazil to grow soybeans


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BRAZIL SOYBEAN PRODUCTION

Mil. TonsMil. Bu.

1973 5.0 184

200034.2 1,259

2002 43.5 1,600

USDA Proj. 2003 48.0 1,766


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Brazil’s Cerrados

  • Land purchase prices: $100/Acre or less plus clearing costs

  • Quality varies, buyer beware

  • Web site for real estate:http://www.AgBrazil.com/brazil_s_agriculture_frontier.htm


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Crops Raised in Cerrados

  • Soybeans

  • Wheat

  • Rice

  • Sugar cane

  • Cotton

  • Corn

  • Coffee

  • Pasture


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Brazil’s Cerrados

  • Soil types: sandy to sandy loam

  • Aluminum content: 0.05 to 0.06

  • Requires about 1.6 tons of lime/A.

  • Avg. annual rainfall: 35 to 80 inches, depending on the location

  • Avg. temperature: 73 F. range: 63-90

  • Irrigation water available

  • Double/triple cropping possible


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Rate of Expansion in South American Soybean production

  • Brazil: 1993-1999 = 55 mil. bu./year

  • Argentina:1993-1999 = 51 mil. bu./year

  • Projected 2000-01 expansions:

    • Brazil +74 mil. bu.

    • Argentina +103 mil bu.

    • Other small expansions in Bolivia, Paraguay, Uraguay


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Brazil Corn

  • Brazil is a major corn grower

  • Brazil exports no corn in most years

  • Reason:

  • Transport costs nearly equal price of corn

    • What it would take for Brazil to export corn: approximate doubling of corn yields


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Estimated Costs of Producing Soybeans, Iowa & Brazil,

2000

Cost per acre

Cost per bushel

Mato

Matto

Non-land costs

Iowa

Paran

á

Grosso

Iowa

Paran

á

Grosso

Seed +

innoculant

$ 18.00

$10.00

$10.00

$0.36

$0.22

$0.20

Fertilizer & lime

27.30

38.00

47.00

0.55

0.84

0.94

Labor

19.60

10.00

10.00

0.39

0.22

0.20

Chemicals

30.00

35.00

24.40

0.60

0.78

0.49

Crop insurance

3.00

0.00

0.00

0.06

0.00

0.00

Interest

5.90

6.48

6.92

0.12

0.14

0.14

Machinery

43.19

25.00

33.85

0.86

0.56

0.68

Miscellaneous

8.00

8.00

9.00

0.16

0.18

0.18

Sub-total

$154.99

$132.48

$141.17

$3.10

$2.94

$2.82

Land

140.00

42.00

32.00

2.80

0.93

0.64

Total

$294.99

$174.48

$173.17

$5.90

$3.87

$3.47

Normal yields

50

45

50


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Farm access road through the small scrub brush of the Cerrados.


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Typical dirt road in Brazil during the beginning of the dry season.

Brazil Cerrados

Top Soil 120 ft


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Cotton planted

on Cerrados


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Newly Cleared Land In Brazil

Planted to Upland Rice


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Current and potential production in expansion areas(mmt)

Total

+480-550

mil. Bu.


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Major waterway systems

Major waterway systems


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Sapezal export route


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Central Iowa Export Route


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Major railroads


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Ferronorte rail cars, the old and the new


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Railroads

1.Are in bad condition

a.different rail gauges

b.less than 300 miles of new and upgraded

lines

c.trains derail regularly on old rail

2.Ferronorte (Soy Railroad) purchased 50 cutting edge technology locomotives and 700 new 105-ton aluminum covered hopper cars

3.Derailments essentially destroy aluminum cars

4. Major grain company buying 40 smaller hoppers

5.Very limited grain loading facilities on the new rail


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Railroads - cont’d

6.New loading facilities unlikely until all new rail completed

7.Seasonal grain movements unlikely to support new railroads

8. Directly serve only small areas

9.Grain carrying capacity likely to increase but at a very modest rate


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Conclusions

  • Brazil has large and clear cost advantage in soybean production

  • Brazil soybean transport costs range from 100% to 400% higher than U.S. transport costs

  • Brazil land clearing and soy production will likely continue at the historical rate

  • Brazil’s transportation investments will be limited by:

  • a.capital shortages

  • b.environmental and social problems

  • c.politics


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Alternatives for U.S. Agriculture

  • Reduce marketing costs

    • Increased use of semi trucks

    • Bypass high cost elevators

  • Reduce cost of producing U.S. soybeans through lower land costs

  • Emphasize value added products


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    Yand justice for all

    The U.S. Department of Agriculture (USDA) prohibits discrimination in all its programs and activities on the basis of race, color, national origin, gender, religion, age, disability, political beliefs, sexual orientation, and marital or family status. (Not all prohibited bases apply to all programs.) Many materials can be made available in alternative formats for ADA clients. To file a complaint of discrimination, write USDA, Office of Civil Rights, Room 326-W, Whitten Building, 14th and Independence Avenue, SW, Washington, DC 20250-9410 or call 202-720-5964.

    Issued in furtherance of Cooperative Extension work, Acts of May 8 and June 30, 1914, in cooperation with the U.S. Department of Agriculture. Stanley R. Johnson, director, Cooperative Extension Service, Iowa State University of Science and Technology, Ames, Iowa.


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