It is no secret that there is an abundance of natural resources in Brazil, but a big question for crop, livestock and biofuels producers in the United States is just how quickly those resources are becoming a reality.
"Opinions vary as to how much of the Cerrados, Brazil's vast savannas, will be converted to farmland each year, and along with that how much the country's livestock and poultry producers will be able to expand and grow exports," says Tim Scheer, a member of the Nebraska Corn Board from St. Paul.
Scheer, along with two other Corn Board members and Kelly Brunkhorst, the board's ag program manager, returned recently from a mission to Brazil that included several stops--from the country's capital, to large soybean fields, to a floating grain export facility on the Amazon River. The trip was a joint mission with the Nebraska Corn Board's counterparts from Iowa and Illinois.
"Although stronger global grain and soybean prices will likely give Brazilian producers a good profit this year, the previous two years were difficult," Scheer says. "That has slowed expansion because it is costly to convert the savannas to good crop land."
Stan Boehr, a Nebraska Corn Board member from Henderson, says Brazil's livestock and poultry industries have grown rapidly. "Hog and poultry production, especially," he adds. "Brazilian pork and poultry are in high demand locally but also in the export markets, which compete with U.S. producers, especially in Asia."
In fact, Brazil has been the world's largest beef and poultry exporter and fourth-largest pork exporter since 2004, according to the USDA's Economic Research Service. "Brazil is able to produce a lot of animal feed, which helps them produce a lot of pork and poultry," Scheer says. "They also export a lot of grass-fed beef cattle for other countries to process."
The bottleneck within the country is transportation, however. "Everything, from soybeans to poultry to pork to cattle, all take a couple of days to get to market," Boehr says. Although many producers partner together to build their own roads, there is still a lot of investment needed in the country's transportation infrastructure."
Nevertheless, Brazilian producers are determined to feed as much of their soybeans and corn to livestock and poultry as they can. "Producers don't want to ship corn and soybeans," Scheer says. "They want to ship pork, beef and poultry. They want to add value and squeeze every dollar out of what they ship. "
The biofuels industry in Brazil is also growing, according to Brunkhorst. "They are increasing their sugarcane production so they can produce more ethanol. They told us they want to double their ethanol production by 2012. And on the usage side, they are pushing for higher blends of ethanol at the pump. Currently, you can buy a 25 percent ethanol blend as well as 100 percent ethanol, and they have shown that the engine technology is there to use higher blends."
Brazil is also taking steps to increase its ethanol export capabilities. "They're still in the discussion stages as far as building pipelines to get ethanol to the ports, but it is definitely in their future plans," Brunkhorst adds.
As for corn and soybean production, Reinhold Stephanes, Brazil's agriculture minister, recently reported that the country's crops should reach record levels this year, although soybean production may dip a percentage point or two. Soybean production was estimated at 58.2 million metric tons (2.1 billion bushels), followed by 53.4 mmt for corn (2.1 billion bushels). Brazil estimates it will pass the U.S. and become the world's top soybean exporter during the 2008-09 crop year.
In last fall's harvest, the U.S. produced 70.4 mmt (2.6 billion bushels) of soybeans and 332.1 mmt of corn (13.1 billion bushels).
"There is no doubt that Brazil's crop, livestock, poultry and biofuels producers are increasingly competitive in the world marketplace," Scheer says. "It is important for U.S. producers to pay attention and keep advancing our own production efficiencies and technologies. That is critical if we want to maintain and grow our valuable livestock industries and add value to our own agriculture products."