Executive Insights: Sea of soybeans
April 1, 2024 | Kirk Leeds
Earlier this year, I again had the opportunity to join several ISA directors on a visit to Brazil. The purpose of our time in the South American country was to see firsthand its continued expansion of soybeans, making it the world’s largest producer. On this trip, we traveled to Matopiba, a region in north and northeast Brazil considered the “new frontier” in soybean production. It represents around 12% of Brazilian soybean production, with rapid expansion expected.
As we were visiting a farm of several thousand acres that had only been in soybean production for a few years, our Brazilian farmer host mentioned that everywhere you looked you saw a “sea of soybeans.” He was absolutely right. As I got back in the van to travel to another stop on our tour, I kept thinking about this sea of soybeans (and increasingly corn, too) and the implications for soybean production in Iowa and across the U.S.
While visiting another farm, we stood in a field that five years previously had been pasture (cerrado) filled with small trees, large bushes and thick grass and weeds. It took the farmer two years to clear the land and dump industrial amounts of lime on the soil to reduce acidity levels so they could plant soybeans in the third year. Within two years, the field was producing 72 bushels-per-acre soybeans.
Last year, Brazil used 124 million acres of land for grain production while planting on 189 million acres. So how do you plant 189 million acres on 124 million acres? The 65-million-acre difference is a result of double cropping and increasingly from triple cropping. Unlike Iowa and large portions of the U.S. most Brazil farmers plant soybeans followed by corn. In some cases, cover crops are “harvested” by livestock grazing after the harvest of soybeans and corn (or other crops). We visited farms where the farmer decided to make corn his first planted crop, followed by soybeans, and they harvested more than 250 bushels of corn per acre. He’s proving that, yes, you can produce large crops of corn and soybeans in the tropics.
Brazil has several advantages relative to the U.S. Among them, large amounts of available land, particularly in the “new frontier” areas of Brazil. They have favorable climate in large portions of the country. Yields are increasing and with the investments in research being made by the Brazilian government and the private sector (U.S. and local companies), yields will continue to improve. The potential to harvest three crops per year is a game changer. When you combine this with the rapid adoption of technology by younger farmers, Brazilian farmers will remain formidable competitors.
The U.S. also has advantages. Although Brazil continues to see significant investments in roads, rail and barge infrastructure (much of which seems to be by foreign investors), they still have a long way to go. There are reasons to question whether they will ever catch up with the capacity of the U.S. to transport harvested crops. On and off farm storage of soybeans in Brazil is a challenge due to lack of investments and the reality of trying to store corn and soybeans in the tropics. U.S. farmers have better risk management tools including crop insurance (thus why protecting crop insurance is our top priority in the farm bill). We face less direct currency risk from the dollar fluctuation and lower interest rates. On the sustainability front, the U.S. has a much better story to share with our customers and the general public. And even though they seem to have a large pool of farm workers, the U.S. still has a significant advantage in the skills of our workforce.
Perhaps an advantage that I think is not fully appreciated is the one below our feet. There are real risks to having farmland in constant production, particularly in an area with very low soil fertility and high acidity as in Brazil. As much as we often wish we could skip winter here in the Midwest, cold winters not only give the soil a chance to rest but they also help us manage diseases, pests and weeds. It was not uncommon to hear Brazilian farmers talk about needing to spray fungicides and insecticides 6-8 times. And even though we were told that weed control is not really an issue, as we were reminded in the Jurassic Park movies, “life finds a way.” It’s difficult for me to believe that these pressures will not continue to increase in the years to come. Life, including weeds, diseases and insects, always finds a way.
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