South American Soy In The News

chicagotribune.com



 
 


 

Brazil's soybean business worry for U.S.

By ANDREW MARTIN

Chicago Tribune

CUIABA, Brazil - In this muggy provincial capital built on abandoned gold mines, construction workers are known to spend as much time sifting dirt for stray gold nuggets as putting up new buildings.

But the popular governor of the state of Mato Grosso in west-central Brazil, where Cuiaba is located, is championing a different moneymaker: Soybeans.

Spurred by new global markets, soaring prices and vast tracts of undeveloped land, Brazil is poised to surpass the United States as the largest soybean producer in the world, largely due to the explosive growth of farming in Mato Grosso.

Mato Grosso's success has stirred waves of panic in the American Midwest. Some U.S. soybean farmers worry that they can't compete with Brazil's cheap labor and land, divided into soybean plantations that are routinely 10,000 acres, far larger than a typical U.S. farm.

Environmentalists, meanwhile, fret that Brazil's soybean success is accelerating deforestation of the Amazon for new farmland.

Mato Grosso's governor, Blairo Maggi, gruffly brushes off such criticism and prefers to talk about his state's tremendous potential for agricultural expansion.

Only 7 percent of the land in Mato Grosso is used for farming, and with twice as much land as California, Mato Grosso could see 10 percent annual growth in new farms over the next decade, the governor said.

Already, Mato Grosso - "thick forest" in Portuguese - has more acres devoted to soybeans, 12.9 million, than Illinois or Iowa, America's biggest soybean states. Illinois has 10.5 million acres and Iowa 10.4 million acres, according to a recent U.S. Department of Agriculture report for 2002.

"People have a lot of fear of the unknown," said Maggi, known locally as the Soybean King because his family owns the world's biggest soybean farming operation. "There is a lot of room to enlarge."

SUBHED: A change of fortunes

The emergence of Brazil and Argentina as players in the world soybean market is unwelcome news to U.S. soybean farmers, who faced little competition for decades.

In the 1960s, the United States controlled 80 percent of the global market for soybeans, which are used mostly as a protein source in livestock feed. By the turn of the century, that market share shrunk to 34 percent, and Brazil and Argentina together now supply 50 percent of the world's soybeans.

The pain has yet to be felt by many Midwestern farmers because of government price supports and increasing world demand, primarily from China's emerging middle class.

Indeed, Midwestern soybean farmers are seeing some of the best prices ever. A drought in the United States, along with Asian soybean rust fungus in South America, helped drive up prices this year, past $10 per bushel. Soybean prices usually hover around $5 or $6 a bushel, according to the USDA.

But experts suggest that U.S. soybean farmers should enjoy the good times while they last. The future, they say, is clear: Brazil will grow more soybeans and the United States less.

"At this point, it has been more talk than actual impact," said Darrell Good, an agricultural economist at the University of Illinois at Urbana-Champaign. "Everyone who goes down to South America comes back with a scare story for the American producer.

"It's much more profitable to grow soybeans in Brazil than it is here. Over the next decade, we are going to lose beans to South America and switch to corn."

Recognizing the threat, U.S. soybean associations are busily working on strategies to remain competitive, such as promoting U.S. advantages in quality, tracing shipments and transportation.

SUBHED: Transportation an obstacle

(EDITORS: BEGIN OPTIONAL TRIM)

Because many soybeans are transported by barge, U.S. soybean growers are pushing the government to improve locks and dams along the Mississippi River. They are also promoting an energy bill, now stalled in Congress, that encourages the use of soybeans to produce diesel fuel.

In Illinois, a new program called SoySelect will allow farmers to quickly deliver soybean products that can be traced from the store to the field in which they were grown. Such "traceability," officials hope, will make U.S. soybeans more attractive.

"We know that they (Brazilians) are producing lots of beans, more and more all the time," said Sharon Covert, a Tiskilwa, Ill., soybean farmer who heads the Illinois Soybean Checkoff Board, which uses farmers' money for promotions. "You just have to be ready for that type of competition."

The potential of that competition - as well as its weaknesses - is evident on the road north from Cuiaba.

BR 163 stretches 1,100 miles to the Amazonian port city of Santarem, through an immense stretch of largely undeveloped land that Maggi's government touts as the world's last great agricultural frontier.

Roberto Smeraldi, director of the environmental group Friends of the Earth Brazil, said soybean expansion is a "powerful driver" of deforestation.

Because land planted with soybeans typically soars in value, Smeraldi said speculators are clearing more and more territory in the hopes that it becomes the next cluster of huge soybean plantations.

"It stimulates people to open up the frontier," Smeraldi said. "Out of four areas they open up, maybe only one actually works for soybeans ... but then the damage is done."

Some of this wild land is protected by Brazilian law. While environmentalists complain that the rain forest is being wiped out, farmers stress - or grouse - that a good chunk of it is off-limits to the plow.

The land near Cuiaba is a scrubby savanna known as cerrado that gives way to lusher forests as BR 163 heads north toward the Amazon River. Brazilian law requires farmers to preserve up to 50 percent of land classified as cerrado or transitional forest.

The rain forest covers roughly half of Mato Grosso, and only 20 percent of it can be cultivated.

"It's very much discussed that it's being deforested," Maggi said. "What I want to say is that it's being preserved."

But the biggest obstacle for Brazilian soybean farmers may be that rural Brazil's transportation system is in terrible condition, particularly the roads, which can make driving inefficient and terrifying.

BR 163 is no exception. Jammed with trucks carrying soybeans, logs and farm equipment, the road is two narrow lanes full of kamikaze drivers and gaping potholes.

(END OPTIONAL TRIM)

In the state of Para, across Mato Grosso's northern border, the main transportation artery, BR 163, turns to dirt. It's supposed to be paved in the next few years, but for now, soybean trucks must travel twice as far as they otherwise would, heading to ports in southern Brazil, where lines of trucks waiting to unload their cargo stretch for miles.

"This is a big problem we are having," said Guilherme Faria de Freitas, who manages a soybean plant in Mato Grosso for Cargill Inc., the U.S. agribusiness giant.

Faria de Freitas works in the boomtown of Sinop, 310 miles north of Cuiaba.

"Once this paving is done, it's another world," Faria de Freitas said. "Nothing will keep us from going."

Maggi said improving the roads is a priority for his government, but he is partially reliant on federal and local officials for help. Optimistically, he said, BR 163 would be fixed in five years.

SUBHED: Prosperity on the rise

Despite the challenges, signs of new wealth are everywhere in Sinop: Roads and subdivisions are under construction, a John Deere showroom is packed with new tractors, and the downtown is lined with stores and restaurants.

Founded only 24 years ago, Sinop is now the fourth-biggest city in Mato Grosso, with 95,000 residents. Many of them come originally from longtime farming villages in southern Brazil where land and housing are more expensive.

Nelson Glucksburg was among the first farmers to settle in Sinop. Glucksburg is an accountant from the southern state of Parana who moved for the cheap land and the chance to make a fortune.

Now 50, Glucksburg owns 12,355 acres outside of town, where birds, monkeys and an occasional jaguar flit between the rows of soybeans, rice and sunflowers.

Glucksburg's farm, which is of average size for Mato Grosso, has 30 full-time employees and another 30 part-time workers.

"It was very difficult and complicated," Glucksburg said of his early years of farming. "The deforestation is very expensive. It's a very strong forest."

Idemio Machado hopes he, too, can cash in on Brazil's soybean boom. Machado, 33, sold about 75 acres of land in southern Brazil and bought 1,235 acres in Para because land is substantially cheaper.

Machado said he is working in a gold mine to save money but plans to plant soybeans on his farm, which he hopes to expand to about 6,200 acres.

"We came here to plant, not for the gold," he said, standing beside his wife, Angelica. "But we have to survive."


 
By ANDREW MARTIN

Chicago Tribune

CUIABA, Brazil - In this muggy provincial capital built on abandoned gold mines, construction workers are known to spend as much time sifting dirt for stray gold nuggets as putting up new buildings.

But the popular governor of the state of Mato Grosso in west-central Brazil, where Cuiaba is located, is championing a different moneymaker: Soybeans.

Spurred by new global markets, soaring prices and vast tracts of undeveloped land, Brazil is poised to surpass the United States as the largest soybean producer in the world, largely due to the explosive growth of farming in Mato Grosso.

Mato Grosso's success has stirred waves of panic in the American Midwest. Some U.S. soybean farmers worry that they can't compete with Brazil's cheap labor and land, divided into soybean plantations that are routinely 10,000 acres, far larger than a typical U.S. farm.

Environmentalists, meanwhile, fret that Brazil's soybean success is accelerating deforestation of the Amazon for new farmland.

Mato Grosso's governor, Blairo Maggi, gruffly brushes off such criticism and prefers to talk about his state's tremendous potential for agricultural expansion.

Only 7 percent of the land in Mato Grosso is used for farming, and with twice as much land as California, Mato Grosso could see 10 percent annual growth in new farms over the next decade, the governor said.

Already, Mato Grosso - "thick forest" in Portuguese - has more acres devoted to soybeans, 12.9 million, than Illinois or Iowa, America's biggest soybean states. Illinois has 10.5 million acres and Iowa 10.4 million acres, according to a recent U.S. Department of Agriculture report for 2002.

"People have a lot of fear of the unknown," said Maggi, known locally as the Soybean King because his family owns the world's biggest soybean farming operation. "There is a lot of room to enlarge."

SUBHED: A change of fortunes

The emergence of Brazil and Argentina as players in the world soybean market is unwelcome news to U.S. soybean farmers, who faced little competition for decades.

In the 1960s, the United States controlled 80 percent of the global market for soybeans, which are used mostly as a protein source in livestock feed. By the turn of the century, that market share shrunk to 34 percent, and Brazil and Argentina together now supply 50 percent of the world's soybeans.

The pain has yet to be felt by many Midwestern farmers because of government price supports and increasing world demand, primarily from China's emerging middle class.

Indeed, Midwestern soybean farmers are seeing some of the best prices ever. A drought in the United States, along with Asian soybean rust fungus in South America, helped drive up prices this year, past $10 per bushel. Soybean prices usually hover around $5 or $6 a bushel, according to the USDA.

But experts suggest that U.S. soybean farmers should enjoy the good times while they last. The future, they say, is clear: Brazil will grow more soybeans and the United States less.

"At this point, it has been more talk than actual impact," said Darrell Good, an agricultural economist at the University of Illinois at Urbana-Champaign. "Everyone who goes down to South America comes back with a scare story for the American producer.

"It's much more profitable to grow soybeans in Brazil than it is here. Over the next decade, we are going to lose beans to South America and switch to corn."

Recognizing the threat, U.S. soybean associations are busily working on strategies to remain competitive, such as promoting U.S. advantages in quality, tracing shipments and transportation.

SUBHED: Transportation an obstacle

(EDITORS: BEGIN OPTIONAL TRIM)

Because many soybeans are transported by barge, U.S. soybean growers are pushing the government to improve locks and dams along the Mississippi River. They are also promoting an energy bill, now stalled in Congress, that encourages the use of soybeans to produce diesel fuel.

In Illinois, a new program called SoySelect will allow farmers to quickly deliver soybean products that can be traced from the store to the field in which they were grown. Such "traceability," officials hope, will make U.S. soybeans more attractive.

"We know that they (Brazilians) are producing lots of beans, more and more all the time," said Sharon Covert, a Tiskilwa, Ill., soybean farmer who heads the Illinois Soybean Checkoff Board, which uses farmers' money for promotions. "You just have to be ready for that type of competition."

The potential of that competition - as well as its weaknesses - is evident on the road north from Cuiaba.

BR 163 stretches 1,100 miles to the Amazonian port city of Santarem, through an immense stretch of largely undeveloped land that Maggi's government touts as the world's last great agricultural frontier.

Roberto Smeraldi, director of the environmental group Friends of the Earth Brazil, said soybean expansion is a "powerful driver" of deforestation.

Because land planted with soybeans typically soars in value, Smeraldi said speculators are clearing more and more territory in the hopes that it becomes the next cluster of huge soybean plantations.

"It stimulates people to open up the frontier," Smeraldi said. "Out of four areas they open up, maybe only one actually works for soybeans ... but then the damage is done."

Some of this wild land is protected by Brazilian law. While environmentalists complain that the rain forest is being wiped out, farmers stress - or grouse - that a good chunk of it is off-limits to the plow.

The land near Cuiaba is a scrubby savanna known as cerrado that gives way to lusher forests as BR 163 heads north toward the Amazon River. Brazilian law requires farmers to preserve up to 50 percent of land classified as cerrado or transitional forest.

The rain forest covers roughly half of Mato Grosso, and only 20 percent of it can be cultivated.

"It's very much discussed that it's being deforested," Maggi said. "What I want to say is that it's being preserved."

But the biggest obstacle for Brazilian soybean farmers may be that rural Brazil's transportation system is in terrible condition, particularly the roads, which can make driving inefficient and terrifying.

BR 163 is no exception. Jammed with trucks carrying soybeans, logs and farm equipment, the road is two narrow lanes full of kamikaze drivers and gaping potholes.

(END OPTIONAL TRIM)

In the state of Para, across Mato Grosso's northern border, the main transportation artery, BR 163, turns to dirt. It's supposed to be paved in the next few years, but for now, soybean trucks must travel twice as far as they otherwise would, heading to ports in southern Brazil, where lines of trucks waiting to unload their cargo stretch for miles.

"This is a big problem we are having," said Guilherme Faria de Freitas, who manages a soybean plant in Mato Grosso for Cargill Inc., the U.S. agribusiness giant.

Faria de Freitas works in the boomtown of Sinop, 310 miles north of Cuiaba.

"Once this paving is done, it's another world," Faria de Freitas said. "Nothing will keep us from going."

Maggi said improving the roads is a priority for his government, but he is partially reliant on federal and local officials for help. Optimistically, he said, BR 163 would be fixed in five years.

SUBHED: Prosperity on the rise

Despite the challenges, signs of new wealth are everywhere in Sinop: Roads and subdivisions are under construction, a John Deere showroom is packed with new tractors, and the downtown is lined with stores and restaurants.

Founded only 24 years ago, Sinop is now the fourth-biggest city in Mato Grosso, with 95,000 residents. Many of them come originally from longtime farming villages in southern Brazil where land and housing are more expensive.

Nelson Glucksburg was among the first farmers to settle in Sinop. Glucksburg is an accountant from the southern state of Parana who moved for the cheap land and the chance to make a fortune.

Now 50, Glucksburg owns 12,355 acres outside of town, where birds, monkeys and an occasional jaguar flit between the rows of soybeans, rice and sunflowers.

Glucksburg's farm, which is of average size for Mato Grosso, has 30 full-time employees and another 30 part-time workers.

"It was very difficult and complicated," Glucksburg said of his early years of farming. "The deforestation is very expensive. It's a very strong forest."

Idemio Machado hopes he, too, can cash in on Brazil's soybean boom. Machado, 33, sold about 75 acres of land in southern Brazil and bought 1,235 acres in Para because land is substantially cheaper.

Machado said he is working in a gold mine to save money but plans to plant soybeans on his farm, which he hopes to expand to about 6,200 acres.

"We came here to plant, not for the gold," he said, standing beside his wife, Angelica. "But we have to survive."



 

Copyright © 2004, Chicago Tribune


 
  South American Soy, LLC  


© 2006-2007.  All rights reserved. 
No images or written material
may be reproduced without consent
of South American Soy, LLC & AgPage.
1414 N 2400 E Rd
Assumption, IL 62510
US Toll-Free (888) 891-8475
International: (217) 226-3454
US Fax:(217) 226-4273
Site By
Check out the AgPage Site