AgDM newsletter article, October 2001

Brazil's soybean production - production inputs

Kelvin Leibold Phil Baumel Bob Wisnerby Kelvin Leibold, extension farm management specialist, 641-648-4850, kleibold@iastate.edu; Phil Baumel and Bob Wisner, professors of economics; and Marty McVey, AGRI-Industries

(Second in a series)

Brazilian soybean production has expanded rapidly in recently years. Soybeans were produced on 33.6 million acres in 2000. The estimated yield for Brazilian soybeans is 45 bushels per acre while the U.S. average yield has been around 38 bushels.

A discussion of the production inputs and resources used in Brazilian soybean production is presented below.

Soils and Fertility

Most of the soils in the new areas being developed in Brazil are classified as tropical soils, or what is known as Oxisols. The subsurface horizon contains only hydrated oxides of iron and aluminum along with kaolinite clays and quartz sand. The soils are subject to the formation of "hardpans". These are "old" soils. The two largest areas of these soils are the Amazon Basin and the Congo Basin of Africa.

The Oxisols are highly weathered soils with low native fertility and low organic matter. They can be very productive when supplemented with lime and phosphorus. The addition of lime and phosphorus helps minimize the aluminum toxicity. Aluminum toxicity is often the major limiting factor for crop production with very acid soils. As the toxicity increases the root development decreases. Many native plants have high tolerances to aluminum toxicity. The process of how aluminum toxicity occurs in the plant is not very well understood at this time. However, much effort is being spent researching ways to overcome the root development problems in these type of soils. Aluminum toxicity is common throughout the world. It occurs in South America, southern United States, Africa, and Australia. This is a common problem in older soils.

The low pH of the soils also causes problems with availability of phosphorus. The availability of phosphorus decreases significantly as the soil drops below 6 pH. Aluminum and iron increase in availability. That is why some people have said that these soils would never be productive. However, producers with a greater understanding of the soils have been able to make these soils very productive by adding lime to increase the pH. It should be possible for these soils to produce even greater yields if producers have a greater selection of adapted varieties and a better understanding of soil chemistry.

Soybeans require large amounts of phosphorus compared to other crops such as corn or wheat. Phosphorus stress on plants usually occurs when the plant is in the seedling stage and the roots have not developed enough to supply all the needed phosphorus. Banding of fertilizer applications would probably give better yield responses because the Oxisols soil test low in phosphorus. It would improve the availability of the nutrients applied.

Brazil has large supplies of lime. The problem, similar to the US, is transportation costs. In the 1970s when the government was trying to stimulate the growth in central Brazil with government loans and grants, one of the key factors in deciding where to target these new growth areas was the availability of low cost lime.

The soils in both the south and the cerrados are very fragile. The soils in the cerrados are thin loess (wind deposited) soils (2 to 3 feet) over sandstone and rock formations. The high rainfall amounts present significant risk of high amounts of soil erosion. Some of the areas have significant slopes, both in rise and in length. Producers are using no-till and terracing to try to minimize erosion.

Weed control

Brazilian farmers tend to have fewer weed control problems. This is partly due to the fact that these lands have not been farmed for very many years. However, they use no-till, which will tend to increase weed pressure over time. They also have several weeds that chemicals do not control very well.

Another challenge is that temperatures stay warm after the soybean leaf canopy has fallen, which encourages weeds to start growing before the crop is harvested. This late season weed growth probably has very little if any yield impact. However, it can be a challenge to harvest crops with young green weeds growing. The growth of new weeds after the crop has matured and dropped leaves would be an unacceptable level of control for most Midwest producers.

Brazilian research is currently focusing on identifying herbicide resistant varieties, studying weed ecology and allopathic effects, and developing integrated pest management control strategies. Along with Monsanto, they have developed Round-Up Ready soybean varieties that will be released as soon as they become legal. It is speculated that this could happen within two years.

It is illegal to raise Round-Up Ready soybeans in Brazil, but it is occurring. It is most prominent in the southwestern part of Brazil where the seed comes in from Argentina and then continues to be brown bagged. It is estimated that in some parts of the southwestern area that over 60 percent of the soybeans are Round-Up Ready. A lot of these soybeans are exported back out of Brazil through Argentina. Contamination is and will become an even bigger problem for Brazil to deal with. It may provide an opportunity for U.S. producers who can identity preserve soybeans to sell into certain markets at a premium price.

The types of chemicals used on soybeans are similar to ours. This includes Treflan, Classic, Cobra, Reflex, Basagran, Pursuit, Poast, and Select, along with others that can be found in the U.S. Chemical weed control costs about $15 to $20 an acre. This gives reasonable broadleaf and grass control.

Perennial weed pressure seems to be light. However, the pressure from perennial weeds will increase over time. The fact that it rarely freezes will also increase perennial weed pressure. In the south where labor is very cheap, hand hoeing may be a reasonably good option. In the new cerrados where labor is higher priced, it may be less of an option.

A major concern is the growing number of herbicide resistant weeds. Many of the chemicals that producers use are of the same chemistry and have the same mode of action. Continued and repeated use of the same chemistry will put tremendous selection pressure on the weeds to develop resistance.

In general, there are more weeds in the southern part that has been under cultivation longer. The chemical resistance to weeds is also showing up in the south.

Weed control in the new cerrados is based on chemical control. Chemical carryover is less of a problem due to the warm soil temperatures and higher rainfall. However, they will need to rotate crops and chemical modes of action if they want to minimize the probability of developing additional resistant weeds.

Diseases and insects

The disadvantage of a climate with warm winters is that you have more disease and insect problems. Disease problems included stem canker and frogeye leaf spot. Brazilian scientists estimate that 90 percent of the soybean seeds are treated with some type of systemic or contact fungicide. Powdery mildew and white mold are also problems. Planting in narrow rows enhances White Mold and some of the producers are considering going to wider rows to help manage the disease. Sudden death syndrome is also a major disease problem due to no-till and high rainfall.

Soybean Cyst Nematodes (SCN) were discovered in Brazil in 1992. It is estimated that five million acres are currently infested with SCN. The Mato Grosso Foundation is working to try and develop varieties that are resistant to SCN and stem canker.

Insects are also more of a problem due to the warm weather. Insects include velvetbean caterpillars, southern stinkbug, and the ceratoma beetle. Some producers are using a biological control for velvetbean caterpillars. Many of the producers are spraying several times during the growing season to try to control diseases. This adds substantially to the cost of production.

Machinery

The machinery costs of production in Brazil vary significantly by areas and crops. Smaller and older equipment is found in the southern region of Brazil. Farther north are farms that are larger in size and appear to be more profitable. They tend to have larger and newer equipment. We saw pictures of several large combines operating in one field but we did not have the opportunity to observe this. It appears that no-till is the major tillage system. This has resulted in less horsepower requirements and less fuel usage. This also has reduced the use of heavy tillage equipment. The exception would be the planting of sugar cane. Cane production currently requires large tractors due to the tillage and planting methods used.

Almost all of the farm tractors, harvesting equipment, and trucks use diesel fuel. The current price for diesel is approximately $1.50 a gallon. Diesel is considered to be the "working fuel" so it is free from fuel taxes. Gasoline costs approximately $3.00 per gallon. Cars cannot use diesel, only gasoline or alcohol.

In the southern region we observed the use of smaller equipment. Typically this is a mechanical front wheel assist tractor with less than 120 horsepower. Massey Ferguson tractors were common. Many tractors were in the 50 to 100 horsepower size. Combines tended to be older and most did not have cabs. New Holland combines with twelve to fifteen foot platforms were quite common.

John Deere started in Brazil with an arrangement with SLC, a German company, in 1945. SLC produces combines, tractors, planters, cotton harvesters, and sugar cane harvesters. Recently John Deere bought the remaining shares and is now 100 percent owner. John Deere equipment is manufactured in Brazil under the brand name SLC and painted John Deere green.

Case-IH has been manufacturing in Brazil since 1975, although they have been selling equipment in Brazil since 1920. Massey Ferguson has a manufacturing plant in Brazil and appears to be the largest selling tractor, at least in southern Brazil.

Case-IH and John Deere appear to be increasing market share. Of interest to watch will be whether these companies can expand domestic production in Brazil and minimize the import taxes they now face. Taxes can be as much as 35 percent.

Most of the planters in the south are made by a company called Jumil. They are a no-till planter set up as a five row planter for corn on approximately 36-inch rows. They can add units to plant soybeans in 18-inch rows. The new planters are larger with more units and use air-metering systems. Jumil has been in businesses since 1936, is ISO 9001 certified since 1995, and uses the latest computer design software for engineering and production.

Brazil has imported about 175 cotton pickers into the cerrados area. These are John Deere five row pickers. Due to the rapidly expanding acreage of cotton and shortage of labor in the new frontier, producers are purchasing these larger, more expensive units. The largest domestically manufactured cotton picker is a two-row picker.

Brazilian producers are also importing other brands of cotton pickers. A major factor in the importing and selling of equipment is the amount of seller financing available. Difficulties in accessing capital and unfavorable currency exchange rates are continuing problems.

They use traditional sprayers, foggers, and aerial application for spraying. Producers don't need a license to buy or apply chemicals. Most of the application is done by the farmers themselves and is not custom applied by the cooperatives. This is partly due to cheap labor and the large number of farm laborers.

Brazilian made machinery is less expensive than comparable equipment from the U.S. Hired laborers operate most of the equipment so there are very few tractors with cabs and only a few combines with cabs. So equipment manufacturing costs are less. It is estimated that a new 100 horse power tractor costs $50,000 and a new SLC combine with cab and a fifteen foot platform costs $90,000.

Brazilian researchers estimate machinery costs for soybean production is about 20 percent of the total cost of production. This would be approximately $32 per acre. However, this would not include trucking to a port. If you compare this number with the 2,500 acre farm in the southern area it is pretty reasonable.

Assuming a 2,500 acre farm has $250,000 invested in equipment with a repair cost of $10 per acre and two gallons of fuel used per acre, the machinery costs, excluding labor, is about $23 per acre. This is less than what a typical Iowa farmer would have. This is due to the use of older equipment, lower initial investment costs, more hours of use per year, and lower costs of repair. By using no-till, the amount of tillage equipment and fuel needed is also decreased. Labor costs are low enough that producers substitute labor for machinery.

Up until 1995, Brazil had a uniform national fuel pricing system. The price of fuel was controlled by the government at the wholesale level. Through the use of a tax the government kept the price of diesel fuel constant no matter how far you were from the refinery. This was an important and significant subsidy for the development of agriculture in the cerrados.

 

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