AgDM newsletter article, September 2001

Brazil's soybean production

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

(First in a series)

Brazil occupies almost half of South America and spans more than 3.2 million square miles as shown in Table 1. Two major regions dominate Brazil's landscape: the Amazon River Basin and the Central Plateau. Brazil has the fifth largest population in the world with 172 million, yet it has many areas with very sparse population. Brazil has experienced a large migration from the rural areas to the urban centers. Sao Paulo is the third largest city in the world today. Brazil has the tenth largest Gross National Product (GNP) in the world. The personal income of the US totals $8.2 trillion while Brazil's is only $710 billion.

Table 1. Comparison of Brazil and U.S.

Area (sq. miles)
Current cropland acreage*
Potential cropland acreage**
Rural population (percent)
GDP*** per capita (US$)
GDP*** agriculture (US$)
148 billion
185 billion
Paved highways (miles)
Railways (miles)

* Includes all agronomic and horticultural crops (source FAO)
** Current area for all crops plus cerrado area that could be cropped.
*** Gross Domestic Product

Brazil was growing soybeans in the late 1800s. In the 1950s the United States Department of Agriculture started exchanging genetic material with the Agronomic Research Institute in Sao Paulo. This continued on into the 1960s. Production reached 220,000 tons in 1960. Soybean production continued to grow with annual growth rates averaging more than 10 percent.

Soybean production area

Brazilian Soybean Production RegionProduction of soybeans is occurring in two main regions as shown below. The traditional region is in the south and south-central part of Brazil. This includes areas in the states of Sao Paulo, Parana Santa Catarina, Rio Grande do Sul. Most of the land is developed in this area. Increases in production in this area will be the result of increases in yields and shifts between acres already in production. The cerrados area is where most of the expansion is occurring and major growth will occur in the future. This includes land in the Mato Grosso, Mato Grosso do Sul, Minas Gerais, Goias, Tocantins, Bahia, Maranhao, and Piaui. The potential is staggering. Previous to the 1970s, agricultural production in this region was very limited. It consisted of small farms located on the fertile soils along the river valley areas. Due to the soils it was believed that it would never have any significant agricultural crop production. It is estimated that the cerrados occupies over five million acres, which is equivalent to twenty percent of the continental U.S. land mass. It makes up almost one-forth of Brazil's land mass. This is a gently sloping land area with a slope usually less than 3 percent. The vegetation ranges from open treeless grasslands to low growing dense forests. These grasslands are referred to as light cerrados and the forested area is referred to as heavy cerrados. The light cerrados can easily be cleared with two crawler tractors dragging a heavy chain between them. The heavy cerrados requires cutting out the heavier brush before it can be dragged. The trees can be used for firewood, for manufacturing charcoal, or for use as heat in grain dryers.


Current situation

Size of the Brazilian Soybean Production Area in relation to the U.S.Today's farmers in Brazil face many of the same issues that US farmers do. Falling prices, without government supports, have left many of them in a tough financial position. The smaller farmers in the south of Brazil have had very rough times. These farms are less than 1,500 acres in size. They have seen an increase in the value of their land, but their profit margins have declined. Many of them are facing negative returns and loss of their farms. The acreage flexibility provision of "Freedom to Farm" would work better in Brazil than in the US. There are a significant number of farmers switching from soybeans to other crops such as corn because the returns are better. Coffee, corn, and cotton are all on the increase. The farmers in the south of Brazil that are closer to the ports are now starting to export some corn because, even with high freight rates, corn is more profitable. Many of the more progressive smaller farmers want to expand their operations. There isn't any land for sale in the region so they have "leap frogged" into the cerrados. They tend to be the better producers and more aggressive ƒfarmers. There is some debate as to whether the new land is helping support the old farm (in the south) or if the old farms are helping subsidize the growth in the new frontier. The growth in the new areas has had major help from the government. The government funded agricultural research agency has 39 research centers located throughout the country. There are sixty scientists working on various issues related to soybean production. Fifteen of these are plant breeders. It is estimated that sixty percent of the varieties being grown today are varieties the Brazilian government has developed.

Yields and Production

map of BrazilBrazil raised 33.6 million acres of soybeans and 28.9 million acres of corn in 2000. They also have over 46 million additional acres in sugercane, edible beans, rice, coffee, casava, wheat, and cotton. Brazil produces almost 40 million metric tons or almost 1.5 billion bushels of soybeans. The US has been producing around 2.7 billion bushels per year. The estimated yield for Brazilian soybeans is 45 bushels per acre. Yields could be even higher as field visits suggest that significant harvest losses occur due to the age of the equipment, training of operators and harvest conditions. The US average yield has been around 38 bushels per acre. The higher soybean yields in Brazil are the result of several factors. Brazil has a longer growing season. Many of the hybrids are 120 to 150 day hybrids as compared to our 100 day hybrids. Their soybean plants are much taller and have more leaf area before the plants start to flower. The rainfall is more predictable and continues later into the growing season. Inputs in Brazil are much cheaper so producers tend to use more herbicides, fungicides, and insecticides. A major factor has been the development of new hybrids suited to this region. This will continue and the new hybrids will have greater disease and insect resistance. They will also be more tolerant to aluminum and iron toxicity in addition to having higher yield potential. Brazil is using radio and television to teach the machine operators how to be better operators. With all the effort currently underway Brazil should be able to reach its goal of increasing yields by 10 bushels per acre within the next ten years.

Pricing Grain

The Chicago Board of Trade (CBOT) is the exchange that sets the price structure for grain in Brazil. The ports and the grain buying elevators in the country set their price based on the CBOT prices. Brazilian prices are often quoted in terms of basis point spreads from the CBOT. When grain is delivered to the ports the producers are paid in reals (the currency of Brazil) but the price is determined by CBOT prices and US currency exchange rates. Basis spreads change throughout the year. In late June 2001, soybeans in Ponta Grossa, Parana were bringing about $4.60 to $4.70 a bushel. This is about 100 miles from the port of Paranagua. During a two week period, basis can vary by 15 center per bushel.

Other crops

Although most of the attention has been focused on soybean production, Brazil produces several other major crops. These include: corn, rice, coffee, sugarcane, wheat, cow peas, peanuts, cassava, bananas, cotton, mulberry (for silk worms), citrus, castor bean, grain sorghum, eucalyptus (for grain drying and energy), and tobacco. They also raise pineapple, papaya, sunflowers, canola, coconut palm, rubber trees, date palms, and pasture. Brazil currently raises about the same acres of corn as soybeans as shown in Table 2. Corn is often double cropped in the south with soybeans. Most of the corn is used as livestock feed.

Table 2. Brazilian crop diversity

Million Acres
Edible beans

Producers in the south are increasing their corn acreage because, at current prices, corn is more profitable than soybeans, and they are close enough to the ports to make hauling it more economical. Typical yields in the south range from 60 to 120 bushels per acre. Low yields are due to using it as a second crop, low nitrogen fertilizer rates, and nights with high temperatures. Much higher yields are possible. Coffee was the primary crop in Parana before a freeze in 1975 destroyed much of the crop. This led producers to switch to soybeans. However, Brazil is still a major coffee producer. Coffee was sometimes inter-cropped with rice or corn. Coffee trees will produce for about 12 years. Coffee is harvested mechanically. Sugarcane is widely grown in Brazil. It is used in making ethanol. Ethanol production increased dramatically in the 1970s. One hundred percent ethanol is sold for fuel for about $1.60 per gallon while gasoline costs about $3.00 per gallon. Sugarcane is also used to make sugar that is exported. Upland rice is the first crop planted when the new lands in the cerrados is cleared. Rice is more tolerant of the very acid soils (about 4.5-5 pH). Cotton acreage has increased by 600 percent in five years. Cotton provides an alternative to soybeans in the "new lands". The growing season is ideal with a steady supply of rain giving way to a dry season. The cotton sets bowls as it enters the dry season, producing some of the best quality cotton in the world. This may have a negative impact on US cotton producers, encouraging more US acres to switch to soybeans. Eucalyptus is used for fuel for grain dryers and energy for other uses. Wood is used because it is cheap and available. Eucalyptus is a fast growing tree. Much of the wood now comes from tree farms.

Future issues -- major heading

In the future issues of Ag Decision Maker we will discuss the production inputs (fertilizer, chemicals, machinery, etc.) needed for soybean production in Brazil. Estimates of the cost of producing soybeans in Brazil will be presented, along with comparisons for the US. Also, transportation opportunities and bottlenecks will be discussed.


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