August 1, 2012

Conventional Soybeans Continue to Have a Niche in Central Brazil

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Farmers and researchers in central Brazil continue to feel that there remains a strong niche market for conventional soybean production in Brazil (non-GMO). In the three states of Mato Grosso, Rondonia, and Goias, 72% of the soybeans grown in 2011/12 were GMO varieties, but 28% of the soybeans produced were conventional varieties.

According to the Brazilian Association of non-GMO Grain Producers (Abrange), European and Asian countries are the principal purchasers of conventional soybeans and these two regions will purchase 5 million tons of conventional soybeans (18% of Brazil's total soybean exports) and 6.5 million tons of conventional soybean meal in 2011/12. Brazil is the major supplier of conventional soybeans worldwide and the state of Mato Grosso is the number one producing state of conventional soybeans in Brazil. An estimated 35% of the soybean production in the state is still conventional varieties. That is why the state has more programs for conventional soybean production than any other state.

Embrapa, in conjunction with seed companies, processors, and agribusinesses, created the "Soybean Free" program in 2010 in order to preserve and promote the production of conventional soybeans in Brazil. They developed a research program for the development of new conventional soybean varieties as well as an education program for farmers detailing what they must do in order to produce contamination-free conventional soybeans.

Abrange and the Mato Grosso Institute of Agricultural Economics (Imea) estimate that conventional soybean seed are 14% cheaper to purchase than GMO varieties. There are also no company royalties associated with conventional seed which in Brazil are either R$ 0.44 per kilogram of purchased seed or 2% of the final yield if the royalty was not paid at the time the seed was purchased. Conventional soybeans can also command a premium in the market of between R$ 2 to R$ 5 per sack or US$ 0.44 to 1.13 per bushel.

In order to maintain the purity of conventional soybeans, farmers must adhere to a rigorous program from planting to marketing including: thorough cleaning of planters, combines, trucks, and secure storage facilities. Additionally, they must separate conventional fields and GMO fields with at least 20 meters of vegetation. In order for a shipment of seed to be considered free of GMO contamination, it cannot contain more than 0.1% of GMO seed or in other words, one seed per thousand.

The reason why Mato Grosso and central Brazil was chosen for the Soybean Free program is because of the export capabilities of the region. The conventional soybeans produced in that part of Brazil are exported out of the country through ports on the Amazon River. This limited export capability helps to greatly reduce the possibility of contamination during the export process.