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December 3, 2015

Mato Grosso Expected to Double Corn Production in Ten Years

The state of Mato Grosso is already the leading grain producing state in Brazil and according to a new study released this week, over the next ten years, it will build on that leadership role even more. The Mato Grosso Institute of Agricultural Economics (Imea), in conjunction with the Federal University of Mato Grosso (UFMT) recently released a ten-year projection for the agricultural economy in the state called "Agro MT Outlook 2025."

The projected growth of agriculture in the state is indeed eye-popping. The state's grain production is expected to increase 90% over the next ten years from the current 44.6 million tons to 84.7 million tons. Poultry and swine production over the period is expected to increase 71% while beef production is expected to increases 46%.

The growth in crop acreage will come mainly from the conversion of pastures to row crop production, which has been the trend in recent years. Soybean acreage in the state is expected to increase 62% from the current 8.6 million hectares (21.2 million acres) to 13.8 million hectares (34.1 million acres). As a point of reference, 34.1 million acres of soybeans would be slightly more than the combined total of soybeans planted in 2015 in the states of Iowa, Illinois, Indiana, and Minnesota.

Even more impressive is the anticipated growth of corn production in the state. Virtually all the corn in Mato Grosso is grown as a second crop following soybeans and currently 35% of the soybeans in the state are followed by a second crop of corn. That percentage is expected to increase to 40% within ten years. As a result, the corn acreage in the state is expected to increase 85% from the current 3.3 million hectares (8.1 million acres) to 6.2 million hectares (15.3 million acres).

Corn production in Mato Grosso is expected to increase 113% over the next ten years due to not only increased acreage, but also due to improved productivity. Corn yields in the state are expected to increase from the current 6,000 kg/ha to closer to 10,000 kg/ha (92 bu/ac to 154 bu/ac). As a result, corn production is expected to increase from the current 17.7 million tons to 38 million tons.

Soybeans currently account for 57% of the grain production in the state and that is expected to decline to 52% in ten years. In contrast, corn currently accounts for 18% of the total grain production and that is expected to increase to 38%.

The domestic demand for corn in the state is expected to increase due to expanding livestock production and ethanol production. Currently there are nine sugar/ethanol mills in the state and three of those mills use corn to make ethanol when sugarcane is not available during the summer rainy season. This is a small use of corn, but the amount of corn used for ethanol production is expected to increase as mills are being built in the state that will only use corn and more mills are being proposed. Even with the added domestic demand, the majority of the increased corn production will move into the export market.

Cotton is the third major crop in the state and approximately three-quarters of the cotton acreage in the state is also grown as a second crop following soybeans. Cotton production is projected to increase 57% in ten years from the current 2.4 million tons to 3.8 million tons and the state will maintain its leadership position as the principal cotton producing state in Brazil.

The increase in agricultural production is expected to bring with it increased number of jobs especially as cattle ranching is replaced with crop production. Cattle ranching in Mato Grosso is not labor intensive and each hectare of pasture converted to row crop production will increase employment. Imea estimates that each 1,000 hectares of soybeans generates six jobs.