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February 11, 2011

Conventional Soybeans Holding their Own in Mato Grosso

The farmers in western and northwestern Mato Grosso continue to buck the trend of switching their soybean production to Roundup Ready soybean varieties. In fact, they continue to feel there will be a niche market for conventional soybeans and two large gain companies, Amaggi and Cargill, agree with them.

In the southern Brazilian states such as Parana, Rio Grande do Sul, and Mato Grosso do Sul, it is estimated that 90% or more of the soybeans are Roundup Ready, but in Mato Grosso, the percentage is only 60%. Some attribute this lower percentage in Mato Grosso due to a lack of Roundup Ready varieties suited for the region, but there are concrete economic reasons as well for the lower percentage.

The promoters of conventional soybeans (non GM) point out that the cost of production and the yields are about the same for both conventional and Roundup Ready soybeans and that the primary advantage of Roundup Ready soybeans is the greater flexibility in managing the crop. For conventional soybeans, herbicide applications need to be applied at specific times, whereas for Roundup Ready soybeans, herbicides could basically be applied at any time after the soybeans have been planted. If a farmer can successfully manage his conventional herbicide applications, there is no advantage using Roundup Ready soybeans. In fact, promoters of conventional soybeans say there is a US$ 16 per hectare advantage using conventional soybeans.

This advantage is due to the premiums paid by end users for conventional soybeans. The problem for conventional soybeans has always been the costs related to keeping the conventional soybeans segregated from the GM soybeans. In southern Brazil, this is very difficult because the transportation system and the ports are not set up to keep the identity preserved. As soon as a farmer in Parana, for example, sells his conventional soybeans, they are comingled with Roundup Ready soybeans. This problem has been solved for farmers in western and northwestern Mato Grosso because they have the option of exporting their soybeans out of the two Brazilian ports located on the Amazon River.

The two ports on the Amazon River are at Itacoatiara in the state of Amazonas, operated by Amaggi, and Santarem in the state of Para, operated by Cargill. Access to these ports is basically restricted because the vast majority of the soybeans must be barged to the port from the city of Porto Velho in the state on Rondonia. There is a highway being constructed from northern Mato Grosso to the city of Santarem and once the highway is complete, soybeans will be able to be trucked to the port year round. It remains to be determined if the port will continue to be restricted to conventional soybeans, but for now, that is the case.