February 24, 2011
Trip Report - Observations on Brazilian Agriculture
We recently returned from a two week trip through central and northwestern Brazil. Most of our time was spent in Mato Grosso, but we also traveled through the state of Rondonia and a small part of the state of Amazonas as well. We made it as far into the Amazon Rain Forest as there was asphalt, when the asphalt ended, we turned around. The total distance traveled by car was approximately 5,000 kilometers.
The weather during our stay in Brazil was warm, very cloudy, rainy, and humid. Some days it rained nearly all day and other days, there were numerous showers throughout the day with intermittent sun in between. Heavy rains continue to fall across much of central Brazil delaying the early harvest and the planting of the safrinha crops.
Below are some of my observations concerning: soybean, corn and cotton production, a resumption of construction on the Ferronorte Railroad, barging and logistical considerations, and cattle ranching in northern Brazil.
Soybean Production in Central Brazil
The soybeans planted in central Brazil are of three different maturity groups; early, medium, and full season. Usually by the end of February nearly all the early maturing soybeans would have been harvested, but late planting and recent heavy rains have resulting in a delayed harvest of the early maturing soybeans. The medium maturing soybeans are approaching maturity and the full season soybeans are still in the pod filling phase.
- The soybean acreage in Mato Grosso increased approximately 110,000 hectares compared to last year.
- Most of the extra-early maturing soybeans have already been harvested.
- Yield reports of the early maturing soybeans are generally favorable.
- Frequent heavy rains have slowed the early harvest and many soybean fields are mature, but the weather has been too wet for harvesting.
- We saw harvesting taking place in only two fields in Mato Grosso and we saw dozens of combines parked along the side of the fields waiting for dryer weather.
- Many soybean fields have been mature for several weeks, but wet conditions have prevented harvesting.
- The early maturing soybeans that have not been harvested look to have average yields.
- Quality concerns are becoming an issue with mature soybeans that are waiting to be harvested.
- Descants have been applied to some of the medium maturity soybeans in order to speed up the maturation process.
- The medium and later maturing soybeans look very good and they have a good yield potential.
- Farmers are actively spraying for rust, but thus far, rust has been less of a problem than it was during the 2009/10 growing season.
- The soybean crop in southern and eastern Brazil also has a very good yield potential
- In general, the Brazilian soybean crop has out preformed the early expectations.
- The anticipated impact of La Nina has been less than expected.
- The one remaining obstacle for the crop is the possibility of heavy rains that could delay harvest and negatively impact seed quality.
Corn Production in Central Brazil
Full season corn production has become a rarity in central Brazil. During all of our travels we saw very few fields of full season corn. Nearly all the corn now produced in central Brazil is grown as a safrinha crop after the soybeans are harvested.
Cotton Production in Central Brazil
The true surprise this growing season has been the huge increase in cotton acreage in Mato Grosso (up 60%). There has also been a tremendous increase in the safrinha cotton acreage as well this year.
- Total cotton acreage in Brazil is expected to be 1,309,000 million hectares compared to 835,700 million hectares planted in 2009/10.
- We saw many fields that were planted to soybeans last year, but have been switched to cotton this growing season.
- The condition of the full season cotton is average to good and the crop is developing normally although there are some spotty stands.
- safrinha cotton acreage has increased greatly, but planting was delayed by wet weather.
- The planting window of safrinha cotton is now closed and the wet weather probably prevented all of the intended safrinha cotton from being planted.
Construction Resumes on Ferronorte Railroad in Mato Grosso
We had the opportunity to visit the construction site of the Ferronorte Railroad near Alta Araguaia in southeastern Mato Grosso. Construction on the railroad has recently resumed after nearly a decade of inactivity. The railroad is currently operational for only about 60 miles into the southeastern corner of the state and two grain terminals are in operation along the existing track. Even though construction has recently resumed, the entire project remains decades behind its original schedule.
- Work has resumed on laying track between Alta Araguaia and Itiquira and eventually Rondonopolis.
- They have lain approximately 25 kilometers of new track since construction has resumed.
- It's a single track with a pullover every 30 kilometers where trains can pass.
- Once the roadbed is prepared, they can lay more than a kilometer of track per day.
- The ties are made of concrete, which are manufactured on site, and the rails are imported from Japan.
- Approximately 800 men are working on constructing the railroad.
- Construction of a grain terminal at the city of Itiquira has begun and it will be the third terminal on the line.
- The terminal will have the capacity to load one train of 120 cars per day.
- The next terminal will be constructed just south of the city of Rondonopolis.
- After the railroad reaches Rondonopolis, it is scheduled to go to the city of Cuiaba, which is the capital of Mato Grosso, but the route for the train has not yet been determined.
- America Latina Logistica currently has exclusive rights to operate the railroad and to build new segments, but the federal government wants to open up the process to competing companies.
- Due a lack of competition, the freight rates on the railroad are only slightly less than the freight rate for trucking soybeans to ports in southern Brazil.
Barging Operations and Logistics
As part of our travels, we were able to view two barging operations that already exist in central Brazil. The largest operation by far exists on the Madeira River that flows north into the Amazon River. A much smaller operation exists on the Paraguay River which flows southward to the Parana River in Argentina.
- The barging operation on the Madeira River starts at the city of Porto Velho where Cargill and Amaggi operate grain terminals.
- The Amaggi operation transports soybeans to the Amazon River port of Itacoatiara where they are transferred to ocean going vessels.
- The Cargill operation transports soybeans to the Amazon River port of Santarem where they are transferred to ocean going vessels. Santarem is located closer to the mouth of the Amazon.
- Soybeans that are barged to the Amazon are produced in western Mato Grosso and are trucked to the Port of Porto Velho.
- It is cheaper to send soybeans from western Mato Grosso to the Amazon River than it is to truck them to ports in southern Brazil.
- Both companies are capable of expanding barging operations in the future.
- There is a very small barging operation in Caceres, which is located in southwestern Mato Grosso, that sends soybeans southward on the Paraguay River and eventually into the Parana River and the Port of Rosario in Argentina.
- The total distance barged to Argentina is approximately 3,500 kilometers.
- The condition of the highways in central Brazil varies from abysmal to good.
- The condition of the highways generally deteriorates toward the end of the rainy season.
- The conditions of the roads are generally poorer in areas of heavy agricultural production due to heavy truck traffic.
Cattle Ranching in Northern Brazil
The agricultural activity that occupies the most acreage in Brazil is cattle ranching. Generally, there are about four times more acres of pastures than row crops in Brazil with the state of Mato Grosso being a prime example. Even though the farmers in Mato Grosso plant the largest soybean acreage of any state in Brazil (6.4 million hectares), it is also the state with the largest cattle herd (30 million head) and 27.0 million hectares of pastures.
- Cattle ranching occupy more acreage than any other agricultural activity in Brazil.
- In the southern Amazon Region nearly all the deforestation is the result of land being cleared for logging and cattle ranching.
- Forty percent of the state of Rondonia has been deforested and probably 90% of the deforested land is now in pastures.
- The economy of the state of Rondonia is almost solely dependent on cattle ranching and logging.
- As a way to reduce deforestation, the federal government has been promoting the conversion of degraded pastures into row crop production.
- Approximately half of the increased 2010/11 soybean acreage in Mato Grosso came from the conversion of degraded pastures to soybean production.