February 7, 2012

Beneficial Irrigation Systems Slow to be Installed in Brazil

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

In central Brazil, the installation of an center pivot irrigation system would allow farmers and ranchers to greatly expand their production potential during the five month dry season when the temperatures are adequate for crop production, but there is little or no rainfall (May through September). Unfortunately, the installation of irrigation systems has been very slow due to bureaucratic bottlenecks and a lack of infrastructure, notable electricity. According to the National Irrigation Secretary, the irrigation potential in Brazil could reach 30 million hectares, but only 4.9 million hectares are currently being irrigated. At the current rate of expansion of 150,000 hectares per year, it would take over a century and a half for Brazil to reach its full irrigation potential.

The American company Valmont is one of the few irrigation manufactures operating in Brazil and according to their president, Marcelo Borges Lopes, 500,000 hectares have already obtained the required water permits and the center pivots are ready to be installed, but the areas are lacking the needed electricity to operate the pumps. The pumps could also be operated using diesel fuel, but the cost of using diesel would be approximately double the cost of using electricity.

Using either source of energy, electricity or diesel, has its drawbacks. Diesel is much more expensive, but farmers are requesting a reduction in local taxes as a way to stimulate the installation of diesel powered systems. Electrical pumps would be much cheaper to operate, but the cost of extending the power lines to remote locations is prohibitive, so farmers are asking for subsidies to do that as well.

Another bottleneck in installing an irrigation system is obtaining the needed water permits. Valmont officials indicated that 22 permit request have been waiting for approval from the Mato Grosso state Department of Water Resources (DHR) since May of 2011. Without these water permits, the farmers cannot obtain the needed financing from the bank to install the systems. These 22 petitions represent 3,500 hectares of new irrigation. Ideally, these permits need to be issued by May to allow enough time to install the systems before the start of the growing season in September. The average cost of a center pivot system is estimated to be R$ 4,000 to R$ 5,000 per hectare.

The Mato Grosso market is considered one of the more promising markets for irrigation in Brazil due to the amount of safrinha corn production in the state. Corn requires a lot of water and the biggest detriment to safrinha corn production is the lack of rainfall in May and June when the crop is filling grain. In fact, if adequate irrigation was available, farmers in central Brazil could actually grow three crops per year. The first crop would probably be early-maturing soybeans planted in mid-September and harvested in mid-January. The soybeans would be followed by a second crop of corn planted in mid-January and harvested in June. The third crop could be a small grain such as wheat, or another oilseed crop such as canola or sunflowers, or even another grain crop such as grain sorghum or millet.

In addition to grain producers, livestock producers would benefit as well, both dairy and beef cattle operations. Typically, the pastures of central Brazil are dry by June and remain that way until the rains return in September and as a result, the cattle tend to lose weight during the dry season. The weight loss could be avoided with the use of irrigation and rotational pastures. A cattle rancher who raises Red Angus and Aberdeen Angus indicated that his cattle achieve a weight gain of 1.3 kilograms per day by grazing on 210 hectares of irrigated sorghum that receives 12 inches of water during the dry season from five center pivots.