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January 21, 2015

Brazilian Farmers Switching Pastures and Sugarcane to Soybeans

During the last five years, the soybean acreage in Mato Grosso do Sul has increased 30% as ranchers and sugarcane producers switched some of their traditional acreage to more soybean production. Farmers in the state are expected to plant an all-time record high of 2.3 million hectares of soybeans in 2014/15.

Soybean prices were very good during most of that time which encouraged farmers to make the switch. The price of soybeans has since declined, but farmers and ranchers continue to increase their soybean acreage.

The conversion of pastureland has been the primary way in which soybean acreage has increased in the state in recent years. Brazilian scientists have demonstrated that cattle production and row crop production can both be increased by utilizing a long term rotation between row crops and pastures. It is much easier and quicker converting pastures to row crops than it is to purchase and clear new land. Additionally, stricter environment laws have made it much more difficult to clear new land for additional row crop production.

In addition to the price, another reason for the increased enthusiasm for soybeans has been improved technologies used in soybean production. No-till planting now accounts for 95% of the soybean production in the state which allows for the soybeans to be planted directly into the existing pastures. No-till planting also helps to maintain the fertility of the soil by reducing erosion and increasing the water holding capacity of the soil.

The switching of sugarcane to soybeans has been a secondary way in which soybean acreage has increased. Sugarcane producers in the state have been disappointed in recent years with adverse weather impacting their sugarcane production and low prices for sugar and ethanol. The prospects for the sugar sector remain clouded and farmers are expected to continue switching some of their sugarcane to soybeans whenever the sugarcane fields need to be renovated.