January 2, 2013

Conab Shipping Corn from Mato Grosso to Northeastern Brazil

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

One of the ways the federal government has been trying to help small family farmers in northeastern Brazil that have been impacted by one of the worst droughts in decades is by buying excess corn in Mato Grosso, transporting it to northeastern Brazil and then selling it to farmers at below market prices. This program is especially important for small dairy producers who have no other way to feed their cattle since their pastures have dried up. Officials in the state of Bahia for example reported that milk production in the state has fallen 80% since the drought started earlier last year.

Between June and December of 2012, Conab has transported 181,300 tons of corn from Mato Grosso to northeastern Brazil to supplement animal rations in the region. Conab estimates that 350,000 tons of corn will be transported to northeastern Brazil before the program is completed in early 2013. The last shipment of corn for 2012 was on December 14th and shipments are expected to resume on January 7th. The remaining 169,000 tons are scheduled to be shipped during the first half of 2013.

The demand for subsidized corn far exceeds the amount available through this program. More than 110,000 small farmers in the region have registered for the program, but the amount of corn available through the program will only meet a small fraction of what is actually needed.

Livestock producers in northeastern Brazil were pleased when scattered summer rains returned to the region during the month of November, but the weather during December turned dryer once again and there is not much rain in the near term forecast. Most of these livestock producers try to supplement their pastures with corn that they produce themselves, but the weather thus far this summer has not cooperated. In the dryer regions of northeastern Brazil the corn and dry bean crops are expected to decline 90% form average because farmers have not received enough rainfall to plant their summer crops.

While this program was focused mostly on northeastern Brazil, smaller amounts of corn has also been supplied to small livestock producers in southern Brazil who were also impacted by drought during the 2011/12 growing season. Farmers in Rio Grande do Sul and Santa Catarina have received 82,000 tons of corn with 8,000 tons remaining to be shipped in early January.

Not only does this program benefit livestock producers in northeastern and southern Brazil, it has also helped in a small way to eliminate some of the excess corn produced in Mato Grosso. Mato Grosso farmers produced a record corn crop in 2011/12 and only about one third of the corn crop is consumed within the state. The remaining corn must be shipped out of state at high costs to end users throughout Brazil or to exporters in southern Brazil. There is still corn from the last harvest occupying storage space in the state that is needed for new crop soybeans that are just starting to be harvested.