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May 29, 2020

Soybeans are Gaining Acreage in the State of Sao Paulo, Brazil

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

The state of Sao Paulo is by far Brazil's largest sugarcane producing state, but farmers in the state are also putting more emphasis on soybean production as well.

During the 2019/20 growing season, the soybean acreage in Sao Paulo increased 11.4% to 1,109,000 hectares. The soybean production increased 31% in 2019/20 compared to the previous year to 3.9 million tons according to Conab.

Farmers in the state have taken a greater interest in soybeans due to the record high soybean prices and low prices for sugar and ethanol. The sugar/ethanol sector in Brazil has endured financial challenges for about the past decade. As a result, dozens of the smaller and older sugar mills have closed their doors in recent years.

A newly planted sugarcane field generally produces for 5-6 years before it has to be replanted. Generally, a sugar mill rents land from surrounding farmers to produce sugarcane, so when a mill closes, there will probably still be sugarcane in the field. After a mill closes, the sugarcane might be processed by a neighboring mill for a few years, but eventually the sugarcane is converted to a new crop which more and more tends to be soybeans.

Additionally, some sugarcane producers have introduced soybeans into their sugarcane rotation. Generally, it is recommended that a sugarcane field be renovated every 5-6 years due to declining production. During that process, producers incur planting costs and they lose one year of income from the field. Some producers have decided to plant 1-2 years of soybeans in-between sugarcane crops as a way to generate additional cash flow and they have been generally pleased with the results.

Another source of additional soybean acreage in the state has been the conversion of degraded pastures to row crop production. This has been the trend all across Brazil as producers try to increase productivity on existing land instead of clearing more land. This also has environmental benefits by reducing the pressure on deforestation.

The increased interest in soybean production in the state has led to the Secretary of Agriculture for the State of Sao Paulo to establish a research center specifically dedicated to improving soybean production in the state. The center will evaluate the adaptability of commercial soybean varieties to the conditions in the state as well as the best cultural practices for soybean production in the state.