November 11, 2011

Pasture Conversions Used to Increase Soy Acreage in Brazil

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

In Conab's second monthly evaluation of the Brazilian soybean crop, they indicated that farmers in Mato Grosso were going to plant 335,000 more hectares of soybeans in 2011/12 (6.71 million hectares vs. 6.39 million hectares). Most of this increased acreage is coming from the conversion of pastureland to row crop production, especially in eastern Mato Grosso.

Eastern Mato Grosso has traditionally been devoted to cattle ranching, but that has been changing in recent years. For the first time, many ranchers are planting soybeans amidst their pastures and corrals and they are using degraded pastures or pastures that were scheduled for renovation to plant their soybeans. The cost of conversion varies depending on how much fertilizers are needed to increase the fertility of the soil, but a good estimate is about R$ 1,000 per hectare.

Going from cattle ranching to row crop farming requires a more highly trained work force, especially to operate the highly technical machinery now used in modern agriculture and many farmers are reporting having trouble finding the trained workers that they need. Another problem in the region is the lack of adequate infrastructure (roads, bridges, storage facilities, grain elevators, equipment dealers, input suppliers, etc.) needed for large scale row crop production.

Environmental concerns are also on the forefront on producer's minds until the Brazilian Congress decided on a new set of environmental regulations called the Forestry Code. These new regulations will set the amount of land that a farmer must keep in native vegetation. Until these new rules are decided, farmers remain in doubt about what exactly they can or cannot do with their property.

Even with the increase in row crop production in the state, there is still plenty of land for cattle ranching as well. According to the Mato Grosso Association of Livestock Producers (Acrimat), there are 25.7 million hectares of pasture in the state which is nearly four times more than there are soybean acres. The pasturelands in the state support 28.7 million head of cattle and over half the state is still classified as indigenous areas or conservation/park areas.