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November 16, 2011

Farmers in Eastern Brazil with Rare Opportunity for Early Planting

Farmers in eastern Brazil normally have to wait until the end of November or early December to receive enough rainfall in order to start planting their soybeans, corn, and cotton, but this season the rains came early and the planting has started early as well. In the new agricultural frontier of Brazil in the states of Maranhao, Tocantins, Piaui, and Bahia (MaToPiBa), many producers were caught off guard by the early onset of the rains.

In order to take advantage of a rare opportunity to plant their crops as early as the rest of Brazil, producers worked around the clock to prepare their fields and initiate the 2011/12 planting season. An estimated 10% of the crops in the region have already been planted and that is expected to increase rapidly in the coming days.

Farmers in the region continue to clear land and convert degraded pastures to more and more row crop production. Soybean production is the main crop, but corn is gaining acreage and western Bahia is already the second leading producer of cotton in Brazil.

Strong domestic corn prices have been the stimulus for farmers to significantly expand their corn acreage. The region is deficit in corn production and nearly all the corn produced in the region is for local livestock consumption. Ironically, farmers in the region must compete with corn imported from Argentina. Due to the extremely high cost of transportation in Brazil, in some years, it is cheaper to import corn from Argentina into northeastern Brazil than it is to transport corn from Mato Grosso to northeastern Brazil.

The corn in Argentina is produced very close to the port and it is relatively cheap to send cargos of corn to northeastern Brazil. Unfortunately, the area of surplus corn production in Brazil is in the state of Mato Grosso, which can be as much as 2,000 kilometers away from the livestock producers in northeastern Brazil, and the only way to move the corn is by truck over poorly maintained roads. There are no railroads or barging operations that connect the center-west region of Brazil and the northeast part of the country.