November 21, 2011

Eastern Mato Grosso Experiencing Growth in Soybean Production

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

The focus of agricultural expansion in Mato Grosso is now centered on eastern Mato Grosso in the region known as the Araguaia Valley in municipalities such as Agua Boa, Alto Boa Vista, Confresa, Vila Rica, and Santa Terezinha. This region continues to be dominated by cattle ranching, but row crop cultivation is making inroads. High domestic prices for soybeans and corn have convinced many ranchers in the region that growing crops may be a better alternative than cattle ranching.

One of the newest agribusiness to invest in the region is Itahum Agropecuaria, which is headquartered in the state capital of Cuiaba. The company intends to plant 50,000 hectares of soybeans (125,000 acres) this growing season. They are also building two storage facilities in the northern part of the region with a capacity of one million sacks each (approximately 2.2 million bushels) and they are planning to build a soybean crushing plant and a biodiesel production facility as well. The storage facilities should be ready for use when the current soybean crop is harvested early next year. The company already has 180 employees in the region and that is expected to triple once the storage facilities become functional. The company already has several other biodiesel facilities up and running in the state.

Most of the soybean expansion in the region is occurring where degraded pasturelands are converted to row crop production. Due to new and stricter environmental regulations concerning the clearing of land, this is now the preferred method for landowners to expand their crop production.

One of the advantages of the region is that is the closest part of Mato Grosso to port facilities in northeastern Brazil. The electrical grid has recently arrived in the northern part of the Araguaia Valley and the main highway in the region, BR-158, is in the process of being asphalted. The region is also relatively close to rail lines that link it to northern ports.

Even though it is called the Araguaia Valley, it is really just the drainage area for the Araguaia River, which is one of many tributaries to the Amazon River. The Araguaia River itself is probably several times larger than the Mississippi River. The region consists of cerrado vegetation (savanna) and transitional forest which is the transition between cerrado and the rain forest.