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October 18, 2012

State of Tocantins Poised to Increase Soybean Production

One of the larger underdeveloped regions of central Brazil as far as row crop production is concerned is the state of Tocantins, which is positioned between the states of Mato Grosso on the west and Bahia on the east. The state has many attributes necessary for increased grain production including: large amounts of relatively cheap land, it is mostly cerrado vegetation which is easily cleared, the terrain is generally flat, the low soil fertility is relatively easily corrected, it has a good climate for crop production with two distinct seasons-one wet and one dry, abundant rainfall, a relatively close proximity to ports in eastern Brazil, and a developing infrastructure. While the state of Tocantins is not one of the larger states in Brazil, it is somewhat larger than the United Kingdom.

The agricultural enterprises in the state are currently dominated by cattle ranching, but high commodity prices are convincing many farmers in the state to move over to row crop production instead. During the 2011/12 growing season, farmers in the state produced 1.3 million tons of soybeans, 448,000 tons of corn, and 443,000 tons of rice with smaller amounts of dry beans, cotton, peanuts, sunflowers, and castor beans. These production numbers are miniscule compared to what is produced in neighboring Mato Grosso, but they are increasing.

The state secretary of agriculture estimates that grain production in the state will increase 15% to 20% in 2012/13 due to hefty increased in grain acreages. He is confident of the increase because many farmers have already forward sold much of their anticipated production for higher prices compared to last year.

Logistics in the state have also improved in recent years with the completion of a rail line liking the state with the Port of Itaqui in the state of Maranhao in northeastern Brazil. Additionally, the major highway running north and south in the state (BR-153) has recently been completely asphalted and there is the possibility of barging operations starting up in the state as well. All of these improved logistics help to hold down the cost of inputs that must be brought into the state and the cost of transporting the grain out of the state.