September 22, 2011

Conventional Soybeans Gaining Acreage in Mato Grosso

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

Farmers in the United States and Argentina grow almost exclusively GMO soybeans, but many farmers in Brazil remain convinced that there will continue to be a market for conventional soybeans (non-GMO). The market niche for conventional soybeans grown in Brazil is actually expanding especially in Europe, Japan, Korea, New Zealand, and China. Brazil is the largest producer of conventional soybeans and the state of Mato Grosso grows more conventional soybeans than any other state in Brazil. Approximately 35% of the soybeans grown in Mato Grosso are conventional soybean varieties, which is up from prior years.

Mato Grosso farmers can grow conventional soybeans in large part because virtually all the conventional soybeans produced in the state are exported out the Amazon River Port of Itacoatiara. This allows the farmers and exporters to hold down the potential costs of keeping the conventional soybeans from being contaminated with GMO soybeans. There are conventional soybeans grown in other Brazilian states, but they lose their identity as soon as they enter the transportation network. By using primarily one port, importers are reassured that there has not been any contamination and therefore are willing to pay a premium of about US$ 0.50 per bushel for the conventional soybeans.

According to the Mato Grosso Institute of Agricultural Economics (Imea), it's actually cheaper to grow conventional soybeans as opposed to GMO varieties, which are primarily Roundup Ready soybeans. Imea calculates that farmers who planted conventional soybeans last year saved 15% in production costs compared to those who grew GMO soybeans.

The biggest savings comes from the fact that producers don't pay royalties for conventional soybean varieties as opposed to paying Monsanto a royalty to grown Roundup Ready soybeans. Imea calculates that for every 1,000 hectares of conventional soybeans, a farmer saves R$ 23,000 by not paying royalties.

Conventional soybean yields in Mato Grosso just as good as Roundup Ready yields and the use of conventional soybeans avoids the potential problem of developing herbicide resistant weeds. Farmers who grow Roundup Ready soybeans generally only use Roundup herbicide for their weed control and as a result, Roundup resistant weeds are becoming a bigger problem. Farmers who grow conventional soybeans can avoid this problem by alternating the herbicides they use.