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September 8, 2020

Potential Long Term Soybean Expansion in Brazil

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

As Brazilian crop production continues to expand, the recurring question is how much more crop expansion is possible in Brazil.

The director of the consulting firm Agroconsult, Andre Pessoa, tried to answer that question in a recent webinar sponsored by the institute Insper Agro Global and Itau BBA. He indicated that soybean production in the cerrado biome in the center-west region of Brazil could expand 5 million hectares over the next 10 years (12.3 million acres). He estimated that 10% of the area of the states of Mato Grosso, Mato Grosso do Sul, Goias, and the Federal District is adaptable for agricultural expansion.

He indicated that the center-west region of Brazil currently has 21 million hectares of crops/forestry plantations (51.8 million acres) and 55 million hectares of native cerrado and pastures (135 million acres). If just 10% of that area is converted to soybean production, that would equate to 5 million hectares or 12.3 million acres.

In the Matopiba region of northeastern Brazil, which includes the states of Maranhao, Tocantins, Piaui, and Bahia, there are 19 million hectares of native cerrado and pastures (46.9 million acres). If just 10% of that was converted to soybean production over the next 10 years, that would equate to an additional 2 million hectares of soybeans production or 4.9 million acres.

Pessoa also indicated that the soybean acreage expansion would be even larger were it not for more intensive use of existing crop land in Brazil. According to Pessoa, 42% of the crop land in 2019/20 had a second crop produced on the same land during the same growing season. In the center-west region of Brazil it is even higher at 61%. Second or even third crops include corn, cotton, wheat, small grains, dry beans and others.

Most estimates are that Brazilian farmers will plant 38 million hectares of soybeans in 2020/21, so if the soybean acreage increases 7 million hectares in 10 years (5 million in the center-west region and 2 million in northeastern Brazil), that would equate to an 18% increase over 10 years or 1.8% per year. I think that is a very conservative estimate, and given the right market incentives, the soybean expansion could be much higher than that.