Jul 09, 2010
Brazilian Farmers Are Slow to Purchase Inputs for 2010/11 Crop
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
Even though the costs of inputs are lower this year compared to last year, farmers in central Brazil have been slow to purchase their inputs for the 2010/11 crop due mainly to a shortage of credit and cash. For many years the farmers in Mato Grosso have been relying on the multinational grain companies for much of the credit they needed to plant their crops. With the economic downturn of the last few years, these companies have significantly cut back on the level of credit they are willing to extend to the farmers.
The Association of Soybean and Corn Producers in Mato Grosso (Aprosoja) estimates that the multinationals will supply approximately 25% of the production credit for farmers in Mato Grosso, which is down from 35% for the last growing season and as much as 60% several years ago. As a result, farmers are having to dig deeper into their own pockets for more of the cash necessary to plant their crops. Estimates are that farmers in the state will use their own funds for 37% of the production costs, which is up from 34% for the last growing season.
The Mato Grosso Institute of Agricultural Economics (Imea) estimates that farmers have purchased 81% of their anticipated seed needs compared to over 90% last year at this time. They also estimate that farmers have purchased 61% of their anticipated fertilizer needs and 71% of their chemical needs, both of which are behind last year's pace. While the pace of buying is slow, farmers are still expected to purchase about the same amount of inputs as they did for the 2009/10 growing season.
Prices of inputs are lower this year in Brazil compared to last year. The cost of agricultural chemicals in Sorriso, which is located in central Mato Grosso, declined 28% compared to last year from US$ 4.50 per liter to US$ 3.23 per liter. In Sorriso the price of fertilizer declined 6% from US$ 469 per ton to US$ 440 per ton. Soybean seed costs have also fallen 13% over the past year to R$ 2.12 per kilogram or approximately US$ 33 per bushel.
In central Mato Grosso the cost of production for soybeans is estimated at R$ 1,258 per hectare or approximately US$ 290 per acre. Assuming the average yields are 3,000 kilograms per hectare or 43.5 bushels per acre, next year's out of pocket production costs are estimated at US$ 6.70 per bushel in central Mato Grosso.