Jun 14, 2010
Sugarcane Replacing Oranges in the State of Sao Paulo
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
Farmers in the state of Sao Paulo are reducing their orange orchards in favor of growing more sugarcane. After suffering through years of low prices, increased disease pressure, increased costs, and occasional frosts, orange growers in Sao Paulo have decided to cut back on orange production and to increase sugarcane production. According to a recent survey conducted in the state, 38% of the orange growers in Sao Paulo said they are reducing their orange acreage and 58% of those respondents said they are increasing their sugarcane acreage.
The state of Sao Paulo produces 85% of Brazil's oranges and is responsible for virtually all of Brazil's orange juice exports, which is the largest in the world. Over the last ten years, the price of oranges has fallen 20% in terms of the Brazilian real. As a result, the orange acreage in the state has fallen 23% over the last decade to 700,000 hectares.
Orange production would have fallen even more had it not been for the 25% increase in yields achieved over the last decade. Most of the yield increase was the result of new varieties which allowed for increasing the number of trees per hectare. Those types of yield increases are not expected to be repeated over the next decade due to the expanding presence of a disease called "greening." The disease greatly increases the cost of growing oranges and limits the yields.
If the farmers of Sao Paulo want to increase the acreage of a certain crop, sugarcane continues to be their number one option. The state has approximately 4 million hectares of sugarcane and about 60% of Brazil's total sugarcane crop. Other states are also increasing their sugarcane acreage especially the state of Minas Gerais in an area called the Minas Gerais Triangle or the southwestern corn of the state. Nationwide, Brazil will process approximately 660 million tons of sugarcane during the 2010-11 growing season.