Jun 03, 2010
Conventional Soybeans Maintaining Niche in Brazil
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
The use of Roundup Ready soybeans in Brazil continues to increase, but there is also a segment of Brazilian soybean farmers that feel that conventional soybeans may offer an advantage over GMO soybeans. The advantages of conventional soybeans include lower priced seed, a premium for conventional soybeans paid by exporters, and less problems with resistant weeds. There are disadvantages as well and they include the need to use higher priced herbicides to control weeds and less flexibility in herbicide applications.
Many soybean farmers in Brazil bristle at the idea of paying royalties to Monsanto in order to utilize Roundup Ready soybeans. In Brazil, the royalties are paid twice, first when the seed is purchased and secondly when the soybeans are sold. The up-front royalty cost is R$ 0.45 per kilo or approximately US$ 7.00 per bushel. The second cost is 2% of the production if the soybean yields exceed a pre-determined amount. As one soybean farmer explained, it's similar to paying for an air bag in your car and then if you have an accident and the air bag deploys, you must pay again because the air bag worked.
During the current marketing year, buyers from Europe and Asia were willing to pay premiums in order to obtain conventional soybeans from Brazil. The premiums varied between R$ 2, 3, 4 per sack or US$ 0.57, 0.85, 1.14 per bushel. Not all the premiums made it back to the producers because they were absorbed by middlemen such as crushers or exporters who claimed they needed part of the premium in order to pay the additional cost of maintaining the identity of conventional soybeans. In the end, Brazilian farmers who grew conventional soybeans were paid more for their production compared to GMO soybeans.
Additionally, there is a real concern in the farming community, both in the Brazil and in the U.S., about the growing problem of Roundup resistant weeds. Roundup resistant weeds were just a novelty a few years ago, but they have now become a legitimate concern. If a farmer already has resistant weeds, the continued use of Roundup could greatly expand the problem. The only way to solve the problem is to use alternative herbicides and not Roundup.
Since soybean production in the United States and Argentina is virtually all GMO, Brazil is the only remaining major soybean producer where conventional soybeans are still a major component of the total production. In fact, various soybean producer associations in Brazil have requested that Embrapa, the national agricultural research service, continue to conduct research on conventional soybeans instead of assuming that all soybeans in Brazil will eventually be GMO.
In Mato Grosso last year, 52% of the soybeans were GMO compared to 42% during the 2008-09 growing season. If there continues to be premiums paid for conventional soybeans, then it's possible that Brazil will continue to maintain a healthy conventional soybean market.