Nov 18, 2009
Brazilian Agriculture Expanding Into MaToPiBa
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
For the last decade, much of the row crop expansion in Brazil has been focused in the center-north region of the country in the states of Maranhao, Tocantins, Piaui and Bahia, an area that is now being called MaToPiBa. For the 2009-10 growing season, the grain production acreage in the region will increase 10% or about 350,000 hectares more than last year. The four states combined account for about 8.8% of Brazil's soybean acreage and 12.2% of Brazil's corn acreage. Fifteen to twenty years ago there was virtually no soybean or corn production in the region. Bahia is the largest producer of the four states accounting for 71% of the soybeans and 40% of the corn produced in the region.
The vast majority of farmers moving into the region are from southern Brazil. One of the main advantages of the region is that the land costs only about one third as much as land in southern Brazil. The region is also closer to port facilities as compared to Mato Grosso for example, which greatly reduces transportation costs. Most of the soybean and corn expansion in the region is coming from the conversion of pastures into row crops or the clearing of cerrado vegetation. The Minister of Agriculture estimates that 20 million hectares of land in the region could legally be transformed into row crop production.
The federal government is in the process of extending the North-South railroad into the region to facilitate grain shipments. Conab estimates that grain storage capacity in the region has expanded from 3.67 million tons of storage at the beginning of this decade to 7.23 million tons in 2009.
All this expansion has not gone unnoticed by agribusiness. Louis Dreyfus Commodities and Amaggi (the company owned by the Maggi family) recently announced a joint venture aimed at tapping into the growing agricultural potential of the region. The joint venture is investing US$ 100 million in storage and port facilities. Their objective is three fold, to produce soybeans and corn, and to supply the necessary agricultural inputs such as seed, chemicals, and fertilizers to local producers, and to commercialize the grain both domestically and internationally. Dreyfus brings to the venture decades of global experience and its presence in more than 50 countries. Amaggi brings to the venture expertise in producing soybeans and corn as well as knowledge in grain origination and local logistics.