Saturday 1 October 2016

Agri juggernaut - how agriculture in Brazil is booming

Brazil's agricultural revolution could make it the world's largest food exporter within a decade

Mike Brady

Published 16/03/2016 | 02:30

Brazil - endless acres of quality land.
Brazil - endless acres of quality land.

Brazilian agriculture could be every Irish farmer's dream. Endless acres of quality land, rainfall levels similar to our own and sunshine like Spain means everything just grows faster, bigger and better all year round. Brazil is larger than the entire continent of Europe, and while 61pc of the country is still covered by scrub and trees, they are reclaiming or breaking new land for agricultural production at breakneck speed.

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With the world's population projected to increase to 9bn by 2050, Brazil sees itself as a solution to this problem. According to the OECD-FAO, Brazil will account for 40pc of the increase in the world's food production over the next decade,

The centre of commerce in Brazil is the south. Sao Paulo has a population of 20 million, Rio de Janeiro six million and the entire country has a population of 202 million. Farm size is smaller in the southern states and land prices are higher, if you want to make it in farming in Brazil the tradition has been to head north.

Pioneer farmers sell their holdings in the south, purchase more land with the same money further north where they break or reclaim the land and plant it in crops primarily soya, corn (maize meal), sugar cane and cotton. Soya and corn account for 80pc of land area and 86pc of production.

The scale and speed of this land development is quite breath-taking. Brazil currently has 330 million hectares of agricultural land (39pc of the country); 165 million ha are in arable crop production but it has a further 100 million ha which it expects to enter agricultural production in the near future.

It is currently the world's largest exporter of sugar, coffee, orange juice and the second largest exporter of soya, beef and corn.

The boom in Brazilian agriculture began in the 1970s with scientific advancements in soya bean production.

They speak of agriculture before and after soya; Brazil was a net importer of food in that period and is now the second largest exporter of food in the world. It is difficult to see who can compete with them if they manage to bring the virgin land of the Cerrado and the Savanas into agricultural production.

The enterprise of choice for all of this land is arable cropping, primarily soya beans and corn. Brazilian agriculture and even the Brazilian economy revolves around soya bean production.

In 2014, agriculture was 23pc of GDP (Ireland 7pc) and accounted for 43pc of all exports (Ireland 12pc). Soya alone made up 14pc of all Brazilian exports; this amounted to 40pc of the world's supply and this figure is expected to hit 60pc by 2025.

The soya bean juggernaut is simply unstoppable. Plant breeding companies are developing GM varieties of seed to suit the climatic conditions in different regions. Embrapa is a very well established and respected state research body supporting growers.

The seed and chemical companies provide agronomy advice and much needed credit for inputs; the machinery companies are rolling out space age machines and technology and the grain buyers are shipping the soya produced to the four corners of the earth.

The soya farmers strive to grow more and more tonnes by increasing the land area farmed and achieving higher yields per hectare to satisfy the voracious demand for soya protein. In addition, most soya farmers can grow a second crop in the same year on the same land due to the exceptional growing conditions.

The typical rotation is soya followed by corn (maize meal), or soya followed by cotton on the best land.

The scale, productivity improvement, availability of quality land come together to create a very impressive arable industry which is powering on like a high speed train. This freedom to farm is an Irish tillage farmer's paradise, we simply cannot provide such opportunity.

Beef industry

The beef industry is the next significant agricultural industry in Brazil. Dominated by various forms of the Zebu breed, beef production exists on the land not suitable for soya or corn.

The pasture land is seeded to C4 tropical grasses, which in farmer terms are more 'stemmy' when compared to Irish temperate C3 grasses. This means feedlot finishing is the norm with readily available maize meal and soya bean meal. The beef industry has similar issues to the Irish beef industry where the breed societies dominate farmer thinking in trait selection.

The lack of a clear strategy and use of genomics to speed up the path to the perfect carcase and meat cuts for the consumer is a clear deficit in the Brazilian beef industry. The margins are low as appears to be common in beef farming worldwide. This combined with the poor conversion rate of concentrate feed to meat, especially when compared to chicken and pork, lead some in Brazil to suggest that beef is a twilight industry destined to be a niche player.

Chicken and pork production combined will surpass beef production in Brazil in 2019. Soya and corn dominate the country's agriculture; both are commodities and an obvious route to adding value is to feed some of it to chickens and pigs and export the higher value vacuum-packed meat.

Chicken consumption in Brazil has increased by 53pc in the last 10 years whereby beef has been stagnant. The beef industry is floating along rudderless when compared to the well-oiled soya machine.

Looking at the wider picture, Brazil is not without its problems. The economy is in a deep recession with a significant budget deficit, inflation is 11pc, interest rates are 16pc, infrastructure of roads and rail are third world standard, education is a challenge and there is a distinct lack of available capital to service these basic needs.

The nation has been dogged by political scandals which have seen over 40 politicians go to jail for accepting bribes. These scandals have dominated public debate to such an extent that the 2016 Rio Olympics and the Zika virus struggle for media coverage.

However, all these problems are fixable over time and the knowledge and talent are available in the country to do so. The natural advantages of land, climate and a wonderful race of people can only mean that this country will not only be an agricultural powerhouse but an economic powerhouse in the years ahead.

Michael Brady is an agricultural consultant and managing director at the Brady Group Agricultural Consultants email: mike@bradygroup.ie This article is based on a recent Nuffield agri-study trip to Brazil.

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