“Understanding Agricultural Intensification and the Environmental Tradeoff Question: The Case of Mato Grosso Brazil” Peter Goldsmith Director, Food and Agribusiness Program, University of Illinois Lemann Dialogue November, 2013

A scientific debate Green et al. (2005) – Feeding the planet in 2050 – Relieving poverty and malnutrition among developing countries Agricultural Intensification and Tradeoffs: A Faustian Bargain? – Direct effect Biome change- plant and wildlife Pollution – Indirect effect Medium term – Land sparing local – Land sparing global Long term development allows for investment in wild nature – Indirect effect Human development index – Van Wey et al, 2013 – Indirect effect Positive Feedback from profitability and productivity – Get more when more productive Negative feedback – Greater productivity from other inputs, besides land P.D. Goldsmith, Department of Agricultural and Consumer Economics, University of Illinois

Mato Grosso as a Laboratory Fastest Growing and Largest agricultural state in the world Rain forest biome accounts for 25% of the state land. – Dominant biomes are dryland forest and cerrado Public and third part institutions are central to the Mato Grosso intensification story P.D. Goldsmith, Department of Agricultural and Consumer Economics, University of Illinois

Various Biomes of Mato Grosso Key Issues for Tradeoff Analysis 1)Ranking biomes 2)Not distinct boundaries 3)Hard to enforce Source: Arvor et al P.D. Goldsmith, Department of Agricultural and Consumer Economics, University of Illinois

For agricultural businesses where will they find growth: a relentless economic force Grow through – Lower costs Technology adoption Capital intensification Costly – Prices are exogenous – Soybean yield increases Flat Costly – Land expansion “MAPITOBA” But extensive, non land sparing – Intensification through succession cropping Generally only available to tropical zones P.D. Goldsmith, Department of Agricultural and Consumer Economics, University of Illinois

Agricultural Intensification through Safrinha Production Double cropping system for humid low latitude regions of the world – Important welfare question about the land sparing effects of safrinha Specific questions as to the factor productivity of: – Land – Labor – Capital – Chemicals – Energy P.D. Goldsmith, Department of Agricultural and Consumer Economics, University of Illinois

High Uncertainty with Safrinha June 1 Order soybean and maize seed October 15 Safra Planting Date +110 Safra Harvest date February 5 Plant Safrinha (Maize) +120 Safrinha Harvest date June 5 April 20 Maize pollination date May 1 End of rainy season March 1 Safrinha (Maize) window closes February 5 Maize seed costs 3x Soybean seed P.D. Goldsmith, Department of Agricultural and Consumer Economics, University of Illinois

Safrinha’s Impacts on Supply (price) Adding 2% to global supplies MT is exporting 15 mmt of maize As recently as 2000 Brazil was importing 2 mmt P.D. Goldsmith, Department of Agricultural and Consumer Economics, University of Illinois

Area PlantedProductionYield Starch Protein Oil (ha)(mt)(mt/ha)(mt) Maize IL5,099,14449,448, ,021,1214,015,2361,775,209 Mato Grosso2,504,82015,586, ,984,7261,265,652559,568 Soybean IL3,622,01111,698, ,528,3344,268,8632,332,725 Mato Grosso7,072,27021,341, ,436,5477,787,4544,255,463 IL 8,721,156 Mato Grosso 7,072,270 IL Total Production (mt)41,549,4558,284,0994,107,934 23% IL Total Yield (mt/ha) MT Total Production (mt)18,421,2739,053,1064,815,030 MT Total Yield (mt/ha) % Safrinha/64% of the YieldMato Grosso vs. Illinois (%) -45%35%45% 50% Safrinha/75% of the YieldMato Grosso vs. Illinois (%)-22%47%55% 75% Safrinha/90% of the Yield Mato Grosso vs. Illinois (%)25%72%78% Land Factor Productivity: Total Starch/Protein/Oil per Hectare Mato Grosso (Low Lat) vs. Illinois (High Lat) P.D. Goldsmith, Department of Agricultural and Consumer Economics, University of Illinois

Safrinha/Intensification Implications Profitability leads to land use – High prices “fence rows to fence rows” – A case where demand outstrips supply – So significant pressure to expand production But the price elasticity of supply is elastic – Prices will fall – Investment will slow – Capital will shift – Land (ceteris paribus) will be spared Comparable Biomes in Africa – Significant increase in HDI with intensification Van Wey et al, 2013 – Land sparing Forested lands So do we bring these technologies to Africa? – University of Illinois' “FEED THE FUTURE INNOVATION LABORATORY FOR SOYBEAN VALUE CHAIN RESEARCH” – 5 year/$25m USAID Project Is it a Faustian bargain? P.D. Goldsmith, Department of Agricultural and Consumer Economics, University of Illinois