1. BRAZIL’S SOYBEAN PRODUCTION POTENTIAL AND COMPETITIVE POSITION VS. U.S. Dr. Robert Wisner Iowa State University

2. SOURCES OF INFORMATION 4farms in three states 2railroad companies 1barge company 2truck firms 1major grain company 1soybean processor 1wet corn miller 1export elevator 1port authority 2country elevators 3soybean seed producers 3livestock producers 1new farm storage facility

3. HISTORY 1971 U.S. devalues dollar 1971-72 USSR buys huge amounts of U.S. grain 1972-73 harsh El Nino reduces Peruvian fish meal 1973 U.S. food companies, livestock feeders and consumers raise fears of running out of soy products June, 1973, President Nixon embargos soybean and soymeal exports 1973-74 soy importers buy land in Brazil to grow soybeans

4. BRAZIL SOYBEAN PRODUCTION Mil. Tons Mil. Bu. 1973 5.0 184 200034.2 1,259 2002 43.5 1,600 USDA Proj. 2003 48.0 1,766

6. Brazil’s Cerrados Land purchase prices: $100/Acre or less plus clearing costs Land purchase prices: $100/Acre or less plus clearing costs Quality varies, buyer beware Quality varies, buyer beware Web site for real estate: http://www.AgBrazil.com/brazil_s _agriculture_frontier.htm Web site for real estate: http://www.AgBrazil.com/brazil_s _agriculture_frontier.htm

7. Crops Raised in Cerrados Soybeans Soybeans Wheat Wheat Rice Rice Sugar cane Sugar cane Cotton Cotton Corn Corn Coffee Coffee Pasture Pasture

8. Brazil’s Cerrados Soil types: sandy to sandy loam Soil types: sandy to sandy loam Aluminum content: 0.05 to 0.06 Aluminum content: 0.05 to 0.06 Requires about 1.6 tons of lime/A. Requires about 1.6 tons of lime/A. Avg. annual rainfall: 35 to 80 inches, depending on the location Avg. annual rainfall: 35 to 80 inches, depending on the location Avg. temperature: 73 F. range: 63-90 Avg. temperature: 73 F. range: 63-90 Irrigation water available Irrigation water available Double/triple cropping possible Double/triple cropping possible

9. Rate of Expansion in South American Soybean production Brazil: 1993-1999 = 55 mil. bu./year Brazil: 1993-1999 = 55 mil. bu./year Argentina:1993-1999 = 51 mil. bu./year Argentina:1993-1999 = 51 mil. bu./year Projected 2000-01 expansions: Projected 2000-01 expansions: Brazil +74 mil. bu. Brazil +74 mil. bu. Argentina +103 mil bu. Argentina +103 mil bu. Other small expansions in Bolivia, Paraguay, Uraguay Other small expansions in Bolivia, Paraguay, Uraguay

14. Brazil Corn Brazil is a major corn grower Brazil is a major corn grower Brazil exports no corn in most years Brazil exports no corn in most years Reason: Reason: Transport costs nearly equal price of corn Transport costs nearly equal price of corn What it would take for Brazil to export corn: approximate doubling of corn yields What it would take for Brazil to export corn: approximate doubling of corn yields

16. Estimated Costs of Producing Soybeans, Iowa & Brazil, 2000 Non-land costs Seed +innoculant Fertilizer & lime Labor Chemicals Crop insurance Interest Machinery Miscellaneous Sub-total Land Total Normal yields Cost per acre Cost per bushel Mato Matto IowaParanáGrossoIowaParanáGrosso $ 18.00$10.00 $0.36$0.22$0.20 27.3038.0047.000.550.840.94 19.6010.00 0.390.220.20 30.0035.0024.400.600.780.49 3.000.00 0.060.00 5.906.486.920.120.14 43.1925.0033.850.860.560.68 8.00 9.000.160.18 $154.99$132.48$141.17$3.10$2.94$2.82 140.0042.0032.002.800.930.64 $294.99$174.48$173.17$5.90$3.87$3.47 504550

17. Farm access road through the small scrub brush of the Cerrados.

18. Typical dirt road in Brazil during the beginning of the dry season. Brazil Cerrados Top Soil 120 ft

19. Cotton planted on Cerrados

20. Newly Cleared Land In Brazil Planted to Upland Rice

33. Current and potential production in expansion areas(mmt) Total +480-550 mil. Bu.

34. Major waterway systems

40. Sapezal export route

43. Central Iowa Export Route

45. Major railroads

47. Ferronorte rail cars, the old and the new

48. Railroads 1.Are in bad condition a.different rail gauges b.less than 300 miles of new and upgraded lines c.trains derail regularly on old rail 2.Ferronorte (Soy Railroad) purchased 50 cutting edge technology locomotives and 700 new 105-ton aluminum covered hopper cars 3.Derailments essentially destroy aluminum cars 4. Major grain company buying 40 smaller hoppers 5.Very limited grain loading facilities on the new rail

49. Railroads - cont’d 6.New loading facilities unlikely until all new rail completed 7.Seasonal grain movements unlikely to support new railroads 8. Directly serve only small areas 9.Grain carrying capacity likely to increase but at a very modest rate

55. Conclusions Brazil has large and clear cost advantage in soybean production Brazil soybean transport costs range from 100% to 400% higher than U.S. transport costs Brazil land clearing and soy production will likely continue at the historical rate Brazil’s transportation investments will be limited by: a.capital shortages b.environmental and social problems c.politics

56. Alternatives for U.S. Agriculture Reduce marketing costs Increased use of semi trucks Bypass high cost elevators Reduce cost of producing U.S. soybeans through lower land costs Emphasize value added products

58. Y and justice for all The U.S. Department of Agriculture (USDA) prohibits discrimination in all its programs and activities on the basis of race, color, national origin, gender, religion, age, disability, political beliefs, sexual orientation, and marital or family status. (Not all prohibited bases apply to all programs.) Many materials can be made available in alternative formats for ADA clients. To file a complaint of discrimination, write USDA, Office of Civil Rights, Room 326-W, Whitten Building, 14 th and Independence Avenue, SW, Washington, DC 20250-9410 or call 202-720- 5964. Issued in furtherance of Cooperative Extension work, Acts of May 8 and June 30, 1914, in cooperation with the U.S. Department of Agriculture. Stanley R. Johnson, director, Cooperative Extension Service, Iowa State University of Science and Technology, Ames, Iowa.