Marcia Zarley Taylor
Editor, Top Producer, Farm Journal Publishing Company
Marcia Zarley Taylor is a Des Moines, Iowa native with 20 years experience in farm policy, agricultural finance, and environmental reporting. Since 1990, Taylor has served as editor of Top Producer, Farm Journal Media’s business magazine for 200,000 executive farmers. The publication has often been called the “Fortune” magazine of farming and champions the cause of farming as a business.
Since 1998, Taylor has made four trips to the Brazilian frontier to report on the pioneers who are transforming global agriculture. Her magazine coverage on Brazil’s stealth entrance into world soybean markets has shaken leaders at USDA, Congress, land grant colleges and farm organizations. In 1998, the American Agricultural Editors Association named her the Writer of the Year for her South American reporting. And recently, the American Business Media-the professional organization of more than 1,200 business magazines– honored Taylor with a Jesse Neal Award for excellence in business journalism for her series, “Brazil: The Competitor You Can’t Ignore.”
A number of widely accepted ideas about U.S. and world agriculture are being revised as a consequence of the development of vast new areas in Brazil suitable for farming. It has been widely believed that no additional farmland is available anywhere in the world, but there are millions acres of highly productive land now being reclaimed in Mato Grosso and other states in the savannah areas of Brazil. Similarly it has been thought that production of poultry and swine is impractical in the tropics, but large-scale poultry and swine operations are also underway or being planned in this same region.
If Brazil’s state of Mato Grosso could be superimposed on the United States it would extend from Des Moines, Iowa to Columbus, Ohio and from Duluth, Minnesota to Nashville, Tennessee. This huge undeveloped area is typically grassland with scattered small trees. The soils are deep, very acid, low in phosphorus and low in organic matter. Rainfall ranges from 50 to 80 inches per year and it all falls during seven months of the year. During the remaining five months no rains fall. The average temperature is about 80° F. During the past 20 years soil and crop management techniques have been developed specifically for the area making it possible to produce two crops of soybeans per year averaging up to 50 bushels per acre. Other states in the savannah region east of Mato Grosso, have similar soils and environmental conditions but less rainfall. It is estimated that there are 200 million acres of arable land available in this area of which only 15 percent are being farmed. The present value of cleared land suitable for farming is about $250 per acre.
The most important factor limiting even more rapid development of agriculture in Mato Grosso is the near absence of an infrastructure supporting the marketing of crops. There are few paved roads, no railroads and the region is located 1300 to 1500 miles from ports from which commodities may be exported. Growers have developed special barges to navigate 600 miles of the Madeira River north to a port on the Amazon River where large ocean-going ships may be loaded about 600 miles inland from the Atlantic Ocean. A railroad servicing one area is expected to become operative later this year and a second railroad is being developed. A paved road passing through the rain forest to a second port on the Amazon River is in the planning stage. During the past 10 years transportation costs have been reduced 35 percent. The railroad to be completed this year in southwest Mato Grosso will reduce transportation costs from $56 to $25 per ton.
A key factor that has helped to make crops produced in this remote area of Brazil competitive on world commodity markets has been the favorable currency exchange rate. For a number of years Brazilian currency was pegged at a 1:1 ratio with the U.S. dollar but in 1998 it was deregulated and now the ratio is 1: 2.4.
The soybean is the single commodity that has fueled rapid development of agriculture in Mato Grosso and other states in the savannah region and made Brazil the world’s largest exporter of this crop. It is estimated that the break-even cost of producing a bushel of soybeans in Brazil is $4 per bushel as compared to U.S. production costs of $6 per bushel in the Midwest and $10 per bushel in the South. The U.S. has already lost an estimated 14 million acres of soybeans in the southern states and many other growers probably would not be competitive without federal crop support programs. The USDA has predicted that Brazilian soybeans will keep U.S. soybean prices at or below $5.25 per bushel until the year 2010.
Varieties of soybeans used in the U.S. are not well adapted to environmental conditions in Brazil. Brazilian research agencies have developed varieties that thrive under available day length condition as well as fertilization and tillage practices suitable for the area. It is expected that these research efforts will expand as needs develop leading to higher yields and lower production costs.
A recent improvement in the regional infrastructure has been the influx of major U.S. soybean processors and exporters into the area. These companies will further expand the markets available to growers. An even more recent development has been announced plans for construction of a large concentrated swine production operation and a processing plant by a major U.S. pork processor. These and other types of value-added products will provide additional local markets for farmers and alleviate effects of high commodity transportation costs. Interest is corn production is developing which will provide a desirable crop to rotate with soybeans and a feed ingredient for local swine and poultry production operations.
Authorities expect Brazilian pork production to expand 1000-fold within 10 years and estimate 200,000 sows will be added to herds within the next five years. Brazil can only export processed pork and beef to the U.S. at this time because of the presence of foot and mouth disease. Foot and mouth disease has not been reported in the state of Mato Grosso for eight years, and efforts are underway to obtain certification for the state even though the disease occurs in other areas of the country.
An USDA economist has concluded that, “What is going on in Brazil today is the most important shift in global agriculture since the settlement of the Midwest.”
The agricultural potential of the state of Mato Grosso and similar areas in Brazil pose serious long-term problems for farmers in the Midwest. Farmers, farm organization and agricultural research agencies will need to accelerate development of means to permit Midwest farmers to remain competitive in world markets. Some of the areas that warrant evaluation are: (a) maintenance of our lead in the field of biotechnology as it relates to crop and animal production, (b) reduction of high transportation costs associated with laws prohibiting foreign ships from transporting agricultural products between U.S. ports, (c) structural improvements that will reduce river transportation costs from the Midwest to ocean ports and (d) export of more value added products rather than agricultural commodities.
In an effort to provide wide-ranging views and perspectives regarding the practice of and issues surrounding agriculture, the Philadelphia Society for Promoting Agriculture (PSPA) seeks speakers representing a variety of perspectives. The statements and opinions they present are strictly their own and do not necessarily represent the views of PSPA.