Brazil's Farms That Ranch - 2

Farmers Turn to Pasture

Cattle are moved to new pastures. Grain farmers are increasingly putting cattle on land after soybeans and corn, offering another revenue stream. (DTN photo by Alastair Stewart)

SAO PAULO, Brazil (DTN) -- The Cerrado plateaus of Mato Grosso have become synonymous with soybean and corn planting over the last three decades.

In summer, drive along the famous BR163 road that dissects the state and you will see soybeans for as far as the eye can see.

But there are an increasing number of producers who are also putting cattle on their fields.

Silvesio Oliveira has added cattle to grain fields for the last 15 years in a "very unscientific way," he joked.

"We were doing both ways before Embrapa (the government agricultural research institute) started recommending it," he said from his 6,000-acre farm in Tapurah, central Mato Grosso.

Oliveira expanded the practice in recent years; his diversified approach allowed him to weather the recent slide in grain margins with ease as local cattle prices have risen 40% during the last two years.

"It protects me from the risks of grain farming. Mato Grosso farmers tend to put all their profits back into their soy and corn production. I have cattle, which is my savings plan," he explained.

Oliveira plants 3,400 acres of soybeans as a summer crop, followed by second-crop corn on most of the land. However, he plants pasture after soybeans on 500 of those acres, which adds to another 250 acres of permanent pasture that sustains an average of 700 head of cattle.

He used to finish cattle on feedlots, too, but gave that up two years ago because he couldn't be as efficient as the large-scale commercial feedlots in his region.

THIRD, FOURTH CROPS

Mato Grosso is ground zero for crop-livestock integration in Brazil. Embrapa estimates 80% of the people who create integrated systems are grain farmers and the majority of them are in the state.

They predominate because they tend to be more sophisticated and have already mastered the most challenging part of the system, grain production, explained Daniel Latorraca, project manager at the Mato Grosso Agricultural Economy Institute (IMEA).

Planting an additional crop each year, in this case pasture, provides obvious financial benefits in diluting costs of the soybean and corn harvests, but it provides much more than that.

The pasture represents a sustainable alternative to combatting the increased pressure of disease (particularly cyst nematodes), insects (especially caterpillars), and glyphosate-resistant weeds. Adding pasture to the rotation breaks the cycles and reduces the need to spray, which has increased at a dizzying speed during the past five years.

"The difference in soybean potential after two years of pasture is enormous. You don't need to analyze, you can see it," said Oliveira.

Spiraling land prices are the other reason that grain farmers adopt the system. Over the last 30 years, farmers in Mato Grosso who sought to grow simply bought new land. However, the time when they could pick up virgin grain land for a couple of bags of soy is long gone. Land in the far north and northeast of Mato Grosso now goes for an average of R$9,000 per hectare ($950 per acre). In a country, where credit is expensive and currently at a premium, that investment is costly.

Instead, farmers have sought to intensify production.

They do this by adopting the Santa Fe integration system, the most popular developed by Embrapa, whereby brachiara grass is planted along with the second-crop corn. Once the second-crop corn is harvested, cattle are put on the land until August, when the pasture is desiccated for the next soybean crop.

Researchers claim the planting of brachiara along with corn does not reduce yields and provides instant soil coverage after corn harvest.

IMEA has been conducting analysis of integration in practice, looking at the system on 10 properties.

"It is clear that the system, when well done, makes money," said IMEA's Latorraca.

It fits perfectly into a no-till system of production.

Large grain farms are already on board or have plans to do so. Grupo Bom Futuro, Brazil's biggest soy farm, has been operating an integrated system for the last 15 years, while Argentine corporate giant El Tejar said recently that it has plans to invest in integration as part of its drive to make its Brazilian operations more efficient.

It also represents an option for farmers who want to expand soybean production in sandy regions that may not be able to sustain year-after-year of row crops.

ISSUES MUST BE ADDRESSED

While the system appears promising, there remain a number of issues that must be addressed for more farmers to adopt the system.

First, there needs to be better technical assistance and Extension on how to implement the system. At present, most agronomists and farmers know little about ranching.

Then there is the issue of Brazil's archaic labor laws that strictly limit the type of work farm hands can do and restrict the number of hours they can work, not respecting the seasonal nature of agriculture.

Finally, there is the question of credit. Under the current system, the government's subsidized operating credit is offered per harvest, and once the limit is reached, farmers can't get more for another crop, despite the fact they may have paid off the first loan.

"The system needs to take into account the increasingly intertwined nature of modern agriculture in the future," said Paulo Herrmann, president of John Deere Brasil and heavily involved in promoting integration.

Adoption of the system will likely slow in 2015 and 2016, simply because Brazil is in crisis. Because of the volatile political and economic situation, banks restrict the availability of credit while farmers put expansion plans on hold.

"Everyone is being very conservative. I don't know any farmer making big investments just at the moment," said Oliveira.


To read the last installment of this series, please look in the Land section of DTN.

(MZT/CZ)