South America Calling

Brazilian grain farmers have focused most of their attention on expanding area and implementing double cropping over the past ten years.

But with farm operations now well established in the new frontiers of the eastern and western Cerrado and cycles that allow for a second crop after soy increasingly refined, growers will turn their attention to raising yields on the crops they already cultivate.

At least that's the opinion of Aurelio Pavinato, chief executive of SLC Agricola, one of Brazil's largest corporate farms.

"Farmers will start focusing on increasing yields," he told journalists in Sao Paulo.

It's not that Brazilian yields haven't improved since 2003.

Average Brazilian soybean yields have risen 8% to a projected 45.2 bushels per acre in 2012-13, while corn yields have jumped 31% to 75.0 bpa, according to Agorconsult data.

But farmers spent much more capital on expansion. Soybean area grew 50% over the decade.

Meanwhile, the real innovation has been the introduction of short-cycle soybeans, which allow farmers time to grow a second crop of corn or cotton before the dry Brazilian winter sets in.

In 2012-13, short-cycle seeds were used on 47% of soybean area in the states of Mato Grosso, Mato Grosso do Sul, Goias and Parana, according to Agroconsult.

The change prompted Brazilian second-crop corn area to jump 127% over the last decade to 20.7 million acres in 2012-13.

These two trends have increased overall output. Now attention will increasingly turn to refining crop systems and optimizing output from each crop.

Brazilian farmers will be helped in this push by the greater availability of technology, said Pavinato, whose company planted nearly 700,000 acres in 2012-13.

The approval process for new seed technology is now quicker and more efficient and biotech firms are investing heavily in developing varieties for South America. The most obvious example is Monsanto's decision to develop the Intacta RR2 Pro soybean, its first with an insect protected trait, for Brazilian farmers.

The toning down of the land grab will also allow farmers to invest more in farm operations. A high priority will be on-farm storage.

At present, only a third of Mato Grosso farmers have their own silos and Brazil has storage capacity for just two thirds of grain production. That leaves farmers little choice but to sell immediately after harvest, when transport costs soar amid bottlenecks and discounts are deep. With storage on the property, they can wait for things to calm later in the season.

Growers will also increase investment in machinery, not only through choice as they seek to increase efficiency but also out of necessity because qualified farm labor is becoming scarcer and scarcer.

With unemployment near record lows and ample opportunities in regional towns, seasonal farm work has become less than attractive and wages for hired help are soaring.

"Farmers will simply have to automate more," said Andre Pessoa, director of Agroconsult, a farm analytics firm.

(AG)

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