South America Calling

Brazil Focuses on Integration

Intensification will be the key to the expansion of Brazilian agriculture over the next five years, local industry leaders and analysts say.

Brazil is one of the few agriculture exporters with substantial arable land reserves to exploit, but current low prices and poor logistics mean growers will focus more on utilizing existing farmland rather than expanding the frontier.

"The tropical climate makes it possible for Brazil to farm 365 days a year, and farmers will concentrate on using land more," said Alexandre Mendonca de Barros, agricultural analyst at MBAgro, a local consultancy.

Intensification started around 15 years ago with the introduction of second-crop corn after soybeans. The success of the system has led Brazilian corn production to double over the past decade with the second crop now accounting for around two-thirds of output.

Indeed, double cropping has been far more important to the expansion of Brazilian grain production in that period than expansion into new areas.

With still only around a third of soybean land double cropped, there remains room for further growth. But in advanced regions like Mato Grosso and Goias, farmers are taking things a step further with the introduction of a third crop, normally pasture for grazing.

The addition of cattle into farm systems is particularly attractive at the moment with beef virtually the only major commodity whose price hasn't fallen over the past year. But short-term price moves aside, the introduction of pasture into a crop farming system provides another source of income; diversifies price, crop and economic risks; and also adds an important rotation at a time when the pressures of pests and disease on soybean and corn crops are growing, notes Barros.

Embrapa, Brazil's state farm research company, estimates some form of crop, livestock and forestry integration is already utilized on 4 million to 5 million acres and predicts that figure will rise to 10 million acres by 2020.

"Integrated systems are clearly the future for farming in Brazil. It is something we will see much more of," said Luis Carlos Carvalho, president of the Brazilian Agribusiness Association (ABAG).

However, challenges for the wider implementation of integration remain.

The first is practical, with crop farmers and ranchers having to learn the others' business. The cultural divide between crop and livestock farming continues to be reinforced by universities and research groups that look at crops and animal production separately rather than part of a system. That needs to change, notes Paulo Hermann, president of John Deere in Brazil.

The other immediate problem is the system of credit. The government still runs credit on the assumption that farms plant one, or maybe two, crops a year and sets repayment dates accordingly.

"There is no acknowledgement that, increasingly, these crops are, or are becoming, part of a bigger system of production," said MBAgro's Barros.

With Brazil in crisis and credit supply tight, this will be a major impediment to the creation of integrated systems.

Another issue is Brazil's archaic labor laws, which limit the amount farmhands can multitask.

But with farmland no longer cheap, Brazilians are very interested in creating integrated systems on underutilized pasture, with the added bonus that it offsets the greenhouse emissions of their cattle herd.

(AG)

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