Brazilian cotton-planted area will fall by 20% in 2015-16, taking it to the lowest level in 13 years, according to the Brazilian Cotton Producers Association (Abrapa).
With prices still low and access to credit limited, farmers plan to reduce planted area of plume cotton to around 2 million acres in the upcoming 2015-16 season, which starts in November, the association forecasts.
Credit is hard to come by and so producers in Mato Grosso and Bahia will switch, en masse, to soybeans as their main crop.
Margins are very tight and farmers are not willing to take risks, Joao Carlos Jacobsen, president of Abrapa, told local business daily Valor Economico.
On top of costing R$8,000 per hectare ($1,311 per acre) to plant, cotton is a year-long enterprise, said Jacobsen. On the other hand, soybean is produced in 120 days.
To be worthwhile, cotton has to offer returns that are two or three times that of the oilseed, he noted. Soybeans are currently offering a 10% to 15% margin and could provide wider margins on land that is fertile after years of producing cotton.
Credit is an important issue for an expensive crop like cotton and the government's decision to withdraw subsidized credit to large producers in the latest farm credit plan is another reason for farmers to steer clear of cotton next season.
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