Starting
with cheap land, labor: Brazilian farmers have formula for success, by Ron Smith
Farm Press Editorial Staff Aug 01, 2002
Consider
this formula: cheap, productive land, and plenty of it; cheap labor, and plenty
of it; cheap agricultural chemicals; reasonable equipment costs; ideal growing
seasons and markets eager to take what you grow.
How
about Brazil? The potential for Brazil to increase its already healthy
agricultural industry might give U.S., farmers the willies, says Bryce Myrick,
with the Texas Farm Bureau.
Myrick
has made two fact-finding missions to Brazil and says the country has set its
sights on agricultural production that will encompass 90 million acres within
10 years.
“They
are on pace to do that,” Myrick said recently at a recent international trade
conference in San Antonio.
“Brazilian
farmers have tremendous production potential,” he said, “and they are
increasing acreage every year.”
Myrick
said he wanted to see first-hand what kind of a competition Brazil poses for
agricultural markets. It's considerable, he decided.
“Brazil
is about the size of the Continental United States,” he said. “Production
includes soybeans, their main crop, coffee, wheat, rice, corn, sugarcane and
cotton. Trade partners include the United States, Japan, the European Union and
Argentina.”
He
said Brazil stands to gain market share. “Currently, the United States produces
34 percent of the world's soybeans,” he said. “Brazil accounts for 22 percent.
But, from 1990 through 2001, production increased from 15 million metric tons
to 39 million. Europe, China and Japan are the major buyers.”
In
many areas, Brazilian farmers enjoy a competitive advantage over the United
States. “They can make money with $3.80 per bushel soybeans,”
he said. “Land costs average $100 per acre. Labor is cheap, about $1.40 per
hour for managers and 70 cents per hour for tractor drivers.
“Roundup
costs them only $12.80 per gallon, and they can get a 140 horsepower John Deere
tractor for $55,000.”
Myrick
said soybean yields average 40 bushels per acre or more and many farmers
double-crop behind the beans and make from 50 to 100 bushels of corn per acre.”
Storage,
however, is a key to success. “At harvest, soybeans usually bring only $3.50,
but if they can store for a month or so, prices could rise to $4 or $5 per bushel.”
Myrick
said cotton, at 34 to 36 cents per pound offers little incentive. “Cotton
acreage is not likely to increase and could drop,” he said.
Limitations
include a poor infrastructure to move equipment and harvested crops. Also,
Brazil imposes a 16 percent sales tax on equipment.
“Agriculture
gets no exceptions, except the tax goes down to 12.75 percent if the machinery
is made in Brazil. Agriculture does not rate high with the government,” Myrick
said.
Donald
Patman, Texas Farm Bureau President, says Brazil's low production costs and the
strong U.S. dollar improve Brazil's competitive advantage in international
markets.”
Norb Leahy, Dunwoody
GA Tea Party Leader
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