The Rural Voice, 2006-03, Page 36'It's not if, it's when'
The booming farm economg of Brazil and other Central and South American
countries will become more competition each gear for North American
producers, sag two speakers who have visited the region
By Keith Roulston
Booming production in
South America has
been reshaping the
world's agricultural markets,
but just how much have
Ontario producers to fear?
Two speakers dealt with
South America at Grey -Bruce
Farmers' Week in Elmwood
in early January. Bruce
County native Kevin
Weppler, now area director
for Canada and Latin
America for Elanco, spoke
during beef day, while Andy
Van Niekerk, president of
Huronia Branch of the
Ontario Institute of
Agrologists, who recently
toured Brazil with the
Advanced Agricultural
Leadership Program, spoke
on Crops Day.
Niekerk said Brazil has
both advantages and
disadvantages over North
America.
"Will Brazil be our
competition? It's not if, it's
when", Niekerk said.
Land is a national resource and
there are another 200 million acres
that can be brought in production if
needed. Land prices range from a
low of $200-$1400 an acre in the
emerging area of Mato Grosso to
$600-$2,500 an acre in Sao Paulo
state to $4,000 an acre in the centre
of Parana state. Landowners are
creating capital by going into the
undeveloped areas and bringing them
into production, generally a three or
four year process. Often farmers have
"leap -frogged" away from disease
problems by simply moving to a new
farming area.
The topsoil is so deep in some
areas you can hardly find the bottom
of it, Niekerk said.
Crop yields seemed surprisingly
low to Niekerk: 35-40 bushels of
Two visitors to South America discuss the advantages and
disadvantages of that exploding agricultural region.
soybeans in the south, 50-55 in the
north. Corn yield range from 100-170
bushels in the south to 70 or more in
the north. Of course Brazilian
farmers have the advantage of
growing two or three crops a year, he
pointed out. However only recently
have farmers come to realize they
couldn't grow beans after beans after
beans. If farmers learn to grow corn
as well as they grow beans, Brazil
will have a lot of corn to market,
Niekerk said.
Input costs are much different
than in North America. While a new
combine was about the same price as
Ontario, labour charges at the
machinery dealer were only about
$20 per hour for shop time. Cheap
labour is an advantage for farmers
and processors. A lot of corn is dried
32 THE RURAL VOICE
with wood -heat from burning
fast-growing eucalyptus.
Some of the disadvantages
of Brazil include a poorly
developed infrastructure of
roads, railways and seaports.
Often a farmer has to build
the road from a distant
government road to his farm.
Railways were put in by
different colonial countries
meaning they're on different
gauges and trains can't
transfer from one line to
another. The deficient
infrastructure adds $30-$40 a
tonne to the cost of getting
the crop to market.
Like Canadian farmers,
Brazil also faces competitive
problems with the U.S.
farmer because of a currency
that is strengthening against
the U.S. dollar. The inflation
rate when the AALP group
visited was 8-10 per cent but
Brazilians thought this was
good having faced worse
when interest rates ran 18-25
per cent.
The education system seems
lacking, Niekerk said. Corruption
seems rampant and with a huge gap
between the wealthy and the poor,
crime is a real problem, though
Niekerk said his group never felt
threatened on its visit.
There's a lot of vertical
integration in Brazil but the
integration is from the bottom to the
top with most processing plants
owned by farmers. Small farmers'
survival has been through co-
operatives since the 1950s. With little
government support for agriculture
except for the tax benefits farmers
get in being members of co-ops, even
most research is carried out by the
co-ops. International giants Bunge,
ADM and Cargill are also present,
however.