USDA: Brazil Ag Potential Understated

Brazil's capacity for agricultural expansion has been vastly underrated in the past and that country could surpass the U.S. in the amount of land it cultivates for farming, according to a special USDA report.

"The existing scope for agricultural expansion in Brazil is equal to (if not greater than) the total cropland resource in the U.S.," the USDA's Foreign Agricultural Service said in the report.

"It is conservatively estimated that Brazil could increase its total cultivated land area by 170 million hectares (420 million acres) or more if key legal, technical and financial developments occur," the FAS said, adding that such expansion is possible without any further deforestation of the Amazon River Basin.

Such expansion is dependent on the eventual legalization of genetically modified crops in Brazil, widespread adoption of new high-yield crop varieties, and increased investment in transportation infrastructure.

The U.S. and Brazil are roughly the same size. The U.S. now has about 174 million hectares (477 million acres) – or an estimated 19% of its total land – planted with crops. By comparison, Brazil has has 41.8 million hectares (103.3 million acres) or about 5% of its total land under cultivation.

Previous Brazilian assessments of the country's capacity for expanding crop production have been low because the nation’s vast pastures, which account for 177 million hectares (437.4 million acres) or 83% of its total agricultural land, were not considered a source for future grain and oilseed crop expansion, "despite their ease of conversion to mechanized farming and their location adjoining crop lands throughout the country," the FAS said.

In actuality, there has been a sizeable and widespread conversion of Brazilian pastureland to soybean production in the past few years.

Many Brazilian producers and agribusiness leaders feel that in the long run, pasture would ultimately provide a greater resource for the expansion of grain and oilseed production than native Savannah (called Cerrado), FAS said.

FAS agrees with this evaluation, and estimates that 70-90 million hectares or 40-50% of Brazil’s existing pasture acreage could be converted to cropping in the future.

Although Brazil has huge potential, a variety of factors could act to slow the rate of agricultural expansion or limit its future extent, the FAS said. However, none of these factors are on the immediate horizon, the agency added.

Such factors include a faltering domestic economy, levying of new agricultural export taxes; serious reduction of new transport infrastructure development; a significant slump in international agricultural commodity prices; outbreaks of crop diseases or pests, or climate change that substantially alters growing conditions.

The FAS report was the product of a recent trip through Brazil, during which USDA/FAS personnel met with numerous official agricultural research agencies and private sector agribusiness companies.

Editors note: Richard Brock, Soybean Digest's Marketing Editor, is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report.

To see more market perspectives, visit Brock's Web site at www.brockreport.com.