Agronomist Reginaldo Jose Tristao looks over new soybean varieties at a field day in Orlandia, in the state of Sao Paulo. Tristao, who farms 120 acres of soybeans in the next state north, says he visits five or six field days a year to learn about the newest machinery, techniques, inputs and varieties. This one, with 1,500 producers bused in from neighboring counties, is sponsored in part by Embrapa, the federal ag research company.

"Embrapa develops a lot of (soybean) varieties that private companies go on to adapt for regions," explains Tristao. He says that, since Embrapa is a government company with no need to make a profit, it can invest in the several years of effort needed to develop new varieties, such as the nematode-tolerant cultivars he's particularly interested in today.

"Private seed companies - in particular, the smaller ones - can introduce new varieties at less risk by buying the Embrapa varieties to develop for local climates," he says. "And there is a real benefit to using the Embrapa name."

Since its inception in 1973, Embrapa has been a major success in Brazilian agriculture. It can take a good deal of the credit for turning the country's vast Savannah area into soybean-producing farmland by developing soybean varieties adapted to the tropical climate and to the highly acid soils there.

But, to be sure, Embrapa does far more than merely develop soybean varieties adapted to the tropics. It has developed swine races with less fat, soybean varieties specifically for human consumption and a huge animal DNA bank.

It's now turning its sites on biotech, should commercial planting of transgenic crops be allowed here. Embrapa research on increasing nodulation in first-time soybeans after wheat, developed on Brazil's dry Savannahs, is even being recommended to North Dakota soybean farmers. (See "Inoculating Wheat Aids First-Year Soybeans," Mid-March issue, page 20.)

Embrapa, however, is suffering as a result of Brazil's fiscal austerity plan. The plan was designed to further shore up the country's recovering economy, battered by a January 1999 devaluation. Budget cuts are part of that plan.

And one place being cut is Embrapa.

An Embrapa spokesman says that, as a result, 20% of its ag research projects are on hold at its 37 research centers around the country. A hoped-for budget of roughly $200 million this year fell to about $112 million. As if that weren't enough, the funds that are available are slow in making their way to Embrapa. As of October last year - 10 months into 1999 - only 50% of the money allocated had actually arrived at the Embrapa research centers, says the head of a researchers' union.

Aside from cutting back on research projects, even some day-to-day functions are under threat. One Embrapa livestock research facility, for example, had to skip paying its phone, light and water bills for two months in order to keep already-started research going.

Severe budget cuts could hamper development of new varieties and techniques, such as adaptation of transgenic varieties for tropical climates (an Embrapa priority) or development of resistance in traditional varieties.

Tristao says such cuts will have less effect on farmers today than they would have had just a few years ago. "The cuts can only hurt farmers who are constantly looking for better varieties and management practices. But more and more private companies are investing in research to bring varieties to market. They are seeing the benefit that goes along with the risk."

Can private seed companies be depended upon to take up the slack? Tristao says private companies will do what they need to do in order to turn a profit. These days, they may be more ready to invest more in the sort of research Embrapa does.

Weeds are becoming a greater issue in the south, where soybeans have been planted longer. Cyst nematode is spreading north and west. And as new and cheaper transportation routes open in the north and northwest, demand is building for soybean varieties that withstand withering heat.

Will private seed companies fill the gap? Tristao could be right. "Look at this one," he says, pointing out an early maturing variety at the field day test plots. "This one here has some potential."