Talk to an American farming in Brazil and the words Wild West almost always come up in the conversation. Visit there and with the deplorable road conditions and general deficient infrastructure, it does seem like a scene from an old Western.

“We're spoiled with our road and rail system,” says Dwight Fickbohm, farmer from Akron, IA, who recently traveled to Brazil after winning a trip from the Syngenta CruiserMaxx Beans Farmer Swap program. “I won't complain again about driving 20 miles to unload corn.”

I was along on the trip and visited several farmers from the states of Bahia and Mato Grosso. Here's a firsthand view of challenges — new and old — that their farmers face.

ECO AREAS CHANGE

From a conservation standpoint, Brazil prides itself on agricultural stewardship. In fact, it has a long-standing government regulation that requires all private farmland to have a 20% (65% and 80% in some regions) ecological preserve, or conservation area. On that preserve, farmers can't derive any income from those acres and fee hunting, fishing and lumbering are strictly forbidden.

Those rules sound stiff, but they're about to become stiffer in some regions.

Now, the government is in the process of redrawing the lines for preserve regulations in the northern part of the country that border the Amazon basin. That could affect farmers in the northern part of Mato Grosso, the No. 1 soybean-producing state in Brazil.

“There's new legislation underway where a farmer must now keep 80% of his land in a preserve,” says Naildo da Silva Lopes, a farmer and consultant from Lucas do Rio Verde in the heart of Mato Grosso. “We're expecting the new regulations to be in force within the next six to 12 months.”

This will be the first time those legal lines will have changed in over 20 years. Currently, 76% of Mato Grosso is classified cerrado, or tropical savannah land covered in scrub brush, 23% is Amazon-cerrado transition area, and 0.2% is Amazonia. As early as the 1980s, the cerrado lands were considered unsuitable for farming. Today, that land has been cleared and turned into productive soils for crops, especially soybeans and cotton. Almost 14 million acres are in cultivation.

NEW DISEASE BATTLES

Irmaos, Luiz and Clair Gatto, three of six brothers in partnership at Oilema Farm, say they're starting to see some nematode problems on their 14,800 acres of soybeans in Luis Eduardo Magalhaes (LEM) in the state of Bahia. Sixty percent of soybeans they raise are used for seed and they say they regularly have white mold and rust problems.

The brothers have been farming there since 1981 when they moved from the southern state of Rio Grande do Sul so they could expand. They bought 237 acres.

Brazil Iowa Farms, neighbors to the Gattos, have been battling white mold this growing season, too. “We've had record white mold this year, plus rust problems,” explains Luis Henrique, crop consultant.

Brazil Iowa operates three farms and in total has 22,000 acres under cultivation — 60% cotton and the rest soybeans and corn. Average yields for the region run 38 bu./acre, but according to manager Matthew Kruse they expect 47 bu./acre. “We'll even hit 65 bu./acre on some of our better ground,” he says. “However, we use our best ground for cotton and put beans on our lower-quality soils.”

Overall soybean yields for the area are lower because new, less-productive ground is being opened and farmed, which reduces the averages.

“Our soybean production costs ran $350/acre this year, but next year we expect that to go down to $300/acre because input costs are coming down,” Kruse says. “Although cost are high here because of more fertilizer and more spraying, taxes only run us about 25¢/acre.” Rainfall in this area runs 55-60 in./year.

Like most Brazil farmers, Asian soybean rust is a problem for Guilherme Kummer, who farms with his father Paulo and brother Germano at Lucas do Rio Verde in the state of Mato Grosso. “Nematodes are getting worse and worse all the time. It's a very serious problem and it's a limiting factor to higher yields,” he says.

The Kummers moved 21 years ago from Rio Grande do Sul so they could expand. Today they double-crop soybeans and corn on 2,500 acres plus have diversified with a 2,000-head hog finishing unit and a 120,000-hen egg laying operation.

Soybean cyst nematode is the No. 1 nematode battle being fought in Mato Grosso, followed by lesion nematode, then root knot nematode, says Flavio Silva, Syngenta soybean breeder at Lucas do Rio Verde.

“Some farmers here don't believe nematodes are one of the main reasons for reduced yield of soybeans,” he says. “Identification is the first step in pest management, then use resistant or tolerant cultivars, crop rotation and chemical control.”

LAND PRICES STABILIZE

“When we moved here 21 years ago, land costs were running about 50-100 bags/hectare ($280-566/acre) — uncleared. Now they're 600-700 bags/hectare ($3,400-4,000/acre)because we're near BR163 (main highway) and the city of Lucas do Rio Verde in Mato Grosso,”says Kummer.

“We'd like to expand because my brother is coming back to farm, but we will have trouble paying for the expensive land costs here,” he says. “We may have to move 60-120 miles away and buy another, cheaper farm.”

In the state of Bahia, good-quality, cleared land is selling for about $1,800/acre; $400/acre for uncleared land.

“When I came to LEM six years ago most of the land was already in production, but you could still buy cleared land for $600/acre,” says Brazil Iowa's Kruse. “But when people came here 25 years ago they bought land for the equivalent of just a few dollars per acre and have made millions on land appreciation. Today, you need to make it on crop production.

“Americans in the region have commented that if you come here now, buy half as much land as you want and bring twice the money you think you'll need. That's not bad advice,” he says.

INFRASTRUCTURE SETBACKS

Some things never change in Brazil, like its flailing transportation system.

“Our No. 1 production cost here is transportation to a port, to either Santos near Sao Paulo or Paranagua,” says Kummer from Mato Grosso. “We're 1,337 miles to the Port of Paranagua and it's expensive to have inputs brought in and to ship beans out.

“A northerly route to Santarem, a port on the Amazon, was supposed to happen by 2010. Now they say 2015,” Kummer explains. “The big problem is money, plus issues with environmental groups.”

Those groups, especially Greenpeace, make it very difficult for us to build roads and railways, says Naildo da Silva Lopez from Lucas do Rio Verde, who wishes the existing waterway systems could be better used.

“Also, the trucking industry has a strong lobby here and wants the trucks to remain king,” he says.


Editor's Note: For video reports, go to http://tinyurl.com/BrazilVideo.

EXPECT FEWER BEAN ACRES

“All the current indicators point to the potential for record South American soybean production this year (2009-2010),” says Chad Hart, Iowa State University ag economist. “The growers there have really shifted a lot of acres to soybeans. The South America crop is very likely going to be huge.” As you read this, Brazil farmers are in the heat of harvest.

For the next growing season (2010-2011), Brock Associates projects Brazil's plantings at 56.6 million acres, down slightly from 57.08 million acres during this current growing season. “However, we will likely need a recovery in prices to keep plantings that high,” says Richard Brock. “If prices remain where they are now, there could be a sizeable drop in Brazil's soybean acreage.”