José Joaquim Rodrigues, 52, says it's a good year to plant corn in Brazil. Last year he produced 75 hectares, but this year, he's planted more than 250. “Prices are good,” he says, “and you have to take advantage of that because here in Brazil corn prices are volatile.”
Aside from his own land in the central Brazilian state of Goiás, Rodrigues rents from 10 other farmers in the area. He nearly always produces 1,000 hectares of soybeans, and splits a remaining 500 hectares between cotton and corn. How much of those 500 hectares goes to corn or cotton is a matter of price. And this year, Rodrigues is pumped for corn. Last year, he says, he sold a sack (60 kg or 132 lbs.) at R$13. This year he figures to sell at R$30 or more.
Corn prices looked good as the Christmas season approached, but some farmers around the country say they were unable to take advantage of the price spike, brought about by the U.S.-projected use of more of its crop for making ethanol.
One reason, a farmer in Southern Brazil says, was that planting decisions had already been set. And a producer from more northerly Mato Grosso state says, “the price of corn is getting a lot of farmers excited about planting corn as a second crop, but it's difficult to make that happen due to lack of credit. That's why I don't think there will be a lot (of corn) planting.” Another producer in the northerly state of Rondônia says processor representatives had encouraged farmers to grow corn.
Depending on which government agency you listen to, first-crop corn production will be up 6-10% this year, which is less than one might expect given recent price hikes. Although there is not yet any official information available on second-crop corn, it could increase by a third, says one market watcher. If it does, Brazil's overall production increase for corn this season could be 20% above 2005 numbers.
That the increase may not be greater is something that might puzzle growers like Rodrigues, who says corn is not more expensive to grow than soybeans anymore. Rust treatments cost him almost 2 bu./acre last year, which went a long way toward evening up the input cost score between the two crops. Pork and poultry production is on the increase in his state, which, he says, creates an outlet for his product.
Rodrigues says his second-biggest expense is corn borer control. Brazil's government is studying the approval of Roundup Ready corn, and could issue a ruling soon. This gives corn farmers reason for hope, he says. But he's concerned that the royalty prices will be exorbitant. Seed is already his greatest expenditure, and one that has shot up lately.
But the government is, as always, worried about high costs for consumers. If you want to scare a Latin American government, just say inflation. It was in the thousands of percent per year here back in the 1980s. Since then a lot of governments, including Brazil's, have made serious economic changes, and hyperinflation is not likely to come back.
Brazil, naturally, keeps a close eye on inflation. After all, it reached more than 2,000% annually back in the 1980s, depriving poor people of basic goods, which they couldn't afford to buy on the spot and couldn't afford to finance at 80% monthly interest. So policy makers like those in Brazil get wary of upticks in the prices of the basic goods — like food.
In early December, an institute that helps assemble official inflation figures saw the price of chicken had risen 12.3%, and eggs went up 11.6%. Live bird prices actually went down. Some blame the high price of petroleum, which has made corn-based ethanol more viable. It has driven up corn prices as analysts revise their estimates of U.S. corn exports downwards. Corn prices, according to one Brazilian government measure, had risen 16% in Campinas (near the city of São Paulo) in November.