Despite all the rhetoric about the enormous soybean production in Brazil, it's quite possible the gold rush is over.
After spending two weeks there on a Soybean Digest tour, U.S. growers were smitten with not only the size of the fields, but also the size of the beans.
Most soybeans stood more than waist high with rarely a weed in sight. There's no doubt the Brazilians' management abilities are top-notch, rivaling those of growers on the tour. Also, their ability to train and retain bargain employees is as apparent as their lust to continue expansion.
Still, growers on the tour spent countless hours calculating and recalculating how a U.S. farmer could begin farming in this vast growing area that equals the amount of soybeans produced in Iowa, Illinois, Minnesota, Indiana, Nebraska and Missouri combined.
Their conclusion: You needed to be in on the ground floor, when land was cheap and sometimes almost free. Otherwise, the costs of transporting crops via potholed roads and scarce rail lines would take the profit out of the picture.
This season's soybean crop, expected to produce a record 51 million metric tons (up 17.5 million metric tons from last year), is being harvested in Brazil as you read this. U.S. production last year was 74.29 million metric tons.
Here are a few producers' perceptions after seeing the breadbasket of South America.
Elwyn Shugars“Surprises? Yes and no,” says Shugars. “I'd read up on Brazil and talked to others. Still, fields were larger and equipment was smaller than I expected. And, there's more land cleared than I thought.”
After seeing the high level of management, Shugars believes that managers and owners are well-educated with skilled management abilities.
“If I was a young man and had the money, maybe I'd come here and try farming,” he says. “But I think it would be tough. I feel like the window of opportunity is partially closed.
“Brazil is going to get more competitive all the time, so we need to find more uses for our products, like more biodiesel and ethanol plants.”
As Shugars puts it: “They're going to take our soybean market and cattle will be right behind.”
Joe MackBut Mack believes there are misconceptions about Brazil's agriculture. The idea that all land is continuous soybeans isn't true. “They rotate with corn and cotton to keep weed and disease pressure under control,” he says.
A big proponent of no-till, Mack is also wowed with the fact that 90% of Brazil's cropland is no-tilled. “I didn't expect to see that. I thought they tilled just like we did in the U.S.,” he says.
Mack also believes that even though employees may be paid less, they're well-trained. “Combines and planters aren't all banged up. And, I didn't see spray damage from improper chemical mixing,” he points out. “I'm also impressed with the amount of maintenance they do themselves. Everything is well-kept and washed.”
Diversity seems to be the name of the game for Brazil's farmers, too. “They're doing so many things, like seed processing, fish farming, sugarcane, you name it,” Mack points out.
“We don't have the full picture, but I think you'd have a better opportunity to make money if you already had land purchased here. But be sure to push the pencil,” he says.
Alan FellerFor Feller, seeing small equipment was the big shock. Except for more progressive combines, most equipment is without cabs. That often includes 110-hp tractors.
But more than that, the Nebraskan is convinced that the “big” window of opportunity is over. “I think the free land and homesteading have passed,” he says. “Now you've got to be more efficient and turn to equipment, rather than labor, for savings.”
But he's impressed that they continue to push production. “They started with 30-bu/acre beans, then 40 and now they're shooting for 60 bu by 2005,” says Feller. “We just keep shooting for yields of 45-50 bu/acre.”
The advantage Brazil has over the U.S., however, is its ability to trust weather conditions. “For us, it's the biggest variable,” Feller says. “If you knew you could count on the right rainfall, you could fertilize for it and get higher yields.”
Another surprise, he says, is that Brazilians seem to treat corn as a cover crop. Typically, after soybean harvest in February and March, they immediately plant corn.
“Corn is more labor-intensive, but once they get labor trained, look out,” he says. “Corn will be our biggest threat, not beans.”
Mike BellarBut, says the 1,900-acre farmer from Howard, KS, “If my boy was 25 instead of 10, I'd be interested in helping him get going down there.
“I definitely think there are opportunities. There's still lots of land to clear,” he says. “But I think you need to be diversified beyond just crops. If you couldn't get to the ports, you could feed the grain to livestock.”
Besides big fields and small equipment, Bellar was surprised by the number of workers on farms, and, to some extent, the work ethic. “I think my employees work two to three times harder in an eight-hour day than the employees I saw there,” he says.
“When I was younger, I'd have been down there in a heartbeat if I'd have had someone backing me,” says Bellar. “The first years would have been darned tough, though.
“There definitely are opportunities there. I think if you could buy land there and put cattle on it, then wait for the infrastructure to catch up while you're clearing it, you could make it,” he says. “But for as much as I complain about snow, I think I'd miss it.”
Ron Haase“My first thought is that someone who owns the farm does the work,” says the Gilman, IL, 1,200-acre producer who farms with his brother. “But there, farmers own the land and machinery and hire cheap labor to run things.”
That contrasts with Argentina, where Haase visited last summer. “There, most of the work is custom-hired, and they don't own any machinery,” he says.
Haase believes he now farms some of the richest land Illinois has to offer, so it would be hard to imagine leaving and trying to get established in Brazil. “I have advantages here at home, like roads and rails, but they're offset by higher land costs,” he says.
This trip, like his tour last year, reinforces his conviction to be successful by being efficient. “It makes me more cognizant that low cost will be part of each decision I make,” Haase says. “The future is all about management. Everything you do — with tighter margins — will require better decisions.”
Less government bureaucracy in Brazil is one area the Illinois farmer especially likes. He says that may come at the price of greasing a few palms, but still there appears to be less government interference.
For example, Haase, who operates near the Mississippi River, says, “We've spent a lot of money on a study of the river that's gotten us nowhere. In Brazil, they'd have used that money to build roads. Farmers there just seem to have more of an entrepreneurial spirit, and Brazilians hold them in high regard.”