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Primed For Growth

July 28, 2010

Brazil 625x250

TP Study Tour LogoDriving the two-lane asphalt road is treacherous. It’s humped in the middle from oversized trucks making the 683-mile trek with loads of soybeans, cotton, corn and meat to Porto Velho on the Black River. By U.S. standards, this is an out-of- shape county road that would be bypassed for an interstate highway. In Brazil, state highway BR-364 is a superhighway, and the fact it’s now paved is a major accomplishment.

Three miles from this newly asphalted superhighway outside the little town of Diamontino sits Brazil’s newest and largest beef packing plant. The JBS S.A. facility currently is operating at about half of its 3,000-head-per-day capacity.

What is to come, however, sparks the interest of Gustavo Weisheimer, a crop farmer with 20,000 acres about an hour away. It prompted him to help arrange the plant visit for the participants in this year’s Top Producer Frontier Study Tour. The tour was sponsored by United Soybean Board/Soybean Checkoff and co-sponsored by the Soy Transportation Coalition.

"I want to sell my corn to them when the feedlot opens," says Weisheimer, a vice president with Weisul Agricola. He’s eager to develop relationships that could lead to a market for his corn.

To Brazil, both the highway and the packing plant represent major milestones in the country’s quest to become more dominant in global agriculture production. Everything about this area, from the roads to the trucks moving in and out of the plant, are representative of what Brazilian agriculture is, and can be.

Expansion and Limitations. Brazil’s rapid agricultural growth through the 1980s and 1990s is well chronicled. Driven by the promise of fertile lands and ample rainfall, farmers from southern Brazil and across the globe came to Mato Grosso and other states in search of agriculture’s new frontier. Today the opportunity for farmland expansion, though likely not over, is slowed.

The state accounts for 8% of global soybean production and there is enough ground potentially suitable to double production, says Marcelo Monteiro, executive director of Aprosoja, the Mato Grosso soybean growers association. But a myriad of factors still stall expansion.

"If we convert just one-third of our total row-crop and pasture area, we could double the total production area," Monteiro says. "But that’s going to take a lot of investment, because we need lime, we need fertilizer. We need the infrastructure to bring this land into production." 

Transportation costs typically take up about 30% to 35% of the price received by farmers in Mato Grosso. Yet as more roads, waterways and railroads are developed, this cost drops significantly.

"The roads are a little bit better," says Ricardo Silva, who farms next to Weisheimer and is Aprosoja’s associate director. "We have a state tax that soybean farmers pay and an agreement with the government that this tax will build new roads."

For now, railroads provide limited opportunity for moving agricultural products throughout the country.

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FEATURED IN: Top Producer - Summer 2010

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