South American crop consultant Dr. Michael Cordonnier reports the governments of Mato Grosso, Brazil, and Argentina have set goals to greatly expand grain production by 2020. Mato Grosso's goal is to increase production from 28 million metric tons (MMT) to 43 MMT (30 MMT of soybeans and 13 MMT of corn). Argentina's goal is to increase production of soybeans, corn and wheat from 82 MMT to 150 MMT.
"Both of these are lofty goals, but it will probably be more difficult for the farmers in Mato Grosso to reach their goal due to the inherit nature of soybean production in the state," says Dr. Cordonnier. "The cost of producing soybeans in Mato Grosso is much higher than in Argentina for a number of reasons. Mato Grosso farmers spend much more on inputs such as agricultural lime and fertilizers to compensate for the lower native fertility of the cerrado soils. Argentine farmers spend much less on fertilizers due to the high native fertility of the Pampas soils."
Dr. Cordonnier also points to higher transportation costs in Mato Grosso as a stumbling block for expansion. Likewise, for Argentina, Dr. Cordonnier says while farmers may have a lower cost of production, but they must pay a 35% export tax.