By Mark Mueller
Mark Mueller is a farmer from Waverly, Iowa. He farms about 2,100 acres of corn and soybeans.
Starting Monday, AgDay will run a week-long series on the Top Producer Frontier Study Tour to Panama and Brazil. Watch it here.
In the past two years I traveled to both Ukraine and central Brazil with the Top Producer Frontier Study Tour
. The tour's objective was to assess the potential competition these regions posed to American farmers. In both countries I encountered agricultural expatriates from the United States. Their comments and the inevitable comparisons between these agricultural areas led me to the following observations.
My initial thoughts were that Brazil's equatorial climate would trump Ukraine's high latitudes (Kiev is as far north as Winnipeg). Unfortunately, with tropical climates come tropical diseases. Without freezing temperatures to kill its host, treating Asian rust has become a major expense. Soybean growers plan on at least five costly sprayings throughout the growing season. This is another cash outlay for chemicals in a country where operating loans are already hard to obtain. The moist climate also requires harvested soybeans to be run through grain dryers to facilitate long-term storage.
Ukraine was once known as the "Bread Basket of Europe”. Prior to the Bolshevik revolution of 1917 and Stalin's forced collectivization of farms in the 1920's, this part of the world was a major exporter of cereal grains. By the winter of 1932-33, however, famine was widespread and American journalists reported the snow-covered corpses of starvation victims along the roads leaving Ukraine.
With the collapse of the Soviet Union and the ascent of the independent nation of Ukraine, the collective farms were been broken up. The land was distributed to the former employees, usually in parcels of 5 to 15 acres in size. These new owners can either farm or rent to another farmer but they can not sell their land. The rural areas have seen an exodus of relocations to the larger urban areas (Kiev is one of the fastest growing cities in Europe). I saw the results: vast tracts of idle crop land and abandoned farm villages.
Brazil's grain belt is also sparsely populated but is seeing an influx of migrants from crowded regions nearer the coast looking for work. For generations the population and farms were within 200 miles of the Atlantic coast. The only other agriculture was the Amazonian rubber plantations of a century ago. In the 70's large scale farming opened up the country's interior; now Brazil produces and exports soybeans and cotton on a scale that rivals the U.S. Farming communities are boom-towns. Some towns now with 50,000 inhabitants each weren't even listed on my 1999 map of Brazil.
In both countries there is a strong trend toward megafarms of a size rarely attained in the U.S., with a few farms reaching 200,000 acres or more. In Ukraine a farmer may have to piece together literally thousands of small parcels with thousands of landlords. Ukrainian politicians say that necessary land reforms would include giving owners the ability to sell their land. Although everyone agrees this is a good idea, it still hasn't happened. Brazilian farmers must raise the capitol to purchase land in a country where credit is scarce. The bartering of soybeans often substitutes for an almost non-existent banking system with land values listed in bags of beans.
The Big Differences
Infrastructure is a huge difference between these countries. Ukraine has roads, rail lines, canals, utilities and businesses to handle ag commodities. Shipping of farm produce, whether from farm to terminal or seaport to another country involves relatively short distances. Brazil has none of that. Grain, meat or fiber have to travel a thousand miles over dirt roads and inadequate highways just to reach a port where days may be spent waiting to unload. Transportation is the limiting factor. One farmer located at the end of a 15 mile-long dirt road, reported that the truckers who are supposed to haul his grain get better offers from the farms they pass on the way and seldom show up at his fields.
Labor highlights other differences. In Ukraine, decades of communism have snuffed out initiative and innovation. The labor pool seems to be powered by vodka. Ukraine is also plagued with employee theft and governmental corruption. One farm I visited had 40 employees, 24 of whom were security guards. Farmers have lost land because someone bribed a local magistrate to facilitate a takeover. It is fortunate that Ukraine's roads are already built since corruption makes a mile of new concrete highway ten times as expensive as in the U.S.
I witnessed a soybean field being harvested by nine combines with only two small single-axle trucks and a tractor with a wagon to haul away the grain. As I watched in horror, the combines sat idle while the truck drivers, in a most leisurely fashion, gradually moved their loads out of the field and just as slowly returned empty. The combine operators were also culpable, making no effort to move towards any empty trucks or wagons. With combines, trucks and perhaps even operators loaded, a dozen men were doing the work of three. While all this was happening, in the farmyard sat two of the largest and shiniest brand new semi truck and trailers I had ever seen, unused because there was the potential of getting them stuck if it happened to rain.
Brazilians may seem relaxed compared to their American counterparts but they are dynamos by Ukrainian standards. Brazil has had severe unemployment since the 1980's. Agriculture is viewed as the country's salvation by putting millions to work while becoming a global agricultural power. Brazilians work because they are desperate to lift themselves into the middle class. Farmers there have the same social status as doctors in our country. Leafing through the society pages of one Cuiaba magazine, I noticed that many of the glamorous wives pictured were from local fazendas.
A "can do” attitude pervades everything connected with agriculture in Brazil. If a farmer needs a road he builds it himself (one farm I visited had over 100 miles of road to maintain). Since the nearest implement dealer could be several hours away, the highest paid employee on some farms is the mechanic who can probably double as a machinist. New meatpacking plants are moving into grain-surplus, livestock-deficit areas. Local farmers will then start raising livestock to which they can feed the grain. After all, when trucking is the chief bottleneck, would you want a semi to haul $4000 of soybeans or $100,000 of boxed beef?
I believe the industriousness of Brazilian labor trumps the twin Ukrainian advantages of infrastructure and proximity to ports and markets. Brazilian farmers must cope with tremendous distances and poor roads, but their solution is to grow high-value crops like cotton or turn low-value soybeans and corn into meat. Brazil's farmers haven't conquered Mother Nature but they have brought her around to their way of thinking.
Ukraine's farmers will have a difficult time changing the workforce mindset that stifles productivity. A generation of workers raised under communism will have to die off before a competitive work force emerges from those who have come of age under capitalism.