Overview of Brazilian Agriculture

1
?
Does International Soybean Production Affect
Opportunities in Wisconsin?
2
Discussion Outline

• Overview of major soybean producing regions
• Mega trends for soybeans worldwide
• Challenges and opportunities for Wisconsin
  soybean producers

3
World Production in 2001 (million tons)
Source USDA
4
World Major Soybean Producers
Source 2002 Soya Oilseed Bluebook
5
Production Growth
Brazilian grain production from1996 to 2002.
Grain Production (million tons)
Source Brazilian Ministery of Agriculture
6
Production Growth
Brazilian grain production from1996 to 2003.
Grain Production (million tons)
Source Brazilian Ministery of Agriculture
7
Soy Consumption and Production Trends
8
Soy Consumption and Production Trends
1992-2001 11.7 1999-2001 16.7
9
Brazilian Soybean Production Regions
10
Climate Comparisons
11
Progression of Cerrado Land Use
Cleared for grazing
Natural Cerrado
Cleared for Rice
Soybean
12
Soybean Expansion in Mato Grosso
13
Cerrado vs Midwest States
14
Cerrado vs Midwest States
15
Soybean Production in 2000
16
Soybean Production in 2000
17
Soybean Production in 2000
18
Soybean Production in 2000
Assumes all cerrado land suitable for production
is used to grow soybeans.
19
Cost of Soybean Production
20
Where is Soybean Produced in Brazil?
NORTH
0.4
NORTHEAST
6.5
WEST CENTRAL 45.3
SOUTHEAST
SOYBEAN PRODUCTION BY REGION. 1999/2000
8.0
SOUTH
39.8
Source CONAB
21
Where is Soybean is Crushed in Brazil?
NORTH
NORTHEAST
4
MT
7
GO
CENTER WEST
8
MG
MS
SOUTHEAST
21
6
5
16
SP
11
SOYBEAN CRUSHING CAPACITY BY REGION 1999/2000
30
PR
SOUTH 59
4
SC
RS
25
Source ABIOVE
22
Transportation Routes
23
Transportation Routes
24
Transportation Routes
25
Transportation Routes
26
Soybean Costs at Export Ports
27
Future Trends

• Brazilian soybean production will continue to
  expand until market price equals Brazils
  variable cost of production plus transportation.
• Soybean will remain the crop of choice in
  Argentina mainly because it is a dollar based
  crop.
• Non-land cost of production in Brazil is expected
  to become lower over time, particularly due to
  increases in productivity.
• Expansion of grain production further in land,
  will foster the expansion of livestock production
  in Brazils Cerrado.
• Developments in infrastructure, establishment of
  agro-industry, and expansion of livestock will
  foster the introduction of alternative crops that
  could be used to weather years of unprofitable
  soybean prices.
• Latin America in general (and Brazil in
  particular) is expected to continue its gains in
  export market shares.

28
Future Trends

• Brazilian soybean production will continue to
  expand until market price equals Brazils
  variable cost of production plus transportation.
• Soybean will remain the crop of choice in
  Argentina mainly because it is a dollar based
  crop.
• Non-land cost of production in Brazil is expected
  to become lower over time, particularly due to
  increases in productivity.
• Expansion of grain production further in land,
  will foster the expansion of livestock production
  in Brazils Cerrado.
• Developments in infrastructure, establishment of
  agro-industry, and expansion of livestock will
  foster the introduction of alternative crops that
  could be used to weather years of unprofitable
  soybean prices.
• Latin America in general (and Brazil in
  particular) is expected to continue its gains in
  export market shares.

29
Future Trends

• Brazilian soybean production will continue to
  expand until market price equals Brazils
  variable cost of production plus transportation.
• Soybean will remain the crop of choice in
  Argentina mainly because it is a dollar based
  crop.
• Non-land cost of production in Brazil is expected
  to become lower over time, particularly due to
  increases in productivity.
• Expansion of grain production further in land,
  will foster the expansion of livestock production
  in Brazils Cerrado.
• Developments in infrastructure, establishment of
  agro-industry, and expansion of livestock will
  foster the introduction of alternative crops that
  could be used to weather years of unprofitable
  soybean prices.
• Latin America in general (and Brazil in
  particular) is expected to continue its gains in
  export market shares.

30
Future Trends

• Brazilian soybean production will continue to
  expand until market price equals Brazils
  variable cost of production plus transportation.
• Soybean will remain the crop of choice in
  Argentina mainly because it is a dollar based
  crop.
• Non-land cost of production in Brazil is expected
  to become lower over time, particularly due to
  increases in productivity.
• Expansion of grain production further in land,
  will foster the expansion of livestock production
  in Brazils Cerrado.
• Developments in infrastructure, establishment of
  agro-industry, and expansion of livestock will
  foster the introduction of alternative crops that
  could be used to weather years of unprofitable
  soybean prices.
• Latin America in general (and Brazil in
  particular) is expected to continue its gains in
  export market shares.

31
Future Trends

• Brazilian soybean production will continue to
  expand until market price equals Brazils
  variable cost of production plus transportation.
• Soybean will remain the crop of choice in
  Argentina mainly because it is a dollar based
  crop.
• Non-land cost of production in Brazil is expected
  to become lower over time, particularly due to
  increases in productivity.
• Expansion of grain production further in land,
  will foster the expansion of livestock production
  in Brazils Cerrado.
• Developments in infrastructure, establishment of
  agro-industry, and expansion of livestock will
  foster the introduction of alternative crops that
  could be used to weather years of unprofitable
  soybean prices.
• Latin America in general (and Brazil in
  particular) is expected to continue its gains in
  export market shares.

32
Future Trends

• Brazilian soybean production will continue to
  expand until market price equals Brazils
  variable cost of production plus transportation.
• Soybean will remain the crop of choice in
  Argentina mainly because it is a dollar based
  crop.
• Non-land cost of production in Brazil is expected
  to become lower over time, particularly due to
  increases in productivity.
• Expansion of grain production further in land,
  will foster the expansion of livestock production
  in Brazils Cerrado.
• Developments in infrastructure, establishment of
  agro-industry, and expansion of livestock will
  foster the introduction of alternative crops that
  could be used to weather years of unprofitable
  soybean prices.
• Latin America in general (and Brazil in
  particular) is expected to continue its gains in
  export market shares.

33
International Competitiveness
1-Least competitive 2-Intermidiate 3-Most
competitive
34
Deep, Easily Workable, Well-drained Tropical Soils
35
International Competitiveness
1-Least competitive 2-Intermidiate 3-Most
competitive
36
International Competitiveness
1-Least competitive 2-Intermidiate 3-Most
competitive
37
International Competitiveness
1-Least competitive 2-Intermidiate 3-Most
competitive
38
International Competitiveness
1-Least competitive 2-Intermidiate 3-Most
competitive
39
International Competitiveness
1-Least competitive 2-Intermidiate 3-Most
competitive
40
Soybean Price World Market
US
41
Soybean Price World Market
Argentina
US
42
Soybean Price World Market
Brazil
Argentina
US
43
International Competitiveness
1-Least competitive 2-Intermidiate 3-Most
competitive
44
International Competitiveness
1-Least competitive 2-Intermidiate 3-Most
competitive
45
International Competitiveness
1-Least competitive 2-Intermidiate 3-Most
competitive
46
International Competitiveness
1-Least competitive 2-Intermidiate 3-Most
competitive
47
International Competitiveness
1-Least competitive 2-Intermidiate 3-Most
competitive
48
International Competitiveness
1-Least competitive 2-Intermidiate 3-Most
competitive
49
Soybean Transport Matrix
Brazil
United States
Ship
5
Train
Truck
28
Truck
67
16
Ship
61
Train
23
Source ABIOVE
50
Madeira-Amazon Rivers Soybean Export Route
51
Expanding Maggis Amazon terminal
paved runway
new building
52
International Competitiveness
1-Least competitive 2-Intermidiate 3-Most
competitive
53
International Competitiveness
1-Least competitive 2-Intermidiate 3-Most
competitive
54
?
Does International Soybean Production Affect
Opportunities in Wisconsin?
55
?
Does International Soybean Production Affect
Opportunities in Wisconsin?
YES!
56
?
Does International Soybean Production Affect
Opportunities in Wisconsin?
YES!
How?
57
?
Does International Soybean Production Affect
Opportunities in Wisconsin?
YES!
How?
I dont really know. But I can guess a lot!
58
Alternatives for Wisconsin

• Respond to changing consumer demands
• Produce crops with greater value
• Capture added value by developing processing
  infrastructure locally
• Increase regional demand for soy products
• Make crop production more efficient
• Supply specialty markets
• Develop alternative cropping systems for our area

59
US Certified Organic Soybean by State
60
Alternatives for Wisconsin

• Respond to changing consumer demands
• Produce crops with greater value
• Capture added value by developing processing
  infrastructure locally
• Increase regional demand for soy products
• Make crop production more efficient
• Supply specialty markets
• Develop alternative cropping systems for our area

61
US Soybean Protein Content by Region
Midsouth
Southeast
East Corn Belt
West Corn Belt
62
US Soybean Protein Content by Region
Midsouth
Southeast
East Corn Belt
Wisconsin
West Corn Belt
63
Wisconsin Soybean Variety Trial 2002
64
Alternatives for Wisconsin

• Respond to changing consumer demands
• Produce crops with greater value
• Capture added value by developing processing
  infrastructure locally
• Increase regional demand for soy products
• Make crop production more efficient
• Supply regional markets
• Develop alternative cropping systems for our area

65
Alternatives for Wisconsin

• Respond to changing consumer demands
• Produce crops with greater value
• Capture added value by developing processing
  infrastructure locally
• Increase regional demand for soy products
• Make crop production more efficient
• Supply regional markets
• Develop alternative cropping systems for our area

66
Cost For a European Buyer
Ports Rosario, Paranaqua, and New Orleans
Source Geipot, Anec, and USDA
67
Alternatives for Wisconsin

• Respond to changing consumer demands
• Produce crops with greater value
• Capture added value by developing processing
  infrastructure locally
• Increase regional demand for soy products
• Make crop production more efficient
• Supply specialty markets
• Develop alternative cropping systems for our area

68
Soybean Yields by Year and Region
Non Midwest
69
Soybean Yields by Year and Region
US
Non Midwest
70
Soybean Yields by Year and Region
Midwest
US
Non Midwest
71
Soybean Yields by Year and Region
Wisconsin
Midwest
US
Non Midwest
72
Soybean Annual Growth Rate by Year
73
Alternatives for Wisconsin

• Respond to changing consumer demands
• Produce crops with greater value
• Capture added value by developing processing
  infrastructure locally
• Increase regional demand for soy products
• Make crop production more efficient
• Supply specialty markets
• Develop alternative cropping systems for our area

74
Large Soybean Storage facilities
330 yr long x 55 yr wide x 33 yr deep -
7.5 million bushels Built in 2001 -
Building three other 7.5 mill bu units
75
Alternatives for Wisconsin

• Respond to changing consumer demands
• Produce crops with greater value
• Capture added value by developing processing
  infrastructure locally
• Increase regional demand for soy products
• Make crop production more efficient
• Supply specialty markets
• Develop alternative cropping systems for our area

76
Thank you! Questions? Comments?
77
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