March 12, 2001

BRAZIL: AGRICULTURAL EXPANSION AREA TRIP REPORT

Analysts from the U.S. Department of Agriculture traveled to the agricultural expansion areas in Northeast and Center-West Brazil (Slide#1). Generally healthy soybean, corn, and cotton crops were observed, as well as robust expansion of land under cultivation.

Cerrado Weather Overview:
Growers and crop specialists in the Cerrado region, where the natural vegetation is grass and low shrubs across areas of Bahia, Goias, Maranhao, and Mato Grosso, mentioned that dryness in January had been a problem. Rains were generally good from October to December (Slide#2) and early corn planting generally went well. In some areas, early rains were excessive, making planting and stand establishment difficult for soybeans (Slide#3). Rainfall in January was characterized by thundershowers which gave adequate precipitation on some fields, but gave inadequate precipitation for others. Much of the single-crop corn goes through pollination in January, and yield potential in many fields was diminished. Some fields of soybeans that were planted in sandy soils showed some drought stress; however, most fields of soybeans showed good growth and plant health. More general rains returned to the Cerrado in February while the team was in the field. The cotton crop (in blooming or boll formation stage in early February) appeared to be doing well. The drier than normal conditions were thought to be beneficial for the cotton as it reduces the incidence of plant disease.

Expansion of Agricultural Area:
Expansion of crop area in Northeast and Center-West Brazil continues, with soybeans the predominant crop. In the three agricultural areas visited, Western Bahia (Slide#4), Southern Maranhao (Slide#5), and Mato Grosso (Slide#6), fields of recently torn up brush and knocked down trees were observed as land clearing continues. It was reported that recent increases in diesel prices were having a negative impact on land clearing operations. With higher diesel prices it becomes more expensive to do the multiple heavy discings and to transport the five tons per hectare of lime required to prepare native Cerrado land for planting soybeans or other cultivated crops.

Expansion of Infrastructure:
Large receiving stations for soybeans with their quonset hut-shaped flat storage units rise above the Cerrados along the few paved roads in western Bahia, southern Maranhao, and Mato Grosso (Slide#7). New investments were especially evident along highway BR163 going north from the capital Cuiaba (Slide#8). The larger towns of Lucas, Sorriso, and Sinop all had construction projects underway where large new flat storage units (Slide#9) were being built by grain trading companies and cooperatives.

Growing Livestock Sector Demanding More Corn:
A surprising amount of corn was being grown. In western Bahia (Slide#10), and southern Maranhao (Slide#11) (Slide#12), corn is marketed to the livestock industry in northeastern Brazil. In southeastern Mato Grosso, a growing hog and poultry industry is consuming much of the corn. The travelers visited northern Brazil February 13 to 16 (Ref. Slide#1). Mato Grosso farmers plant short-season, medium-season, and long-season varieties of soybeans in order to spread out the demands on labor and equipment (Slide#13) (Slide#14). Starting about 200 kilometers north of Cuiaba at Diamantino, and traveling north along BR163 to Sinop, the soybean harvest was in full swing. Perhaps one-third of the soybeans planted had been harvested. In nearly every field harvested, a row crop planter had planted safrinha (second crop) corn. Double-cropping corn after early soybeans is clearly a common practice in northerneastern Brazil this season.

Rapid Expansion of Cotton Area:
Cotton production has expanded rapidly this season and is becoming more broadly distributed geographically in Northeastern and Center-West Brazil. In the irrigation district in western Bahia (Slide#15) where total crop land is about 300,000 hectares, 53.2 percent of the crop land is in soybeans, 15.1 percent in corn, 15.5 percent in cotton (Slide#16), 5.8 percent in coffee (Slide#17), 4.6 percent in fruit crops (Slide#18), 2.1 percent in edible dry beans, 1.8 percent in rice, and 1.9 percent in other crops (Slide#19). Officials of the local growers association foresee that in the next three years, total crop area will increase, but proportionally, soybean area will decline, cotton will increase, and coffee area will double.

Cotton production is taking off in southern Maranhao near the city of Balsas (Slide#20). Area for the state is estimated at just 2,300 hectares, up from 500 hectares last year. The increase is due primarily to one large corporate-owned farm of 25,000 hectares. The farm is growing cotton on a large scale for the first time this year, having planted 2,000 hectares to the crop, and is expected to grow 5,000 hectares within a few years. The cotton grown on the farm is shipped by road to textile mills in northeast Brazil (Slide#21).

Cotton production continues to increase rapidly in Mato Grosso (Slide#22). Area planted to cotton in 2000/01 is estimated at 362,000 hectares, up 35 percent from 268,000 hectares in 1999/2000. This compares to 3.0 million hectares planted to soybeans in 2000/01. Cotton was seen in the southeast corner of the state near Rondonopolis where planted area this year is estimated to be 46,000 hectares, versus 165,000 hectares of soybeans. Cotton is also being grown in southwestern Mato Grosso near Sapezal, and was observed to be widespread along highway BR163 in northern Brazil.

Tax Policies Boosting Cotton Interest:
Tax breaks for cotton may be partially contributing to cotton expansion. There is a proposal before the Bahia legislature to refund 75 percent of ICMS taxes (essentially a state sales tax) for cotton. Sixty percent would go to farmers and the rest would go for research on cotton. This proposal mimics a law which is already in effect in the state of Mato Grosso, and a similar provision is being proposed in Maranhao.

Coffee Area Also Growing:
Coffee production in western Bahia (Slide#23), which is about 10 years old, is growing rapidly. Because of the 6-month dry season, coffee production requires irrigation (Slide#24), but river and ground water are available. Furthermore, the government of Bahia is developing plans to manage water supplies. There are now 10,000 hectares planted to arabica coffee in Western Bahia under 100 center pivots (Slide#25). The potential area for coffee in western Bahia is estimated at 100,000 hectares. Drip irrigation was also observed being used for coffee. Coffee production is easily mechanized, but must be hand harvested for 2 years until the trees are sufficient size, when mechanical harvesters can be used (Slide#26). Robusta coffee production is expanding in northern Mato Grosso near the city of Alto Floresta (Slide#27). Philip Morris is conducting a pilot project for the production of flue-cured tobacco (Slide#28), and the production of papayas and other tropical fruits are being expanded in Western Bahia (Slide#29).

Northern Expansion Area Activities:
In northern Mato Grosso from the city of Sorriso northward, lumber is being harvested from much of the land that is being cleared, thus providing input for the local timber industry. Once cleared, some of the land is being planted to stands of teak and other tree species. Additionally, land is going into crops such as soybeans, corn, and cotton, while other ground is being put to use as improved pasture. Just north of Sinop, row crop cultivation virtually stops and most developed land is in pasture with some rice (Slide#30) production and occasional horticultural crops such as oranges, coconuts, and robusta coffee.

New Agricultural Areas That May Open Up in the Near Future:
There were two large areas mentioned that so far have been minimally developed for crop cultivation which may be developed in the near future, provided there is some improvement in roadway infrastructure. The tops of two large plateaus in southern Piaui together contain an estimated 3.5 million hectares of flat cerrado land which can be easily developed. An area of similar size and potential exists in the state of Para, but the area in Para is more subdivided, being on the tops of various plateaus and mesas.

Rao Achutuni, Brazil Analyst

Telephone: (202)690-0140

E:mail: achutuni@fas.usda.gov

Paul Provance, Foreign Oilseeds Production Chairperson

Telephone: (202)720-0882

E:mail: provance@fas.usda.gov

For more information, contact Rao Achutuni with the Production Estimates and Crop Assessment Division on (202) 690-0140.