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Production
Estimates and Crop Assessment Division |
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Production
Estimates and Crop Assessment Division |
June 12, 2002
Wheat cultivation in Brazil is highly concentrated in a few traditional southern farming states, where the combination of relatively mild winter temperatures and reliable rainfall allow it to be grown. The vast bulk of the crop is grown in two states, namely Parana and Rio Grande do Sul, which account for roughly 92 percent of total national area and production. Historically, wheat cultivation has experienced cycles of significant expansion and contraction, as government policy and support for the industry has fluctuated. The most notable of these cycles has been the extended phase of overall decline that began in 1987 and ended in 2000, caused by the cessation of government intervention (credit, subsidies, investment) and the eventual privatization of the wheat industry. Wheat area fell from nearly 4.0 million hectares in 1986/87 to a low of 1.0 million in 1995/96, or a reduction of 75 percent. Similarly, wheat production during this period plummeted by a factor of 75 percent, falling from 6.1 million tons in 1986/87 to 1.5 million in 1995/96. Wheat yields, however, after initially falling in the early 1990’s have been trending upward, compensating to some degree for the extreme loss in acreage. Total production in the later years of this cycle averaged between 1.5 and 2.5 million tons.
As wheat cultivation fell out of favor, growers looked to other crops to fill the gap and to diversify their operations. Their attention shifted in large part to corn as an alternative crop, leading to the emergence of its cultivation in the winter season. Farmers in the wheat belt began shifting land resources into winter corn production in the mid-to-late 1980’s, and acreage exploded over the following years. Winter corn cultivation soon went on to dominate the winter crop production scene, with acreage first surpassing wheat in 1993/94. Winter corn yields on average outstripped those obtained from wheat, and led to ever increasing interest in expansion. The epicenter of the transitional shift between wheat to corn was in Parana, where growers almost single-handedly changed the face of traditional winter cropping. Parana is the nation’s top producer for both wheat and winter corn. Since 1989/90 it alone accounted for 60 percent of the total national decline in wheat acreage and 45 percent of the increase in winter corn. This amounted to roughly 1.0 million hectares swapping from one crop to the other over this period.
With the 2002/03 growing season unfolding, an expansion cycle appears to be underway, as government policy has again clearly shifted to support the medium term growth of wheat acreage and production. The country’s agricultural research agency (EMBRAPA) has ascertained that an additional 2.0 million hectares of land suitable for wheat cultivation is available in the non-traditional states of Mato Grosso, Mato Grosso do Sul, Goias, Bahia, and Sao Paulo. The government has also initiated a regional support price scheme which has been favorably received by growers, and is certain to encourage expansion. If this land can be brought into cultivation in the next 5-10 years it would potentially double national wheat production, returning the country to the peak of 1986/87 when the contraction cycle began.
Brazilian wheat farmers could hardly be in a better position at the beginning of the 2002/03 season, given the arrival of drought-busting rains in May and rising domestic grain prices. Ample moisture is spurring planting operations and providing a strong foundation for early crop growth and establishment. At the same time, high wheat prices are poised to enhance farm profits at harvest. The government, in a bid to increase wheat output, has even put a floor price scheme into place which guarantees wheat returns at a regional level of 27-33 percent above last year. Growers, therefore, have substantial incentives to expand wheat acreage this year and surveys indicate that sown area will rise in every producing state. This includes new expansion areas in the Center-West where wheat has not traditionally been cultivated in the past.
At the beginning of June private forecasters in Brazil reported that roughly 60 percent of the national crop was sown, which is near the average pace. Planting progress was greatest in the primary southern producing states of Parana and Rio Grande do Sul, at 73 and 30 percent respectively. USDA currently forecasts 2002/03 wheat area at 1.85 million hectares, up 0.125 million or 7 percent from last year. Wheat production is estimated at 3.3 million tons, 0.05 million or 2 percent from last year’s harvest. Wheat yields are forecast at 1.78 tons per hectare, slightly below the near-record yields achieved last season.
The pre-planting period of March-April 2002 was extremely dry in all growing areas except Rio Grande do Sul, with little to no rainfall occurring from March to mid-May. Drought conditions gripped large areas of prime farmland in Parana, Mato Grosso do Sul, Sao Paulo, Goias, Minas Gerais and Santa Catarina, withering winter corn crops and threatening the yet-to-be planted wheat crop. As the planting window opened in early May, prospects for the wheat crop were questionable, as soil moisture supplies were critically low. However, in the nick of time a cold front sweeping through Paraguay on May 17th brought heavy rains to the wheat region, causing floods and waterlogged conditions in many locations. This weather system brought a dramatic end to persistent drought which had plagued the region, and restored soil moisture to optimum levels. As of the end of May, soil moisture conditions are extremely favorable in all wheat growing areas, with the exception of Goias. This is particularly true when compared to last year, when rainfall was needed in Parana to aid early crop development. Given the current excellent moisture profile across the wheat belt, early emergence and vegetative establishment of the 2002/03 wheat crop should be outstanding. Crop yields prospects are very favorable, though final outcomes will be determined by mid-to-late season weather conditions. Frost is a potential threat to the crop, as are heavy rains at harvest.
