The fields of Brazil

Mar 25, 2008 12:46 PM

Day 4: Juarez Maeda’s Farm
We traveled west to Juarez Maeda’s farm. The first half of the three-hour trip was on a 75-mile road surrounded by mostly woods and pastureland. Next, we proceeded up a 1,000-ft. bluff on a steep dirt road. About halfway to the top of the summit, the road had been washed out and had just been freshly repaired by a bulldozer. Although we were told that there is a 20 to 35% reserve in this area, once we arrived on top of the gently rolling plateau, it appeared to be mainly cropland for as far as the eye could see.

Along the way, somebody from our group asked the local agronomist who was traveling with us about the size of the cornfield we were passing. It was 16,500 acres, more than 25.5 square miles, planted that December. The owner expected a yield of 110 bu./acre at $2/bu.

When we arrived at our next stop, the owner Juarez Maeda was there to greet us. He was very friendly and eager to talk to us and show us his operation. His farm had been homesteaded by his grandfather in the early 1970s. At that time, the Brazilian government gave settlers land if they put a fence around it. His grandfather fenced more than 10,000 acres of mainly grass and brush land. Today the farm is 7,500 acres of soybeans, corn and rice with 300 acres left to clear. On our visit in January of 2007, cash soybeans were $5.69 and corn was $2.75.

Maeda was combining dryland rice and planting no-till corn in the same field the day we were there. The rice was the first crop on this land, which was broken up last year. This farm has a modern 300,000-bu. storage facility with two large grain pits, two legs and a grain dryer. The fuel for the dryer was wood, as with most dryers in Brazil. Because of the climate, many of the soybeans, along with the other crops, are dried.

On the way back to our hotel, we stopped to watch several combines harvest soybeans. We observed that the soybeans were sprayed with a defoliant to speed harvest to enable planting a second crop.

Day 5: Barralcaol Ethanol plant
The next day we toured the Barralcaol Ethanol plant, a privately owned company located 60 miles west of Cuiaba. The plant was started in 1980 with the first harvest in 1983. It processes 3,000,000 tons of sugarcane a year. It contracts with growers on 85,000 acres within a 10-mile radius. The plant produces alcohol and sugar and burns the sugarcane pulp to generate electricity. The plant uses about 35% of the electricity it produces and sells the excess. The plant uses the liquid by-product as a fertilizer to use on about 25% of the plant’s sugarcane acres. It also sells more than $1,000,000 of carbon credits under the Kyoto agreement.

The plant uses some of the electricity and alcohol to process 13,000,000 gal. of raw soybean oil into biodiesel in a new facility located across the road, which operates year round. The plant employs 3,600 workers, plus a seasonal workforce because all of the cane is hand cut. The company provides some of the employees with housing and even has a hospital on site. With the sugarcane processing running from March through November, 24 hours a day, it makes harvesting yields up to 50 tons an acre a huge undertaking.

We then returned to Cuiaba and were invited to an investor meeting for a new alcohol plant 120 miles northeast of the city. It was proposed to be a 2,000,000-ton, 55,000-acre project.

Day 6: Famato and Aprosoja
On our last day in Cuiaba, our group stopped at a modern office complex that housed Famato and Aprosoja. Famato is comparable to the U.S. Extension service, focusing on agricultural production, the environment, workers’ rights and other social issues.

Aprosoja shares office space with Famato and was the reason for our stop there. Although Aprosoja is similar to the Minnesota Soybean Growers Association, in addition to representing 5,000 Matto Grosso soybean growers, it also represents 500 corn growers and 10,000 cattle ranchers. It was started in 2005 and is the only such group in Brazil. There is no national representation for the soybean growers, so the Brazilian government often calls on this group for insight on policy issues in this area. Some of the group’s goals are lobbying for favorable legislation, improving the roads and other infrastructures, and accessing world markets.

This group, as well as almost every producer we talked to, is concerned about environmental issues. They claimed that the world media unfairly portrays the soybean producer as the major factor in the deforestation in the Amazon region. In the Amazon region, only 20% of the land can be cleared and the remaining 80% must remain untouched. Even in the Cerrado or brush/grassland area of Mato Grosso, farmers can only clear 65%, leaving a 35% refuge.

Only 2% of the “legal Amazon” has agricultural activity. Representatives of Famato stated that they could increase soybean acres by more than two-and-a-half times without cutting down one tree in the Amazon.

Transportation
Across our tours, it became clear that transportation is a major challenge to farmers in Brazil. The lack of roads and other infrastructure is severely limiting agricultural expansion. Paved roads are banned in the Indigenous Reserves, which account for more than 17% of Mato Grosso’s total area. Almost 100% of its crops and inputs are transported by truck over a very poor road system using expensive diesel fuels.

Because the deep-water ports are 800 to 1,200 miles away, transportation costs to export grain ranged between $1 to $2/bu. (at the time of our visit).

The closest barge port in Matto Grosso is 600 miles to the northeast, and only one railroad comes to the south edge of the state. Furthermore, although Rondonopolis has the biggest soybean-crushing plant in the world, the existing railroad is still 100 miles away. This explains why almost all goods are transported by trucks. Brazil runs its fleet of vehicles with about 55% diesel fuel, 30% gasoline, 13% alcohol, and 2% natural gas. In comparison, the United States has 31 times as many paved roads and 7.5 times more railroads.

After being exhausted by a week touring central Brazil, I needed another week in Rio to recuperate. But that’s another story.

Midwest Tours and Travel
Our trip was organized through Midwest Tours and Travel of Morris, MN (320/589-3964), a company that is one of the most recognized names in agricultural tours, especially tours to Brazil.

Its founder Dan Mahoney (who farms in the Morris area) said that after having a Brazilian exchange student work on his farm for two years, the government of Brazil invited him to address a conference on Agricultural Irrigation in May 1996. Believing that American businesses needed more information about South America, especially the ag sector, he formed his company in 1997. Since that time, his company has organized 29 tours from the United States and seven from Brazil.

Midwest Tours and Travel has hosted tours with such groups as Hefty Seed, Ag Day TV, Linder Farm Network, Global Ag, Land O’Lakes Executives, Northland Commodities, Top John Deere Dealers of Kansas, and Bower Trading. Jim Bower, a noted commodity and television analyst, traveled with our group to research the size of the Brazilian soybean crop. This was his sixth trip to Brazil.

Mahoney, who is fluent in Portuguese, has numerous contacts throughout Brazil and has been instrumental in setting up projects, including Amerazil LLC, a joint U.S. and Brazilian investment group. He currently is working on several projects in Brazil.