Brazil is the B in BRIC, the acronym invented by Goldman Sachs economist Jim O’Neill, who suggested Brazil, Russia, India and China could become four of the most important global economies by 2050. It’s long been a giant in the world’s agricultural economy, and its guardianship of the Amazon rainforest makes it more important to world farming and the world’s natural environment.

Brazil is the world’s second largest producer of soybeans, second only to Argentina, and a massive exporter. The U.S. Department of Agriculture (USDA) has forecast a return to historical record planted area at 23.3 million tonnes in 2010-11, which will yield a record 67.5-million-tonne soybean crop. The attaché’s estimate for 2009-10 production was 67.25 million tonnes.

"Increases resulted from favorable El Nino weather conditions, increased planted area, substitution from corn to soybeans in southern Brazil and record yields in southern Brazil," the report said. "Average yields in Brazil continue to improve with rapid adoption in the latest production and machine technology and development of better soil management techniques."

However, there are problems. The attaché points out that Brazil’s tropical climate demands improved pest and disease management as producers balance increased costs with the need to increase productivity. "Lack of crop rotation practices in the North and Northeast regions has amplified disease and pest occurrences such as nematode, white fly and caterpillar," the report said. "From the Center-West to southern Brazil, soybean rust appears manageable, having less affect on yields, but requiring significant investments in agrochemical applications."

Brazil has to import fertilizer, the attaché said, putting dependence on imports at 74% for nitrogen, 49% for phosphorus and 92% for potassium. "In 2009-10, the cost of fertilizer was estimated at 12 sacks (60 kg) of soybeans per hectare, the attaché said. "For 2010-11, fertilizer usage is expected to decrease slightly as prices for fertilizer have increased over 20 percent in the past month and continue to rise."

GRAIN CROPS

The International Grains Council (IGC) put Brazil’s total grain crop in 2010 at 60.7 million tonnes, compared with 61.1 million in 2009. The greater part is maize (corn), production of which is estimated at 53 million tonnes, down from 53.5 million. Wheat production is put at 5.2 million tonnes, up from 4.9 million.

The IGC put total Brazilian grain imports in 2010-11 at 8 million tonnes, up from 7.6 million the year before. Of that import total, 6.8 million tonnes will be wheat and 900,000 tonnes will be maize. The IGC also expects Brazil to import an unchanged 400,000 tonnes of barley. Brazil is forecast to export 7 million tonnes of maize for the second straight year.

The IGC predicts that Brazil will produce 7.8 million tonnes of rice in 2010-11, compared with 8.6 million the year before. It will import 600,000 tonnes of rice, down from 700,000 tonnes, and export 400,000 tonnes, down from 600,000.

OILSEEDS INDUSTRY

The Brazilian Oilseed Processors Association (ABIOVE) was formed in 1981 and has nine member companies which are responsible for approximately 72% of the country’s soybean processing volume.

According to ABIOVE, its members purchased 55.656 million tonnes of soybeans in 2009-10 (February through January). They processed 30.799 million tonnes and exported 23.391 million tonnes. They produced 23.549 million tonnes of meal and 5.963 million tonnes of oil, while exporting 12.038 million tonnes of meal and 1.456 million tonnes of oil.

In an annual report on the Brazilian oilseeds sector, the USDA attaché described Brazil’s processing capacity as "ample" at 54.5 million tonnes in 2009-10, up 7.4% on the year.

"The inauguration of new high-capacity crushing plants in the Center-West region brought Brazil’s 2009-10 crushing capacity to over 165,000 tonnes per day," the report said. "Twenty-five percent of plants possess a processing capacity of more than 3,000 tonnes per day, and nearly 50 percent of plants operate with 1,500 to 3,000 tonnes per day capacity."

The attaché quoted figures from the National Animal Feed Industry Syndicate (Sindiracoes), showing total feed demand in Brazil expected to increase at least 6% in 2010, on top of a 5% increase in 2009. Maize accounted for 55% of total animal feed in 2009, while soybean meal was 16.5%.

Brazil’s soybean industry has been keen to make sure it is not tainted by any accusation of blame for deforestation in the Amazon region.

In July 2009, ABIOVE and the grain exporters group ANEC, along with environmental NGOs and the environment ministry, announced the extension of the moratorium on soy production in the Amazone Biome, first put in place on July 24, 2006, until July 2010.

Environment Minister Carlos Minc hailed the success of the moratorium and declared that the ministry’s monitoring had shown that "soybean is not anymore an important element in the Amazon deforestation."

BIOTECHNOLOGY

Brazil has been a relatively enthusiastic user of biotechnology, with the rate of adoption in soybeans at 65% and climbing, according to the attaché. But the rate of growth has slowed because of internal and external demand for niche non-biotech derived products.

"The development of region-specific biotechnology soybean varieties is advancing with double-stacked Round-up Ready and rust-tolerant varieties expected within two years," the attaché said.

The use of biotech maize is also growing. According to the attaché, the 2010 summer maize crop could surpass 50% genetically modified.

"An official from the Ministry of Agriculture’s National Supply Company (Conab) was quoted in the local press saying the genetically engineered seeds could increase yields by as much as 10% to 15%," the attaché’s annual report on the grains sector said. "Even more significant than yield gains, genetically engineered corn can reduce chemical costs an estimated R$300 (U.S.$166) per hectare. There are currently 12 different varieties available for commercial use."

GRAIN PROCESSING INDUSTRY

Brazil’s small wheat crop means that it is a major importer of wheat and wheat flour. However, according to its flour milling association, ABITRIGO, there are some 200 flour mills, of which around 50 are members of the association.

According to the IGC, Brazil’s imports of flour will total 900,000 tonnes for 2009-10, compared with 871,000 the year before. Much of Brazil’s flour need is satisfied by Argentina, one of the world’s biggest exporters.

Brazil is the world’s largest market for malt. Beer sales have risen strongly, supported by an increase in the minimum wage, the IGC said in a recent report. It projects an increase in 2009-10 malt imports of 170,000 tonnes to 1.15 million tonnes, the majority of it from Argentina, Uruguay and the E.U.

BIOFUELS

Brazil has built a massive ethanol industry, based on sugarcane. It ranks second in the world in production and is the leading exporter of ethanol.

But it is also looking to increase the use of its soybean crop to make biodiesel. According to ABIOVE, it was already the fourth largest biodiesel producer in the world in 2009 with output of 1.4 million tonnes. Biodiesel took 14% of the soybean crop.

The government has introduced a 5% biodiesel blend mandate under which, according to the attaché, domestic demand for soybean oil is projected to increase 100,000 tonnes a year.

GOVERNMENT SUPPORT

According to the IGC, the Brazilian government on June 7 announced a record 100 billion Reals ($53.8 billion) in funding to support agricultural production in the 2010-11 season, a figure which, it said, represented an increase of 8% from the previous year. An extra 18 billion Reals ($10.1 billion) will be made available for investment projects including sustainable farming practices and storage.

"The need for additional storage space follows a record soybean crop and sizeable unsold maize stocks from earlier harvests," the IGC said.

Other nations are taking an interest in Brazil’s enormous potential. The IGC reported recently that on April 22 China’s Chongqing Grain Group confirmed the purchase of 100,000 hectares of land in Bahia for the cultivation of soybeans.

Chris Lyddon is World Grain’s European editor. He may be contacted at: