Brazil Soy Growers Encouraged to Curb Farm Expansion

Cheap land in Brazil’s vast Cerrado savanna region has helped propel the country to the top ranks of global soybean producers. Now, Bunge Ltd., Banco Santander Brasil SA, and The Nature Conservancy (TNC) are offering growers incentives to reduce the harmful impact from farming in the environmentally sensitive region. These organizations are joining together to offer loans to soybean farmers in the region who farm on land that doesn’t require additional vegetation clearance. The aim is to reduce cost of operation by funding expenses like silo acquisitions and plantings to realize greater profits, rather than expanding the size of farms with more acreage. The new loans come as a response to tighter government regulations on land development in the Cerrado following pushback from the Brazilian Academy of Sciences and other organizations who have argued that the region’s important water supplies and greenhouse-gas mitigation potential are diminishing. 

The Cerrado, where nearly 40,500 square miles have been converted to agricultural land use since 2008, has undergone deforestation at a rate four times greater than the Amazon. Price per acre in the major Brazilian Cerrado producing states of Tocantins, Bahia, Piauí, and Maranhão sits at roughly $248 whereas arable land in the US soybean states is comparatively much more expensive at about $3,080 an acre. Such economics have contributed to a doubling of soybean production in the Cerrado over the past decade. Gro Intelligence subscribers can readily stay up to date on developments in the global soybean market.

The chart on the left illustrates increases in hectares of soybeans planted in the key producing states within the Cerrado region, and the chart on the right highlights overall Brazilian soybean production and export volume.