Ontario Grain Farmer June/July 2021

28 BRAZIL’S PROFIT MARGINS on corn and soybean production are limited by infrastructure and logistic constraints. However, agriculture is an economical hot spot with continued growth despite supply chain issues, unpredictable weather patterns, and large export taxes. High profit margins, a depreciating currency in comparison to theU.S. dollar, improvements in infrastructure and logistics, cheap production costs, and amultitude of financing options are some of the reasons that Brazil continues to see growth. Soybean production is expected to reach 134 million tonnes and corn production is estimated at 103 million tonnes in the 2020/2021 season. The planted area of both soybeans and corn is up since the 2019/2020 season with 95 million acres (up four per cent) and 47 million acres (up five per cent) planted, respectively. PROFITS “Profit margins are reaching record levels,” says Marcos Rubin of Agroconsult. Rubin was a presenter during the ‘Bringing you What’s Next — South America Edition’ virtual series hosted by FS PARTNERS and Great Lakes Grains. “Commodity prices in Brazil have doubled in the past year and a half,” says Rubin. He notes the depreciating Brazilian currency makes their commodities cheap to purchase on international markets and increases the global market. BRAZIL BY THE NUMBERS — 2020/2021. Soybean exports peaked in 2020 at 91 million tonnes which is up 25 per cent from 2019. But soybean exports have fallen to 84 million tonnes in 2021; down by eight per cent since 2020. Rubin says that the Brazilian government has imposed a large export tax on soybeans which hinders farmers abilities to expand their farms. Corn exports peaked in 2019 at 39 million tonnes and fell 15 per cent to 33 million tonnes in 2020. Corn exports have increased from 2020 to 2021 by six per cent, to 35 million tonnes. Rubin says that unlike soybeans, the Brazilian government has imposed programs to increase their corn exports. LOGISTICS Logistics have been a long-term bottleneck for corn and soybean exports in Brazil due to the rapid expansion of agriculture. Over the past 10 years, several notable improvements have been made. The ports in the northern region, where large-scale farms are located, have received significant upgrades and exports from them have grown 20 per cent since 2010. The lower transportation costs have increased overall profit margins for these farmers. Since 2017, the cost of getting soybeans to port has been lower in Brazil than in the U.S. In 2021, the cost to get soybeans to port in Sorriso, Brazil is estimated to be USD $1.2/bu and USD $1.6/bu in Iowa. Roads and railways have seen improvements in the past five years. However, this is still an area that is being continually improved as a means to get corn and soybeans to port as quickly and efficiently as possible. Caitlin Kroetsch Overcoming obstacles AGRICULTURAL GROWTH IN BRAZIL Marketing Corn: 47 MILLION ACRES (PLANTED AREA) 103 MILLION TONNES (PRODUCTION) 35 MILLION TONNES (EXPORTS) 86 BU/AC (YIELD) Soybeans: 95 MILLION ACRES (PLANTED AREA) 134 MILLION TONNES (PRODUCTION) 84 MILLION TONNES (EXPORTS) 52 BU/AC (YIELD)