Yesterday our group toured a Brazilian grain elevator and grain farm in the community of Itambaraca, Pr Br. We were welcomed by Antonio Malutta, one of four owners of BMV, a grain elevator and farm corporation. BMV was formed following the bankruptcy of the local cooperative grain elevator. The four owners partnered with another business that sells ag chemicals. By partnering, the owners of the elevator receives a lower cost for the ag chemicals and the owner of the ag chemical business gets exposure to farmers coming into the elevator, creating another marketing opportunity. I didn’t ask why the cooperative failed, but I would guess it happened during one of Brazil’s financial meltdowns the happened when their inflation rate was extremely high (triple digit) and their currency was devalued. That is not the case today, one could argue that Brazil is in better financial condition than the U.S. and many other countries.

The BMV corporation consists of the elevator with 520,000 bushels of grain storage and around 5,000 acres of crops. Crops grown by the BMV partners are Corn, Soybeans, Wheat, and Sugarcane. They buy Corn, Soybeans and Wheat from neighbors as well. Yields in the area range from; corn 100 -150 bu/a, Soybeans 50-60 bushels, and from 60-70 bushe3ls per acre of Wheat. They dry grain with wood primarily from the Eucalyptus tree. Natural gas is very high and wood costs $18.00 per cubic meter. I was told that it costs about 10 percent to dry corn with wood down from 23 % moisture to 13% moisture. Included in the costs are the two men each working twelve hour shifts to keep wood in the firebox.

Grain produced and purchased is marketed by a brother to one of the owners. He also works with production and financial records and the banker. To manage price risk, the grain is hedged on the CBOT through a broker. Sometimes BMV works with other elevators such as Bunge, Cargill or others to meet mutual goals. Crop insurance is available, but many farmers don’t buy it I was told because without a government subsidy, it is too expensive.

Last year 20% of Brazil’s corn crop was exported abroad. Of that amount about 30% went to China. Additional local markets are being developed. One is a feed mill the Cargill owns that supplies producers with chicken feed. Grain for export from the area we visited travels 250 miles East to a port on the Atlantic Ocean. From there it will travel to the EU, Japan, Africa, and India.

We then rode our bus out to the farm. A neighbor who Antonio says is one of the best farmers in the country, because he is a fanatic about details, was planting zero-til soybeans into wheat stubble. He was using a 165 hp New Holland tractor pulling a new John Deere zero-till Drill. Planting conditions were perfect for drilling into the red clay soils where there was adequate moisture for quick emergence. The clay soils there are about 4 to 5 percent organic matter and a pH of 6.2 to 7. The fields are slightly rolling providing very good soil drainage conditions. As I watched the planting taking place I thought to myself, boy wouldn’t it be fun to farm down here!
One of the questions I wanted to hear answered was this; “What are the top 3 problems facing Brazilian Farmers today?� The answer I received was,
1. The market volatility. The fear of being on the wrong side as the market moves.
2. Input costs have exploded, particularly for fertilizer, fuel , equipment, repair parts, and land.
3. Not enough political support from the government. “I don’t believe our government supports our farmers the way the United States and the European Union governments do theirs.�

In conclusion, the farmland around Itambaraca is some of the best quality and most productive in the world. Brazil is just beginning to utilize genetically modified hybrids on farms. I would expect their good yields to become much better over the next three to five years. Perhaps average corn yields will increase by 50 bushels per acre. Benefits of technology should result in higher yields and profits.