Inside a million-acre tillage farm in Brazil

Covering an area the size of counties Laois and Carlow combined (650,000 acres), the scale of Bom Futuro is difficult to comprehend. Thanks to the climate, land, rainfall and short season soyabean that allows two crops per year, the farm is actually growing 1.1m acres of crops every year, similar to the amount of land under tillage in Ireland. Bom Futuro, which is Portuguese for good fortune, seems like a very appropriate name for this farm.

The farm grows 655,000 acres of soyabeans, 250,000 acres of cotton, 200,000 acres of corn (maize) and 40,000 acres of pasture. The farm also has 250 acres of ponds for aquaculture where the local fish are fed soybean meal. Throw in that it rears and finishes 90,000 head of cattle every year, has facilities to store 800,000 tonnes of grain, a tree farm, a hydroelectric energy generator which supplies all of its energy needs, and it starts to look more like a multinational company than an actual farm. But even though it has 5,500 employees it remains a family business and is run very much as such. Along with its owners, 800 families work and live on this farm.

Located in the very centre of Brazil, in the state of Mato Grosso, this is the East Anglia of Brazil, but at a scale of 10 or even 100 times that of the UK arable regions.

Travelling out the two-hour trip from Campo Verde, all that can be seen are fields of 300 acres only limited in size by how they have been laid out. This is big country but unlike the US, there are few roads to break up the land.

Soyabean fields dominate the landscape, with a scattering of cotton and corn filling in the flat rolling plains. Huge grain silos rise from the horizons, with barely a house, tree or a hedge in sight. Despite having double the rainfall of Ireland (ranging between 1,600 and 2,000mm per year), when I arrive, Sid, the farm manager at Bom Futuro is crying out for rain to plant the remaining first crop soya.

This has been one of the challenges this year and planting has been delayed because of it. The soils here are reddish in color, sandy and coarse and water moves freely through them, taking any nutrients with it. It is for this reason that no-till is used to establish the crops to prevent soil erosion and to try retain as much moisture as possible to ensure the seeds get the best chance.

Family business

Bom Futuro is owned by the Maggi Scheffer family. The three brothers and their brother-in-law went about constructing Bom Futuro in the mid 1980s and today it owns almost 330,000 acres and leases the same area again. It has annual revenues of over $0.5bn (€0.46bn) and with 655,000 acres of soyabean alone makes it the largest soyabean farm in the world.

It plants year round. Soyabeans are the first crop, with corn and cotton as the main second crops. Soyabeans yield about 1.3t/ac, meaning it produces 850,000t of soyabean per year, or about 1% of Brazil’s soyabean production.

While the warm, wet climate produces excellent growing conditions, it’s also a haven for diseases and insects. The farm sprays soybeans about seven times each growing season while planes are used to spray the cotton. They apply Roundup before planting and herbicides twice, insecticide three times and fungicide once during the growing season. At the end of the growing season, they also apply paraquat.

Sustainability is high on the owner’s mind and this farm is required to have about 35% of its land in conservation. Interestingly, they receive no subsidy for leaving this land idle. With two growing seasons, there is never a time when a field is left unplanted. This is very important to reduce runoff and soil loss from their heavy rains.

There is a seed and animal feed business (Sementes Bom Futuro) which produces animal feed for the cattle and seed for the farm. The seed is also produced for seed companies such as Monsanto.

Drying the seed has been one of their biggest expenses and a number of years back they switched from propane to wood. Today they farm all the wood (eucalyptus) to use in the burners.

The rainy season is October to April and the crop rotation at Bom Futuro, which is typical, is that the first crop soya grows from October to January. In February the second crop goes in, which is usually soya or corn. A third crop can be an undersown grass crop for the cattle enterprise.

GM technology

Bom Futuro has always been an earlier adopter of new technology form no-till to GM (genetically modified) crops. Almost all of the cropping is now GM. 70% of the Soya is GM for the two traits, insects and herbicides (Roundup). 13% is for Roundup only and the balance is conventional.

All of the cotton is GM, with 95% of it GM for herbicide and insecticide and 5% for just herbicide. What was surprising was that they don’t want Roundup ready corn as it grows in the following GM soya crop as a volunteer, effectively becoming an uncontrollable weed. This means that today 90% of the corn is GM for insect only with 10% for herbicide.

Land price

Prime soyabean land that can grow two crops in the year is making $10,000/ha (€3,700/acre) in this area. Brazilian farmers usually express yields of grain crops such as soyabean and corn in sacks (60kg) per hectare.

Land is valued in sacks of soya/ha and is currently making 500 sacks/ha. In a good yielding soyabean crop, the profit is generally 20 sacks/ha. This means it would take 25 years of the current profit from the soya to pay for the land (500/20).

It is not generally a cash transaction but the farmer pays in the following year’s crop. If it is, for example, 500 sacks/ha, 200 sacks are paid immediately or their cash equivalent and the balance is paid over the following two years in actual soyabean. This is a solution to a problem in Brazil where it is near impossible to borrow money to buy land due to central bank rates in excess of 14%. This arrangement also provides an element of hedging.

Bom Futuro has made big purchases of land in recent years and does not envisage buying land in the near future. It generally takes 10 year leases on the rented land and on average pays nine sacks of soya/ha. But this can be in a range of five to 15 depending on the soil, yield potential and the infrastructure on the farm.

Brazil and Soya

The USDA forecasts Brazil’s 2015/16 soyabean production at a record 100m tonnes, an increase of 3.7% on last year. Although, the soyabean area has increased over the last nine consecutive years, this year’s increase is the smallest since 2011/’12.

Brazil and the US have been competing for the top place as the world’s largest exporter, but the strong dollar and weak real is helping Brazilian farmers. This means that US farmers must take lower prices in order to compete.

Grain production in Brazil has changed drastically in recent years. For commercial grain farmers in Brazil, soyabeans and corn no longer compete for the same acreage. There is basically a monocrop of soyabeans for the first crop and a monocrop of corn for the second crop. Therefore, the rate of soyabean expansion is dependent on the price of soyabeans and not on the ratio between soyabean prices and corn prices – they don’t compete with each other for acreage in Brazil. If the prices for soyabeans are good, Brazilian farmers will continue expanding their soyabean acreage.

Corn production in Brazil is now less dependent on price than it used to be. Corn now tags along with soyabeans, so as the soyabean acreage increases, it automatically offers more opportunities to plant a second crop of corn as well. Of course, prices will still influence the corn acreage in Brazil, but not to the same degree as they used to.

Despite lower global soyabean prices, farmers have contracted soyabeans at $16 to $18 per sack. ($300/t) ex-farm. The weaker real (the currency devalued approximately 33% since the start of the year) has resulted in a higher domestic price and this is encouraging farmers to increase their area of soyabean.

But the falling currency raises the cost of agricultural inputs such as seeds and fertiliser and this is eroding profitability. However, as soyabean needs less fertiliser than corn, this shifts the balance further in favour of soya. And this can be seen on the ground on farms such as Bom Futuro, where it wants to plant as much soyabean in its first crop as possible. A 3t/ha soya crop will bring in about $1,000/ha (55 sacks/ha @ $20/sack or 3T/ha), and with costs of $720/ha, this leaves a profit of around $280/ha (€100/acre). This is before paying for land (rent or repayments) or depreciation on machinery.

After visiting Bom Futuro, while it may not be obvious initially, tillage farmers in Brazil, despite their enviable scale, face the same challenges; environmental restrictions; access to finance; commodity price uncertainty and increasing costs of inputs as any tillage farmer in Ireland.

We need to ensure that we have policies and technologies available to tillage farmers in Ireland to grow the best yields of the highest quality grain, while keeping the landscape and environment intact. Right now, it seems that not only are we on a different playing field in terms of scale, we are actually playing a completely different game. Perhaps it is time we admit this and approach our tillage sector differently rather than chasing scale.