Marketeye-Brazil February 16

[marketeye]

Still going in Brazil. Left the famous St. Louis hotel in Luis Eduardo. That is the hotel that a lot of U.S. farmers have frequented and stil do, I found out. I got off the elevator and ran into farmers from Missouri, Illinois, and Iowa. This area of the state of Bahia is really growing, both in productive land and ag business. And I found out today, the Brazilian government, along with private money will start building the first leg of a railroad that will run from western Bahia, straight east, to the Atlantic Ocean. When this baby gets finished, look out, corn, soybeans and cotton will be flowing out of this country quickly. Right now, 70% of grain movement is done by way of trucks, the other 30% by boat and railroad.

I also found out today that a good number of farmers are forward-selling 2012 soybeans. And, get this, you already know that the stae of Mato Grosso is the leading soybean-producing state, along with growing a lot of corn. However, the rapidly increasing poultry and swine production operations are in the Bahia area. So, the situation building is how to get the feed products to the livestock in Bahia?

Does this sound familiar to what happened with the cattle industry in the U.S.?

Today, I will interview Brazil's Ministry of Agriculture in Brasilia. It's an honor. I went out and bought a new white shirt, for the occasion.

Good day,

Mike

[Jim Meade / Iowa City]

I see you're a couple of hours ahead of us, Mike, as it's still 2315 here.  Your information is quite interesting.  I wonder what Brasil's growing meat industry will do to ours and to our grain exports?

[SouthWestOhio]

Mike a couple of questions for the ag minister if they are not already on your list.

What steps (if any) is the governement considering to make crop insurance more accessible?

Besides the new train line you mention above, what other specific transportation improvements are underway or in the planning stages?

How many newly cleared acres does he expect to come into production in the next few years?

[marketeye]

Minister says he supports extending the second corn crop planting deadline. I am also hearing of a farmer that has losses of 2.5 million dollars from excessive rains rotting his crop.

Minister says any bottleneck harvest problems should be solved by the farmers because the government has already given enough money.

[marketeye]

Just so it is clear, the Minister didn't tell me about the farmer crop losses. That came from Brazilian reporters

[LuanaGomes]

Marketeye,

If I may, I'd like to make a correction on the information about crop losses. That one farmer you mention actually lost 1.5 million Reais, which equals to a little over US$ 800,000. Just to avoid any misunderstandings, I should say that is a isolated case in Parana state and it happened only because he was in such a hurry to plant the second crop that he decided to dessecate his soybean field without checking the weather outlook before that. Then when the heavy rains came last week he ended up losing his soybean summer crop.

However, problems just like that are happening in Mato Grosso, where heavy and widespread rains are disrupting the crop. A Crop Expedition team is on its way to Mato Grosso next week to check out how big the damage actually is. I’ll keep you posted on that.

As for the bottleneck harvest problems, what the minister said is that those issues should be solved in cooperation between government and farmers. The government’s role, he said, is to provide farmers with enough money so they can build silos and bins themselves, to make sure the roads are in a good condition and that we develop our railroads and river transportation system. Maybe some things got lost in the translation there.

Thanks for the long and fun ride troughout the Brazilian countryside 😉 Hope you had a safe trip back home. and that we can do that again sometime soon. Take care

LG

[marketeye]

Jim,

As I clean up some loose ends from my Brazilian trip, I wanted to answer some questions that I didn't get to. First, your question about the meat industry. A farm-field day that we attended had 600 farmers in attendance. This was the first day of a 5-day field day. The researchers were suggesting to the farmers to add cattle to their operation. So, Brazil cattle production can be seen as going higher. Meanwhile, Brazil consumes 12.0 million metric tons of soymeal, with two-thirds going to poultry production and the rest to hogs. Stats show that 1.0 million metric tons of meal use means 3.0 million tons of corn use for a feed mix. When you consider Brazil's poultry production grew 12% last year, you can see how that continued growth consumes a lot more corn. Plus, hog corn consumption in feed is up 3-4% for 2011-12. Everyone we talked to says poultry production is increasing year-over-year. I'm still trying to get even updated numbers on poultry production. In a nutshell, Brazil's pork, beef and poultry output could be growing. And as a sidenote, the other issue is most of the livestocck production is in Bahia, whereas the major grain production is in the state of Mato Grosso. So, like the U.S., Brazil is facing the issue of getting the grain shipped to where the animals are.

Hope this helps,

Mike

[marketeye]

SouthWestOhio,

I'm trying to follow-up with the question you had about crop insurance. The question wasn't asked to the Ag Minister. However, there is a farm bureau group in the state of Parana that is working heavily on this issue. I sat down with them before I left the country. Here is what I learned:

--Right now, insurance covers less than 10% of all Brazilian crop production. So, a solid crop insurance program is being sought. Interesingly, in the state of Parana, 30% of crop production is covered by insurance. So, this state's farmers are learning the benefits of crop insurance. There are about 6-7 insurance companies that offer crop insurance in Brazil. Essentially, crop insurance is just too expensive for the companies and too expensive for the farmers.

Hope this helps,

Mike