Brazil dryland frontier farm

Large Scale Agriculture

The H operation is large-scale commercial agriculture. Gross and net receipts are in the eight figures. Their home farm now consists of a contiguous area 18 kilometers long by 4 kilometers wide. Excluding their four pivot irrigation circles, their smallest field is 1,000 ha.

During the 2000/2001 crop year, the H brothers grew 950 ha of corn, 4,000 ha of soybeans, 2,000 ha of edible beans, 2,000 ha of upland rice and 3,500 ha of cotton. Part of the edible bean and corn crops were grown on four center-pivot irrigation systems covering 452 ha. In late 2001, they purchased an additional 5,600 ha and for the 2001-2002 crop year, they planted a total of 9,000 ha of soybeans, 5,250 ha of cotton, 1,000 of edible beans, 2,000 ha of rice, and 750 ha of corn. Since 2002, the H brothers have purchased more land and have continuously expended area planted to cotton. Cotton--planted on 12,000 ha in 2004-2005--has become was the most important crop and by far the most important source of revenue.

Although their farms and their fields are larger than those in most parts of North America, the field operations and machinery they use are the same as those used in commercial grain agriculture of the Corn Belt, the Mississippi Delta and the Great Plains regions. Soybeans and corn are harvested with large late-model combines and cotton is picked with several recent-model 6 row machines purchased locally (but imported from the US).

In general, there are fewer field operations on the H farm than on large grain farms of North America. Nature controls most weed and volunteer growth by providing virtually no rainfall between harvesting and planting. Insect and plant disease problems are increasing but are generally less prevalent than in areas that have been farmed for many years.

They have significantly less equipment per land unit than an average commercial North American grain farms; their total tractor horsepower per hectare is 0.25, a tenth that of commercial US farms. Tillage, planting and harvesting are rarely interrupted by bad weather and field operations are done non-stop around the clock. They typically put about 2,500 hours per season on their field tractors.

Yields and Returns

Yields have varied from year to year, but the H brothers have never had a crop failure in the more than twenty years they have farmed in the area. In crop year 1998 -1999, an exceptionally dry year with 35 rainless days starting mid-January, the H farm had the following grain yields in sacks per ha: no till soybeans 47; conventional soybeans 47; corn 130; edible beans 27; upland rice 30; and cotton, 230 arrobas of seed cotton/ha (1,230 pounds of lint cotton/acre).

The 1999/2000 crop year had excellent rainfall. Final yields in sacks per ha: no till and regular soybeans 55; corn 130; edible beans 27; upland rice on newly opened land 33. Cotton yields were exceptional: 2,200 ha of dryland cotton yielded 284 arrobas of seed cotton/ha (1,517 pounds lint cotton/acre). Their irrigated cotton yielded 290 arrobas of seed cotton/ha (1,550 pounds lint cotton/acre). Average net returns for the H brother's cotton production in crop year 1999-2000 were US$1,000 per ha.

For the 2000-2001 crop year, yields in 60 kilo sacks were: soybeans 56, corn 107, edible beans 22, and rice 30. Cotton yields averaged an exceptional at 308 arrobas per ha (1,756 pounds lint cotton/acre). Cotton accounted for less than 30 percent of the total planted area, but contributed 60 percent of total gross farm receipts.

Yields of the 2001-2002 crops were negatively impacted by a 26-day veranico that started the third week of February. This late season dry spell was the first to be experienced since the region opened in the early 1980s. Soybeans on "old" ground yielded 48.5 sacks per ha and on "new" ground 39 sacks per ha, corn yielded 103 sacks, edible beans 18 sacks, and cotton was expected to yield 260 arrobas per ha.

For the 2003 crop year, soybean yields fell to 37 sacks/ha due to Asian rust. Cotton yields averaged 310 arrobas (1,767 pounds lint or 3.54 bales/acre) on dryland. They did not grow corn that year. For crop years 2003-2004 and 2005, soybean yields hit all time records. Cotton yields in 2003-2004 were down somewhat due to excess rain, but the 2004-2205 crop to be picked in mid 2005 appears to be as good as the crop of two years previous.

Recent crop yields continue to set new records each year. Soybean yields this year averaged around 70 sacks and dryland cotton yields exceed 310 arrobas (3.4 bales/A equivalent).

Labor and Labor Costs

In contrast to commercial grain agriculture in north America or Western Europe, the H farm employs a great deal of permanent and seasonal labor. However, their unit labor costs are much below farms of North America or Europe.

Monthly salaries for their technical agronomists--their highest-paid help--are about US$700 per month. Their two field foremen earn about US$600 monthly. Their machine operators (for combines, cotton pickers, sprayers etc.) earn about US$350 per month, and the tractor drivers they employ earn about US$250 monthly. During the year they employ temporary manual laborers who are paid around US$130 per month.

The H brothers feed and house labor and make mandatory contributions to federal social security and other employee welfare programs. They maintain state-of-the art, government-approved sleeping and eating accommodations for their temporary field workers They and their neighbors have encountered no shortage of skilled or unskilled labor.

Marketing and Management

The management of input and output markets is much like that of large-scale North American grain farms. Working with large volumes and their own fleet of trucks and storage facilities, the H brothers are able to negotiate favorable input and output prices with vendors and buyers. Inputs are purchased at wholesale prices: they buy their limestone, fertilizer, herbicides, pesticides, fuel and other inputs in large lots and use their own trucks to haul the inputs to on-farm warehouses.They generally sell directly to wholesalers and exporters. Though soybeans and corn are sold as bulk commodities, they add value to their rice and edible bean production by cleaning and bagging before sale.

The H brothers are early adopters of new technology and keep current on recent developments in world agriculture. They remain in constant contact with Brazilian agricultural researchers in the private and public sectors. Cerrado soils require careful management for maximum productivity, and for fertilizer, liming and micro nutrient recommendations, they contract the services of experienced Consulting Agronomists. They communicate via cellular phones with their technical personnel, vendors, buyers and family. Their financial and production accounts are computerized.

Western Bahia agriculture is highly "dollarized," that is, soybean and cotton prices as well as imported inputs are quoted in US dollars. Via the Internet, the H brothers closely monitor exchange rates, world commodity markets and information on factors moving the markets. Also via the Internet, they keep tabs on costs of production for soybeans, corn and cotton in major producing areas of the world.

On average, over the 18 years, the H brothers paid considerably less than 35 sacks of soybeans/ha for their land (see Land Prices). Over the years, they have continuously invested in soil fertility improvement. Today, their land is some of the most productive in Western Bahia. What is the land worth today? The land would probably sell for 300 sacks/ha but it is not for sale.

In short, the H brothers run a large, tightly managed and highly profitable commercial farm in Brazil's frontier cerrado region of Western Bahia. In terms of farm size, they are not the largest operation in the region. Yet they are among the most profitable. In twenty years of farming, they have shown--by example--that large-scale commercial dryland agriculture in the Brazilian cerrados is absolutely viable. They have also shown that with good management, it can be highly profitable.