Challenges and Opportunities in Corn and Soybean Production in Latin America

The world’s population is estimated to reach 9 billion people by 2050, and food demand is projected to be 60% higher than current levels. Increased food demand will be met by increasing productivity and adding new land for crop production. As a group of 20 countries, Latin America (LA) has been playing an important role in responding to this growing global food demand. The region has tremendous opportunities to increase food production not only by adding new lands to designated cropland but also through the use of new technologies and more ag-inputs and the adoption of modern production techniques. The region is one of the few parts of the world with significant unexploited agricultural land, particularly in Brazil. In addition, some one-third of the world’s freshwater resources is in LA.
The tropical and sub-tropical climate allows most of the countries to attempt double-cropping on a large scale or have even more than two crops per year under an irrigation system. Many of these countries have significantly improved their productivity over the last few years but still have plenty of room for improvement. The agricultural structure in the region is diverse, but large farmers, particularly in Brazil, Argentina, and Paraguay, account for much of the commercial production and export.
LA is not only important as a producer but also as one of the world’s largest agricultural product exporters, accounting for more than 16% of total global food production and agricultural exports. Brazil, Argentina, Mexico, and Paraguay are the leading countries for grain production and export. Some 54% of the total volume of soybeans produced in the world and 16% of the corn have their origin in the region. LA is the number one exporter of soybeans, coffee, sugar, orange juice, and poultry and ranks second in corn, beef, cotton, and ethanol. Infrastructure and logistics are the main bottlenecks preventing an increase in ag-product exports. Investments in these areas must be made for LA to continue helping to feed the world.
Investment in developing new technologies is clearly one way to boost yield and raise grain production. For large and commercial farms, investments in new technologies are critical for production sustainability and the success of the farm’s operations. Farms are dependent on technology to compete in the international market. This has made the region the second largest planted area for Genetically Modified (GM) crops after North America, and it has the world’s fastest adoption rate for GM crops. For small-scale farmers, access to technology via special credit programs and extensions as well as information services are the major challenges in increasing production. Another important aspect of developing agriculture is investment in infrastructure and logistics and reducing bureaucracy.
Brazil stands out as the regional leader in agriculture. Currently, it is the world’s third largest agricultural exporter after the United States and Europe. The country is the most important competitor to the United States in terms of production and international sales of soybeans. Brazil is a soybean country, accounting for approximately 50% of the total grain produced. Most of it will come primarily from an increase in the planting area.
The potential for growing soybeans in Brazil is enormous. Currently, Brazil is planting some 33 million hectares of soybeans to produce around 100 million tons of the crop. However, it has the potential to add at least another 70 million hectares to production very easily without the risk of deforestation. This new land will come from underused degraded pastureland located in the Cerrados area. There is plenty of room for improving productivity, but the increase in production will come primarily from the expansion of the planting area. Despite the challenges arising from the tropical environment, insects, diseases, and low soil fertility, Brazilian farmers are able to match the productivity of US farmers.

 

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Biotechnology will continue to play a very important role in increasing soybean production. The use of glyphosate resistant varieties, legally approved in Brazil in 2005, had a tremendous impact on the planted area growth. Since then, the soybean planted area has increased at an average rate of 4% per year, adding close to 11 million hectares in the last decade. In 2013, Monsanto launched the Bt-soy variety called INTACTA. Three years after its introduction to the market, it occupies more than 50% of the soybean planting area. The use of RR varieties simplified field operations and allowed the adoption of no-till soil conservation practices. Nowadays, more than 90% of farms utilize the no-till method. The use of insecticides, fungicides, and fertilizers are also critical for Brazil to be competitive in the market. Brazilian farmers are doing a great job managing farm operations and agronomic practices, particularly in controlling soybean rust and pests. However, farmers are facing challenges with growing resistance to chemicals and biotech traits.
With the legal approval of RR soybeans in 2005 and its fast adoption rate, Brazilian farmers aggressively started double-cropping by planting soybeans in the regular season (August-December) and using corn as the second crop, following the soybean harvest in January-March. The planting area of corn as the second crop, called “Safrinha,” grew from some 3 million hectares in 2005 to more than 10 million hectares in 2016, during the main production season. Brazil’s total corn production grew from 35 million tons in 2005 to more than 80 million tons in 2015. This explosion in corn production was driven mainly by the increase in productivity with the use of better technology. In fact, productivity improved due to a combination of factors, such as using better hybrids; launching Bt-corn in 2008; investing in modern tractors, planters, combines, and sprayers; increasing the use of fertilizers; and utilizing better crop management practices. The launch of early soybean varieties also contributed to having “Safrinha corn” planted in the January-February period, the best planting window.

Under the soybean/corn double-cropping system, the two crops do not compete anymore for the same planting area. They are complementary, and the technological advancement for one crop brings benefits to the other. Now, as the soybean planting area increases, farmers can also increase their corn planting area. Going forward, Brazil is expected to continue expanding its soybean and corn production as a result of increasing its planting area and improving productivity.

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