Mar 24, 2014

Wheat Production May Move into Central Brazil

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Wheat is the one main crop for which Brazil is not self-sufficient although it's not because of a lack of trying. Wheat producers in southern Brazil have been frustrated over the years by their inability to consistently produce the high quality wheat demanded by the domestic market. Their main source of frustration is generally wet weather during harvest which results in lower quality wheat. The states of Parana and Rio Grande do Sul in southern Brazil account for 90% of Brazil's wheat production, but that might change in the near future.

Farmers in Parana are expected to increase their wheat acreage this year by switching some of their intended safrinha corn production to wheat instead. The Secretary of Agriculture for the state of Parana is estimating that the wheat acreage in the state will increase by 20% in 2014 and that the state will produce 3.5 million tons of wheat in 2014, which if achieved, would be nearly double the 1.8 million tons produced in 2013. The wheat crop in Parana was severely impacted by a series of frosts and freezing temperatures that occurred between May and July of 2013.

Instead of relying solely on wheat being produced in the southern part of the country, Brazilian researchers have been convinced for years that irrigated wheat production during the dry season in Mato Grosso is a viable alternative. Mato Grosso and the rest of central Brazil has six months of rain and six months of dryness, which allows many farmers to already produce two crops per year. If irrigation was incorporated into their farming operations, three crops or maybe even four crops might be grown during the course of one year.

Research has indicated that the cost of producing 70 sacks of wheat per hectare (4,200 kg/ha or 65 bu/ac) in Mato Grosso is approximately R$ 2,500 while the sale of the wheat would generate R$ 3,500 allowing farmers to generate a profit of R$ 1,000 per hectare or US$ 175 per acre. Researchers have also found that the wheat produced in Mato Grosso is of better quality than the wheat produced in southern Brazil and equal to or maybe even better than the wheat imported from Argentina.

Recent state legislation established the Fund for Wheat Cultivation (FACTRIGO) through check-off funds levied on each ton of flower imported into the state of Mato Grosso. These check-off funds will be used to conduct further research on wheat production in the state and to develop wheat varieties adapted to the Cerrado regions of central Brazil.

For those who doubt the viability of wheat production in Mato Grosso, researchers respond that the same thing was said about soybean, corn, and cotton production in years past. Today, Mato Grosso is the largest producer of all three crops in Brazil and one of the principal soybean producing regions in the world.

The newly installed Secretary of Agriculture in Brazil, Nen Gueller, is from central Mato Grosso and he is viewed as being very friendly toward promoting wheat research in central Brazil. Anything that could increase wheat production would be very beneficial to Brazil which is one of the largest wheat importers in the world. Brazil generally imports the majority of its wheat from Argentina, but when there are production problems in Argentina such as in 2013, they need to import more from the U.S. or Canada and pay a higher tariff because they are importing from outside of the Mercosul Trading Block.