May 16, 2017

Conventional Soybeans (non-GMO) have a Place in Mato Grosso

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

While the Brazilian soybean crop is approximately 96% GMO varieties, there is a growing niche market for the production of conventional soybeans (non-GMO) in the state of Mato Grosso. According to a recent Reuters report, there are three grain companies in Mato Grosso that pay premiums for conventional soybeans including: Amaggi, Imcopa International, and Caramuru Alimentos.

The average premium paid this past growing season was R$ 12 per sack or $1.75 per bushel. The premium is needed to compensate for the additional costs in keeping the soybeans from being contaminated with GMO soybeans. These are very attractive premiums given the low prices being paid for soybeans and these high premiums are expected to encourage farmers in Mato Grosso to increase their acreage of conventional soybeans in 2017/18.

According to the Mato Grosso Institute of Agricultural Economics (Imea), 13.6% of the soybeans produced in Mato Grosso in 2016/17 were conventional varieties, which is down from 15% in 2015/16. The decrease is being attributed to the lack of available seed supplies. Some farmers wanted to increase their conventional soybean production this past growing season, but they had problems sourcing seed. The seed shortage was caused by the adverse growing conditions during the 2015/16 growing season when hot and dry conditions in the state significantly impacted seed production.

Regardless of the merits of the arguments for and against GMO crops, there is a demand for conventional soybeans in Asia and Europe and Mato Grosso is basically the only major producer of conventional soybeans. Chinese consumers are demanding more non-GMO soybean oil for cooking, but local producers cannot meet the demand. Lin Tan from the Hopeful Grain & Oil Group indicated to Reuters that China needed 11 million tons of conventional soybeans to meet the domestic food demand, but local producers could only supply 3 million tons to the crushers.

Additionally, a group of 14 countries in the European Union imported 2.7 million tons of conventional soybean meal in 2015 and there may be more demand in the future coming from India.

The reason why farmers in Mato Grosso are basically the only farmers in Brazil producing conventional soybeans is due to how the soybeans are exported from the state. Conventional soybeans must be kept separate from GMO soybeans throughout the entire transportation system and that can be accomplished for conventional soybeans that are produced in western Mato Grosso.

These conventional soybeans are exported through the port of Porto Velho, which is on the Madeira River in the state of Rondonia. From there, they are barged to ports further downstream on the Amazon River. At the port of Porto Velho, there are warehouses and conveyor systems that only handle conventional soybeans, thus avoiding contamination with GMO soybeans. No other port in Brazil has facilities dedicated to only conventional soybeans.

Conventional soybeans could avoid contamination if they were shipped in containers, but for bulk shipments, the port of Porto Velho is the only port in Brazil capable of keeping the conventional soybeans separate from GMO soybeans.