Dec 16, 2022

Brazilian Soy Farmers Spend More Out-Of-Pocket for 2022/23 Crop

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

Large soybean farmers in Brazil used more out-of-pocket resources to plant their 2022/23 soybeans. Farmers in Mato Grosso for example, used their own resources to cover 33% of their production costs, which is up 10% compared to last year. Higher interest rates on production loans and the increased cost of inputs forced farmers shoulder more of the production costs.

Financial resources from Brazil's Annual Harvest Plan 2022/23 were insufficient to cover the higher production costs this growing season according to the Mato Grosso Institute of Agricultural Economics (Imea). The Harvest Plan 2022/23 offered R$ 340.9 billion in production loan credit (approximately US$ 65.5 billion), which was up 36% compared to the prior year, with credit terms more favorable for small to medium producers. For larger producers, which are most producers in Mato Grosso, the interest rates on production loans were close to the prime rate in Brazil, which is currently 13.75%.

Soybean producers in Mato Grosso needed R$ 58 billion to plant their 2022/23 soybean crop compared to R$ 30.7 billion in 2021/22. Farmers provided R$ 18.87 billion from their personal resources or 33%. Multinational agricultural companies supplied 30% of the needed credit in the form of forward grain sales in exchange for seed, fertilizers, chemicals. Financial institutions represented 19.8% of the total credit with 17.3% at market interest rates and 2.4% at subsidized interest rates. This was the highest percentage of personal resources used to finance the soybean crop since the 2016/17 growing season.

Operational costs increased 50% in 2022/23 due to higher costs for fertilizers, chemicals, fuel, etc. and they are expected to increase 4.8% in 2023/24. The operational cost for soybean production in Mato Grosso in 2023/24 is estimated at R$ 6,872 per hectare, or approximately $535 per acre. At a yield of 50 bu/ac, that equates to approximately $10.75 per bushel.