TUE MAR 20, 2018 / Reuters

LUÍS EDUARDO MAGALHÃES, Brazil, March 20 (Reuters) – Brazilian farmers, who are expected to harvest another record soy crop thanks to good weather this year, are placing an unprecedented emphasis on maximizing yields, said André Pessoa, founding partner of consultancy Agroconsult.  This stance, which ends up reducing use of deforested areas for farming, is being exacerbated by problems in drought-stricken Argentina, where a portion of the crop will be lost, raising international soy prices and potentially capitalizing farmers.

“The model of investment has changed, with farmers shifting spending to their own farms,” Pessoa told Reuters on Monday, the first day of a crop tour of Brazil’s new agricultural frontier known as Matopiba – a region which accounts for about 11 percent of Brazil’s soybean output.  A direct consequence of more on-farm investments is yields reaching 100 60-kg bags per hectare on irrigated areas, or almost twice the country’s average in the last crop season, around 56 bags. The use of biotech crops have been a boon, Pessoa said.

As agricultural yields improve, Brazil, the largest exporter of the oilseeds, is ever more competitive on world markets, he said, adding in some areas, farmers have risen average yields to 70 bags of soy per hectare while others are getting closer to 80 and 90 bags per hectare.  “Investing 700 reais ($212.5) per hectare will help improve soil quality and on-property conditions,” Pessoa said. Investing in the farm is currently more attractive than expanding area, he added.

Agroconsult estimates Brazil’s soy crop will reach 117.5 million tonnes this season, more than the 114 million tonnes the government said producers collected in the previous year, when the weather was also nearly perfect.  About 20 percent of Brazilian farmers already prioritize on-farm investments while an estimated 30 percent are likely to do the same. Higher gains from the 2017/18 cycle should give the latter group’s the push needed to boost on-property spending, Pessoa said.  A third group of farmers, whose yields are 50 bags per hectare, would be likely to lose ground to the more efficient peers. “When average yields are very different across farms, this spurs a wave of consolidation, with one neighbor buying the other who is producing less,” Pessoa said.