Despite being hobbled by dysfunctional politics and a chaotic economy, Brazilian agriculture is setting a cracking growth pace which threatens to leave Australian farmers and exporters in its wake.
While most of its 4 million farmers are small scale, low-earning landholders, the South American beef and cropping giant has embraced new technology and mega farming strategies which give the nation an average farm productivity growth of six per cent annually.
Its big-scale professional farming enterprises are growing at more than 10pc annually.
Abundant rainfall, a zero tillage cropping and plant breeding revolution, and the world’s largest beef herd’s adoption of breakthroughs in management and genetics are some of the ag economy’s key drivers.
Brazilian farmers are also keen to learn a lot more about improving water use efficiency and farm risk management planning and are not afraid to turn to their global trade rival, Australia, for guidance.
A team of new generation mega farm operators has been in Australia this month as part of Brazil’s Agrileaders program.
The program selects young rural entrepreneurs and takes them overseas to study agricultural innovation and improve their own agribusiness capabilities.
Run by Rabobank in Brazil, it targets the sons and daughters of many of its biggest clients, mostly from family enterprises.
Rabo’s Brazilian agribusiness loan book covers about 1100 customers and is worth more than $US3 billion.
While much of Brazil’s farmland typically enjoys rainfall averages around 1500 millimetres (60 inches) or much more, drought in northern and central parts of the country in recent years has heightened farmer interest in Australian moisture management and climate risk management strategies.
Tropical rainfall is responsible for much of Brazil’s massive 90m tonne-plus soybean and 80m tonne-plus corn crops, plus sugar and cotton.
Remarkably, less than 30pc of Brazil’s 8.5m square kilometre land area is farmed or grazed, with cropping covering just 9pc of the mostly rain-drenched country.
In most areas two, or even three, crops a year are typical, but unusual dry conditions have hurt yields of late.
“In the past year we’ve have had severe drought, so it’s important to understand how to manage with less rainfall,” said sugar, corn and soybean producer, Paulo Rodrigues.
His family farms 15,000ha in four regions, but rents almost 90 per cent of their land from small landholders.
The weather is not the only risk Brazilian farmers have to better learn to manage for, said fifth-year course participant Lissa Fukuda, whose family employs about 400 people to grow 2000ha of Arabica coffee.
Political instability, recent corruption scandals, double digit inflation and a sliding exchange rate have heightened the need for much more attention to risk management planning, which was a key part of the course work the visitors were doing while in Australia.
The Brazilian currency depreciated against the US dollar by 40pc last year, driving up imported farm input costs.
Although farm commodity exports have benefited from the exchange rate crash, inflation at more than 10pc has made everyday goods and services more costly and hurt domestic demand.
While the team of 31 in Australia represented a mix of producers with typically Brazilian farm commodity interests - beef, soybeans, corn, sugar and cotton producers - their agricultural holdings of up to 20,000 hectares in size were relatively modest compared to some of Rabobank’s client base.
Its biggest customers’ operations cover up to 400,000ha producing everything from the staples of beef, beans and sugar to eucalypt forests and hydro power.
Former agronomist and now Rabobank’s head of rural business in Brazil, Fabiana Alves, said adoption of genetically modified crops and a strong research and technology focus had lifted cropping productivity about 250pc in less than two decades.
“In some areas we’re now seeing a lot more integration of cropping into cattle production areas, improving profitability with corn, sorghum and soybean crops and better pastures,” she said.
“But cattle production by itself is also much more attractive now after emerging from a run of bad prices and a big de-stocking phase, especially as our low currency promotes exports of a lot of meat to Russia, the Middle East, China and the US.”
Lot-fed beef production is set to double to about 20pc of the 220m head herd within a decade.
Apart from risk management training courses run in Sydney the tourists were paying close attention to management initiatives at Sundown Pastoral Company’s beef cattle operation on the NSW Northern Tablelands, and Liverpool Plains cropping enterprises, where irrigated cotton yields are currently more than double Brazil’s typical six bales/ha.
“There are a lot of very switched-on Brazilian farmers who aren’t afraid to get stuck in to get stuff done,” said former Nuffield Australia foundation chairman and Quirindi farmer, David Brownhill.
He was only recently back from an eye-opening trip to Brazil when asked to host the Agrileader group for half a day.
“Their big farms are really big - 350,000ha is not uncommon - and there’s still 100m hectares of agricultural land which can be opened up for cropping alone,” he said.
“I was happy to talk about what we’re doing, but in reality anybody involved in Australian agriculture should be going to Brazil to see what they can really achieve - and what we’re up against.
“Their soils tend to need lots of fertiliser initially, particularly lime (up to three tonnes/ha), but they’ve embraced cropping and livestock technology to make the most of what they do.”
“And it really helps that some farming areas average more than two metres of rainfall a year.”