E-mail this article to
yourself or a friend.
Enter address:


Economist:Brazil could overtake U.S. in food production

(Thursday, Sept. 12, 2002 -- CropChoice news) --

by Julianne Johnston, AgWeb: Brazil may replace the United States as the world's breadbasket unless the US solidifies its agricultural research and redesigns its farm programs, says University of Minnesota professor G. Edward Schuh.

"When I talk to U.S. farmers, I tell them their future competition will likely be with Brazil," Schuh says. "We have let our support for agricultural research decline in this country, while Brazil continues to support its agricultural research. And technological advances in Brazilian agriculture have been phenomenal in recent years."

One of the reasons for this belief, says Schuh, is how Brazilians can effectively use tropical cerrados soils. "This land is cheap and you can triple and quadruple yields with only modest investments in lime and phosphorus fertilizer," he says. "The government needs to invest in the physical infrastructure to open up these vast areas, and it is doing that."

In addition, Schuh notes the recent decline in the value of Brazil's currency, increasing their competitiveness. "Interestingly enough, Brazil's producers are holding their large crop off the market in anticipation that the value of the currency will decline even further as the election becomes closer."

Still, Schuh says it's in US producers best interests for Brazilians to be aided through this currently crisis. "Although a weak currency is good for Brazil's export sectors, it is not good for the economy as a whole since it causes per capita income to decline," he says. "An increase in per capita income is what drives the Brazilian market for our exports to them. And there is a large population of people in Brazil who would be a strong market for US products if their incomes were to rise."

But if we do lose our competitive advantage in agriculture to Brazil or other countries, "it will be largely our own fault," Schuh says. For example, he notes the US is still more efficient than Brazil at keeping soybean operating costs low. "But when you factor in land costs, the competition is a lot tougher," he says. "The value of current farm subsidies is capitalized into the value of land. This drives total production costs up, with the danger that the US is pricing itself out of the market."

From a legislative standpoint, Schuh says the US needs to change the way it addresses the chronic income problem in agriculture. "To address the chronic income problem of farmers, we need to disconnect the income supplements from the use of land," he says. "In that way, the benefits will no longer be capitalized into the value of the land, which drives up costs." Schuh says more attention should be given to rural development, or the expansion of nonfarm activities in rural areas. If that happens, more farmers could live on their farms, hold productive off-farm jobs and remain productive citizens in their home communities.

Dwindling agricultural research dollars also weaken the US competitive edge, compared to Brazil and other countries, he believes. States are not committing public dollars for agricultural research as they used to, and even private sector research has declined over the past 12 years.