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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. | |
