How Brazil Became the World’s Largest Exporter of Soybeans
Brazil is the world’s leading producer and exporter of soybeans, but how did it achieve this position? In this article, we will explore the history, factors and challenges of Brazil’s soybean industry, and what the future holds for this important crop.
History of soybeans
Soybeans are a versatile legume that can be used for food, feed, oil, biodiesel and industrial products. They are also a major source of protein and income for many farmers around the world. Soybeans were first domesticated in China more than 3,000 years ago, and later spread to other parts of Asia, Africa and Europe. However, it was not until the 20th century that soybeans became a global commodity, thanks to the development of new varieties, processing technologies and markets.
Growth factors
Brazil’s soybean story began in the 1960s, when the government encouraged farmers to plant soybeans as a way to diversify their crops and improve their incomes. At first, soybeans were mainly grown in the southern states of Paraná, Rio Grande do Sul and Santa Catarina, where the climate and soil were suitable for the crop. However, in the 1970s and 1980s, Brazil’s soybean production expanded rapidly to other regions, especially the central-western states of Mato Grosso, Mato Grosso do Sul and Goiás. This was made possible by several factors, such as:
- The development of new soybean varieties that were adapted to tropical conditions and resistant to pests and diseases.
- The improvement of infrastructure, such as roads, railways and ports, that facilitated the transportation and export of soybeans.
- The availability of cheap land and labor in the frontier areas of the Cerrado, a vast savanna biome that covers about 20% of Brazil’s territory.
- The adoption of modern agricultural practices, such as no-till farming, crop rotation and integrated pest management, that increased yields and reduced environmental impacts.
- The increase in domestic and international demand for soybeans and soy products, driven by population growth, urbanization, income growth and dietary changes.
As a result of these factors, Brazil’s soybean production grew from about 1.5 million metric tons in 1970 to about 121.8 million metric tons in 2020, making it the world’s largest producer of soybeans. Brazil also became the world’s largest exporter of soybeans in 2020, accounting for about 49.7% of the total global value of exports. Brazil’s main export markets for soybeans are China, the European Union, Thailand, Turkey and Iran.
Challenges and risks
However, Brazil’s soybean industry also faces some challenges and risks, such as:
- The dependence on external inputs, such as fertilizers, pesticides and machinery, that increase production costs and vulnerability to price fluctuations.
- The competition from other major soybean producers and exporters, such as the United States and Argentina, that have lower production costs and higher yields.
- The environmental and social impacts of soybean expansion, such as deforestation, land degradation, biodiversity loss, greenhouse gas emissions, water pollution, land conflicts and human rights violations.
- The effects of climate change on soybean production, such as droughts, floods, heat waves and pests outbreaks.
Strategies
To overcome these challenges and ensure the sustainability and competitiveness of its soybean industry, Brazil needs to adopt some strategies, such as:
- Investing in research and innovation to develop new soybean varieties that are more productive, resilient and nutritious.
- Promoting good agricultural practices that enhance soil health, water conservation and biodiversity protection.
- Diversifying its export markets and products to reduce its reliance on China and raw soybeans.
- Strengthening its domestic consumption of soy products to improve food security and nutrition.
- Implementing policies and regulations that balance economic development with environmental protection and social justice.
Brazil’s soybean industry is a remarkable example of how a country can transform its agriculture sector through innovation, investment and market access. However, it also shows that there is no easy or simple way to achieve this goal. Brazil still has a lot to do to ensure that its soybean industry is sustainable and competitive in the long term.
Brazil: The World’s Largest Soybean Exporter
Brazil is the world’s leading producer and exporter of soybeans, but rising domestic usage and record sales to China have drained supplies. In 2022, Brazil accounted for about 49.7 percent of the total global value of soybean exports, followed by the United States at 32 percent.
Brazil’s soybean production has increased steadily over the years, reaching 121.8 million metric tons in 2020, up from 96.4 million metric tons in 2016. The main drivers of this growth are the expansion of cultivated area, the adoption of improved seeds and technologies, and the favorable climate conditions. Brazil’s soybean exports have also grown significantly, reaching 82.3 million metric tons in 2020, up from 51.6 million metric tons in 2016.
China is the main destination for Brazil’s soybean exports, accounting for about 75 percent of the total volume in 2020. China’s demand for soybeans has increased due to the recovery of its hog industry from the African swine fever outbreak and the trade tensions with the United States. However, Brazil’s domestic demand for soybeans has also increased, especially for biodiesel production and animal feed. As a result, Brazil has faced a tight supply situation and has even resorted to importing soybeans from other countries, such as the United States and Paraguay.
The United States: The World’s Second Largest Soybean Exporter
The United States is the world’s second largest producer and exporter of soybeans, but its market share has declined in recent years due to trade disputes and weather disruptions. In 2020, the United States produced 112.5 million metric tons of soybeans, down from 116.9 million metric tons in 2016. The main factors that affected the U.S. soybean production were the trade war with China, which reduced export demand and prices, and the droughts and floods that damaged crops in some regions.
The United States exported 60.4 million metric tons of soybeans in 2020, down from 55.5 million metric tons in 2016. China was still the largest buyer of U.S. soybeans, accounting for about 60 percent of the total volume in 2020, but its share was lower than in previous years due to the tariffs imposed by both countries. The United States also faced competition from other exporters, such as Brazil and Argentina, which offered lower prices and higher quality products.
However, the U.S. soybean exports have rebounded in late 2020 and early 2021, as China increased its purchases to fulfill its commitments under the phase one trade deal and to replenish its inventories. The United States also benefited from a weaker dollar and a lower supply from South America due to weather delays and logistical problems. As a result, the U.S. soybean stocks have depleted to their lowest level since 2013, creating a supply crunch and pushing prices higher.
The Future Outlook for Soybean Trade
Soybean trade is expected to remain strong in the coming years, as global demand continues to grow faster than supply. According to the U.S. Department of Agriculture (USDA), global soybean consumption is projected to increase by 2.6 percent annually from 2020 to 2030, while global soybean production is projected to increase by only 1.9 percent annually over the same period.
The main drivers of global soybean demand are China’s growing population and income, which increase its consumption of meat and dairy products that require soybeans as feed ingredients; and the rising use of biofuels that require soybeans as feedstocks. The main challenges for global soybean supply are the limited availability of arable land and water resources, the environmental and social impacts of deforestation and land use change, and the effects of climate change on crop yields and quality.
Brazil and the United States are expected to remain the dominant players in the global soybean market, accounting for about 80 percent of total exports by 2030. However, they will also face competition from other emerging exporters, such as Argentina, Paraguay, Canada, Russia, Ukraine, and India, which have potential to increase their production and export capacity.
References:
http://www.ncagr.gov/pollinators/documents/DominicReisig-NCPollinatorProtectionSoybeans.pdf
https://www.statista.com/statistics/961087/global-leading-exporters-of-soybeans-export-share/
https://en.wikipedia.org/wiki/List_of_countries_by_soybean_production
https://apps.fas.usda.gov/psdonline/app/index.html#/app/advQuery
https://www.forbes.com/sites/salgilbertie/2020/10/20/the-worlds-largest-soybean-exporter-wants-to-import-soybeans-what-happened/
https://www.forbes.com/sites/salgilbertie/2021/01/25/the-worlds-two-largest-soybean-exporters-have-depleted-their-supplies/
https://www.ers.usda.gov/webdocs/outlooks/100247/oce-2021-1.pdf
https://en.wikipedia.org/wiki/List_of_countries_by_soybean_production
https://www.forbes.com/sites/salgilbertie/2021/01/25/the-worlds-two-largest-soybean-exporters-have-depleted-their-supplies/
https://www.statista.com/statistics/961087/global-leading-exporters-of-soybeans-export-share/
https://www.tridge.com/intelligences/soybean/BRA
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