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USDA RELEASES REPORT SHOWING BRAZIL'S COMPETITIVE ADVANTAGE IN RAISING SOYBEANS


Source: USDA news release

The United States and Brazil compete to satisfy the global demand for soybeans. Soybean exports contribute billions of dollars to the U.S. economy each year even as Brazil's exports have gradually eroded the U.S. share of the global soybean market.

Researchers with USDA, Economic Research Service (ERS) compared factors affecting the two countries' competitiveness, including costs of both production and marketing. They determined that, on average, production costs per acre for soybeans in Brazil were 22.5 percent lower than U.S. costs from 2010/11-2021/22. Lower capital and land costs accounted for most of this difference. Brazil's farmers largely hire out services to provide equipment and labor for field operations, whereas U.S. farmers tend to own their machinery.

Land costs were also higher in the United States, where one crop is typically harvested per marketing year. Brazil's abundant land resources and its capacity to grow two crops per year increase both the output and revenue generated per unit of land. On aggregate, U.S. costs to produce an acre of soybeans increased 2.6 percent annually from 2010/11-2021/22, while Brazil's costs increased 0.5 percent, not adjusting for inflation.

Factors driving the increase in U.S. costs per acre were higher fertilizer, pesticide, machinery, repair, and land costs. In Brazil, rising fertilizer and pesticide costs represented the bulk of the increase. In both countries, transportation of soybeans to ports adds to the cost of soybeans paid by overseas buyers. However, Brazil's investments in overland transportation infrastructure have reduced the relative marketing cost for exporting soybeans.

Average inland transport costs per metric ton in 2017/18-2021/22 in Brazil decreased by 21.4 percent compared with 2008/09-2012/13.


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