Post on 14-Jun-2015
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Almanaque Aprosoja Brazil’s Soybean Production
Outlook
September, 2010
Government Policies
Brazilian Environmental Legislation
Private Farms
Legal Reserve
APP
Indian Reservation
State Park
National Park
Parks and Indian Reservations
1- Parks and Indian Reservations 2.294.343 km2 27%
2- Legal Reserve 2.685.542 km2 32%
3- Permanent Preservation Areas (APPs): 1.442.544 km2 17%
TOTAL PRESERVED AREA: 6.059.526 km2 71%
TOTAL REMAINING AREA -BRAZIL 2.455.350 km2 29%
8.514.876 km2 100%
Impact of Preservation Policies in Brazil
Source: Embrapa
Area Proposal
New Forestry Code – Key Points
% of 80%, 35% and 20% remains unchanged
Small farms (up to aprox 300 hectares) exhempted
Areas of permanent preservation can count as legal forest
reserves
Legal Forest Reserves
(% of Tree cover in
Farms)
Riparian vegetation, steep slopes and hill tops remain preserved
Area of APP will now count to form % of legal forest reserves
Reduces from 30m to 15m requirements of riverbank cover in
small rivers
APPs (Areas of
Permanent
Preservation)
Farmers who cleared farms before Jul/08 will not need to replant in
the same area. They will be able to use collective areas/parks.
Farmers who cleared land when it was allowed will be legal now
Regularization of
current farms
5 year moratorium in forest clearing for agriculture Moratorium
Land registry reform and state zoning are also priorities that will contribute to a better
business environment and preservation.
State Official Credit Limit Average Area
(hectares)
Cost of
Production
% Area
Planted with
Rural Credit
Paraná - PR R$ 450.000,00 300,00 R$ 1.161 129%
Mato Grosso - MT R$ 450.000,00 1.200,00 R$ 1.483 25%
Source: Aprosoja/ Agroconsult 2009/10
Farm Credit – Opex Financing
Credit limits need to be different for regions with different scales of production (2009/10)
Soybean Operational Exp Funding - PR Soybean Operational Exp Funding - MT
Banks 11%
Banks 42%
- New Forestry Code
- Minimum price program (PEP, PEPRO)
for cotton and corn
- Biotechnology approvals (RR2BT)
- Capex Funding (BNDES)
- PAC (Infrastructure)
- Biodiesel program
- Kandir Law
- Credit access and cost of credit
- Farm Debts problem unsolved
- Rural Insurance still not effective
- Bureaucracy in infrastructure investments
- Exchange Rate –Overvalued BRL
- Restrictions to foreign investment of land
- Land registry and documentation
Positive Negative
Summary – Public Policies
Soybean Production
in Mato Grosso
Land Use in Brazil Land Use in Brazil
Source: iMEA
Cost of Production
COST OF PRODUCTION - SOYBEANS
SEP 2010
SEASON 09/10 10/11 % Total % Change
1. INPUTS (R$/ha) R$ 956,97 R$ 768,38 61% -19,7%
Seeds R$ 123,61 R$ 116,00 -6,2%
Fertilizers R$ 482,31 R$ 387,50 -19,7%
Chemicals R$ 351,05 R$ 264,88 -24,5%
2. FARM OPERATIONS (R$/ha) R$ 186,34 R$ 176,30 14% -5,4%
3 - OTHER COSTS (R$/ha) R$ 360,30 R$ 315,17 25% -12,5%
TOTAL COST R$ 1.503,61 R$ 1.259,85 -16,2%
(ex. Land and Depreciation) USD 729,91 USD 707,78 -3,0%Exchange Rate crop 09/10 @ R$ 2,06/US$ and crop 10/11 @ R$ 1,78/US$
Hedge Position as of September 15, 2010
PLANTING HARVEST
Source: IMEA – Elaboration - Aprosoja
Soybean Comercialization Status – Mato Grosso
Data from the PROJETO REFERÊNCIA of Aprosoja
47 Farms Monitored
80 k Hectares of Soybean
23 k Hectares of Corn 2nd Crop
This project is not aimed to be the average of the state, but a reference to farmers and researchers.
Farm Financial Summary – Projeto Referência (R$/ha)
Source: Projeto Referencia - Aprosoja
Source: Projeto Referencia - Aprosoja
EBITDA
Gross Margin Soybeans
Gross Margin Corn 2nd Crop
SG&A
38%
Farm Financial Summary – Projeto Referência (R$/ha)
For the season 2010/11 it is predicted an
increase of 61% of the EBITDA due to both
price increase and direct cost reductions
Points to Watch in the 10/11 Season
La Niña. Planting in Mato Grosso delayed for 3 weeks at least. This
could effect 2nd crop yields and also transportation costs. Concern for
drought later in the season in the south of the country (RS), where
weather yields have been good for last two years.
Weather Risk
Around 56% of Brazils corn will be GM this season only in the third
season after approval and 75% of RR soybeans. Corn has 9 GM events
with approved cultivars, while soybeans so far only have RR, even
though there are 5 events approved, including the recently BTRR2
GM Technology
New interpretation of an old law (Lei n° 5.709/71) is creating uncertainty in
the market. This interpretation states that brazilian companies with foreign
ownership should be treated as foreign co.
Restrictions on
Foreign Ownership of
Land
The 20 largest producers in Mato Grosso planted 3 million acres (up
from 1.3 mln acres five years ago) and were responsible for 20% of
soybean output. (Source: IMEA) Consolidation Trend
Soybeans - Area and Production Projections in Brazil
Mato Grosso Brazil
Source: Agroconsult (Brazil) and IMEA (Mato Grosso)
CAGR 2.44 % CAGR 4.92%
Biotechnology
Source: CTNBio, Soystats 2010, Agroconsult (Brazil data)
Adoption of Biotech-enhanced Soybean Seedstock GMOs Approved in Brazil
Soyb
eans
99%
91% 80%
72%
GMO soybeans planted before 2005 were brought
into Brazil illegally from Argentina.
Biotechnology
Source: CTNBio, GMO Compass, Agroconsult (Brazil data)
Adoption of Biotech-enhanced Corn Seedstock GMOs Approved in Brazil
Corn
99%
91% 80%
72%
Source: Aprosoja
170 Million hectares
Pasture Conversion Incentive Index – Mato Grosso There are 170 MM hectares of Pastures n Brazil
Pasture Conversion - Source of Area Growth
Ba
gs (
60
kg
) / h
ecta
re
Cattle Opportunity Cost
Convertion Costs (20%)
Operational Costs (ex Inputs)
Input Costs
Socio-Environmental Responsibility
Marcelo Duarte Monteiro CEO
marcelo@aprosoja.com.br