Brazilian soybeans

There is an interesting article in this months Progressive Farmer magazine (an industrial ag publication) about the meteoric rise of the soybean industry in the Amazonian region of Brazil–from virtually no production 15 years ago to 9% of the world’s supply today.

The original trigger for this was not an increased demand for soybeans in Brazil (or even South America), but rather in China. In the 1990’s China abandoned its policy of soybean self-sufficiency and began importing beans–going from nearly no imports in the 1990’s to importing over half the soybeans traded on the global markets in 2014.

So virgin land in Brazil was converted to soybean production, where 40% of the land is “double-cropped” each year (bringing two crops to harvest each season). Land purchased for $160/acre now sells for $6,900 per acre and 25% of the farms in the region coverĀ 15,000 to 50,000 acres. Vast fortunes have been made by investors and agribusinesses.

A belated attempt by the government to preserve forest (passed in 2012) requires the industry to maintain some land in forest and experts say it will be necessary to reforest about 2.5 million acres to bring them into compliance.

So Brazilian forest is cleared to make room for soybeans to be floated across two oceans to China.

How can that make sense?