Agriculture in the Pan Amazon: Global markets for soybean and corn crops

Mongabay has begun publishing a new edition of the book, “A Perfect Storm in the Amazon,” in short installments and in three languages: Spanish, English and Portuguese.
Author Timothy J. Killeen is an academic and expert who, since the 1980s, has studied the rainforests of Brazil and Bolivia, where he lived for more than 35 years.
Chronicling the efforts of nine Amazonian countries to curb deforestation, this edition provides an overview of the topics most relevant to the conservation of the region’s biodiversity, ecosystem services and Indigenous cultures, as well as a description of the conventional and sustainable development models that are vying for space within the regional economy.
Click the “A Perfect Storm in the Amazon” link atop this page to see chapters 1-13 as they are published during 2023.

Because soybeans are annuals, soybean prices can vary sharply over relatively short periods of time. Farmers can choose to expand soy cultivation when prices are ‘good’, which eventually leads to oversupply and a drop in prices; this motivates farmers to switch crops or leave land idle. For this reason, soybean farmers are more attuned to global markets when compared to beef producers and more agile compared to palm oil producers.

Brazil exports between seventy and eighty per cent of its national harvest of soybeans, while Bolivia exports as much as 85 per cent of its production. Consequently, the global market has an overriding impact on the farm economy in both countries. The global demand for soy is driven by the combined consumption of vegetable oil and vegetable protein. Soy oil competes with palm oil, which is more competitive based on price, but the revenue producers enjoy from soy cake ensures that it will continue to be widely cultivated for the foreseeable future.

Geopolitics also plays a role. The trade war between the United States and China initiated by the Trump administration in 2017 led to a dramatic increase in the export of soybeans from Brazil to China. Subsequent agreements led to a return of exports from the United States to China, but Brazil has consolidated its position as the world’s largest exporter of soybeans (since 2013) and displaced the United States as the largest producer in 2019.

China is the world’s largest importer of soybeans and Brazil is the world’s largest exporter. Tensions between the United States and China have led to an increase in exports from Brazil. Approximately 35% of Brazil’s production comes from the Legal Amazon, where harvests are growing at approximately double the rate as that seen for extra-Amazonian producers. Data source: FAOSTAT and the USDA/FAS.

Demand for soy is expected to double by 2050. In 2020, Brazil exported approximately fifty per cent of total production to China; however, increased growth in future exports is more likely to come from South Asia as this region becomes wealthier and increases its consumption of animal protein dependent upon soy cake. Similarly, population growth and increased per capita income in Sub-Saharan Africa are projected to increase consumption of chicken and pork.

If future supply chains remain tied to current production landscapes, South American producers will provide most of the increase in future production. There are other options, but if the projected increase in global demand for soy is met only by production in South America, this would almost inevitably lead to new deforestation in the Amazon or, more probably, large-scale conversion of natural grasslands in the Cerrado, Campos and Pampa biomes.

Over the short term, Brazilian producers will continue to expand production because their technological know-how, abundant land resources and post-harvest infrastructure makes expansion an attractive investment. The improvement of bulk transport systems will facilitate the expansion of production in Northern Mato Grosso and increase that region’s competitive position in global markets.

*Soybean field in the Brazilian Amazon. Image by Fabio Nascimento.*

Increases in cultivation area will most likely occur on non-forest landscapes, including both cultivated pasture within the Amazon biome , as well as by the conversion of Cerrado landscapes, especially in the northeast sector of the Pan Amazon.

Over the medium term, pressure on the Amazon from soy and feed grains will depend on the evolution of the global market. Future supply chains could be radically different than those that dominate today. For example, the increase in demand from Sub-Saharan Africa could be met by policies designed to ensure that region remains self-sufficient in food production. Similarly, the EU may choose to embrace an emerging trend to source non-GMO and organic soy from producers in the Ukraine.

“A Perfect Storm in the Amazon” is a book by Timothy Killeen and contains the author’s viewpoints and analysis. The second edition was published by The White Horse in 2021, under the terms of a Creative Commons license (CC BY 4.0 license).

Read the other excerpted portions of chapter 3 here: