Comparing Prices: Brazil vs. United States

 In accordance with the direct costs of maize production in Illinois, the direct costs of corn production in Mato Grosso have increased since 2016 (see farmdoc daily, September 26, 2023). Direct costs in Brazil reached record levels during the 2022/2023 harvest season; however, future projections suggest a decrease in the 2023/2024 crop season, which is consistent with Illinois' cost projections. The initial article of 2024 examines the direct costs associated with maize production in the United States and Brazil, the world's largest corn exporters, in the context of their respective agricultural regions. The primary costs of corn in the United States have been higher than those in Brazil on a per-acre basis. Nevertheless, Illinois producers have a cost advantage that is predominantly due to the higher fertilizer costs in Mato Grosso, as evidenced by the adjustment for differences in corn yields through the examination of costs on a per bushel basis.

Procedures and Data

The data presented in this article are sourced from the Mato Grosso Institute of Agricultural Economics (IMEA) and the Illinois Farm Business Farm Management (FBFM) Association. Furthermore, the National Supply Company (Conab), Brazil's agency for food supply and statistics, provides the average maize yields for Mato Grosso that are employed to determine costs on a per bushel basis. The cost of production inputs, including fertilizers, seeds, pesticides (herbicides, insecticides, fungicides), and costs associated with drying, storage, and crop insurance, are included in the direct costs in Illinois and Mato Grosso. The data from Mato Grosso pertain to the second maize crop, safrinha, which is sown in January and February immediately following the first-season soybean harvest. At present, the safrinha crop is responsible for approximately 75% of Brazil's total maize production. Brazil has two distinct regions for maize production: the traditional Southern and Southeastern agricultural producing regions and the Center-West agricultural region, which is primarily the State of Mato Grosso, the largest producer of corn in Brazil.

Total Direct Costs

From 2016 to 2023, the total direct costs for the second crop in Mato Grosso have increased from $220 per acre to $269 per acre, representing an average annual growth rate of 2.9%. However, the average annual growth rate of 6.2% for the total direct costs of corn production in central Illinois has been from $380 to $579 per acre from 2016 to 2023 (refer to Figure 1a). Central Illinois anticipates a decrease in total direct costs for the 2024 crop year, with fertilizer costs anticipated to decrease from 2023 levels. Conversely, the 2024 maize crop in Mato Grosso is anticipated to experience a 3% increase in total direct costs. In general, the direct costs of producing maize in Mato Gross have been lower on a per-acre basis than in Illinois since 2016. Nevertheless, Brazil fails to attain the same maize yields as the United States (see farmdoc daily, January 12, 2022). For instance, the average corn yields in central Illinois and Mato Grosso were 224 bushels per acre and 93 bushels per acre, respectively, from 2016 to 2022. The total direct cost figures for both regions are presented in Figure 1b on a dollar per bushel basis. The total direct costs for maize production in both regions have been significantly comparable, with central Illinois averaging $1.98/bu and Mato Grosso averaging $2.24/bu, according to this metric.

The cost of fertilizer for second crop maize in Mato Grosso

Increased from $73 per acre in 2016 to $141 per acre in 2023. During the same period, the cost of fertilizer for maize production in central Illinois has increased from $154 to $250 (refer to Figure 2a). In Mato Grosso, fertilizer costs reached record levels for the 2023 crop, similar to Illinois. However, a substantial decrease is anticipated for the 2024 crop. The cost of pesticides for soybeans in Mato Grosso has increased from $43 per acre in 2016 to $45 per acre in 2022. In contrast, the cost of pesticides for maize production in central Illinois has increased from $64 in 2016 to $136 in 2023. In Illinois, the cost of pesticides per acre has consistently been higher than in Mato Grosso, as is the case with fertilizers and seed (see Figure 4a). In recent years, there have been substantial relative increases in the costs of pesticides in both central Illinois and Mato Grosso. Similar to Illinois, the direct costs of maize production in Mato Grosso, the largest corn-producing state in Brazil, have increased since 2016. Since 2016, central Illinois has maintained an average cost advantage over Mato Grosso when comparing direct costs on a per bushel of production basis. This cost advantage is a result of the higher per bushel fertilizer costs in Mato Grosso, as well as the higher post-harvest costs of drying and storage. Conversely, the expenditures of both seeds and pesticides in central Illinois and Mato Grosso have been significantly similar over the past nine crop years.