Brazilian cotton should surpass the US, with double productivity

Texas or Mato Grosso? If it were a straight points championship, the two states would be competing for the title of largest cotton exporting region in the world. While Texas accounts for 42% of production in the United States, leader in shipments, Mato Grosso alone represents 70% of cotton plantations in Brazil, second in international trade.

Cotton market analysts are already taking it for granted: Brazil will soon assume the position of largest exporter, and cotton will join the select group of commodities in which the country is number 1 in global exchanges. Soy, cellulose, sugar, chicken, beef, coffee and corn are already on this list.

What makes Brazil’s performance in cotton more notable is that corporate cultivation began on lands in Mato Grosso about 30 years ago, while the white fields of Cotton Belt have been part of the landscape of the Southern United States for more than 200 years.

In this clash between the traditional and the modern, the Brazilian Center-West has a favorable climate, cutting-edge technology and high professionalization of producers, and is expected to increase the planted area by 8.4% in the 2022/23 cycle. American competitors, on the other hand, suffer from repeated droughts, loss of lint quality and customers, turning to other crops. In Texas, the United States Department of Agriculture (USDA) projection is that the area cultivated with cotton will shrink by 21% next season.

Leadership in cotton exports is a matter of time

Thus, in the 2023/24 cycle, Brazil for the first time is expected to surpass cotton production in the United States, reaching 3.17 million tons, against 2.85 million. This historic turn will lead to a pairing with rivals in exports, with the projection that the USA will still be slightly ahead, with 2.66 million tons shipped against 2.57 million, according to the USDA.

At first glance, they may seem like temporary achievements, due to climatic contingencies. Analyzed more closely, however, the numbers reveal clear inverse trends involving the two countries.

Cultivating almost double the area dedicated to cotton in Brazil – 3.24 million hectares compared to 1.7 million – the Americans harvest less than their competitors in the Southern Hemisphere. This is explained by Brazilian productivity, even with 95% of crops without irrigation, it is double that of the United States, which irrigates 20% of the area. Here, an average of 1,900 kg per hectare is harvested, and, there, close to 900 kg per hectare.

“Both have China as their main customer. Every year American exports have been falling, and Brazilian exports have been increasing. The forecast is that the USA will continue to face drought in the coming years, having to reduce its exports. This creates uncertainty in the market and gives Brazil the opportunity to have a market share even bigger”, says Lucy Farrand, an analyst at commodities trader Czarnikow, in London.

Almost 90% of Brazilian cotton has a sustainable seal

In this market dispute, sustainability is both the biggest challenge and the biggest opportunity for cotton producers. And in this regard, global leadership is Tupiniquim. The Better Cotton Initiative (BCI) sustainability seal, based in Switzerland, already certifies 84% ​​of Brazilian production, compared to a global average of just 22%. “It is an extremely high index that shows that the supply chain is sustainable in Brazil and is working, and that is what companies are looking for at the moment. The production chain needs to be traceable, you need to know the origin of the cotton. There is still a lot of work to be done, but Brazil is certainly leading this process”, points out Farrand.

In addition to the difference in certified sustainability, cotton farmer Alexandre Schenkel, president of the Brazilian Association of Cotton Producers (Abrapa), highlights three factors that drive the national plume: flat and mechanizable soil, favorable climate and highly professional farmers. Another important competitive advantage of the Cerrado is that 65% of the harvest is in the off-season or “double-crop”. It is the second crop of the year, grown right after the soybean harvest.

“We have a food harvest followed by another fiber harvest. This gives Brazil an advantage and we can produce twice as much”, points out Schenkel. The fact that the rains “cut off” in Central Brazil around the month of May is another ally of cotton, which practically never loses quality due to excess moisture at harvest. “This also helps with the brightness and color of the cotton, as long as it has been handled correctly,” he explains.

Cotton farmer is a businessman and cultivates on a large scale

Varieties resistant to pests and diseases, end-to-end mechanization, favorable soil and climate contribute to the success of Brazilian cotton. But they don’t explain everything, observes Miguel Faus, president of the National Association of Cotton Exporters (Anea). “The most important thing is the seriousness of the Brazilian producer. We are well ahead of them. We have businesspeople who seek results, but respecting all issues. The profile of the average American producer is more accommodating, sometimes waiting for a crop failure to gain the insurance they have there. The focus here is on larger areas and, in terms of competitiveness, we are well ahead, even though people believe that this is not possible,” he says.

If China is the largest global consumer of cotton, India is the largest producer, but with productivity rates still very low. The Indian average is 447 kg per hectare, compared to a Brazilian average almost four times higher. This performance means that feather agribusiness has a land-saving effect in Brazil. “In the past, we produced very little cotton on 3 million hectares in the semi-arid region and 1 million in São Paulo and Paraná. We needed 4 million to supply the domestic market. Today we plant 1.7 million hectares, we supply the domestic market and we are still the second largest exporter in the world”, highlights Alderi Emídio de Araújo, general manager of Embrapa Algodão, in Paraíba.

In terms of product quality, cotton “Made in brazil” would have already matched and even surpassed the American competition, but this information still needs to be spread to international markets. Miguel Faus, from Anea, points out that Brazilian cotton is building a relationship of trust with customers, and this takes time. “American cotton has the green card, which the government guarantees. Spinners trust him because of this. Australian cotton does not have this, but the market already recognizes it as being of superior quality. And we are creating reliability. Each business is important, within each country you have spinning mills that buy good, medium and bad cotton. You need to know the factory, know the owner”, he highlights.

In addition to getting to know customers’ idiosyncrasies during technical visits, cotton farmers have encouraged the opposite path, organizing excursions for buyers to Brazilian farms, so that they can see on site sustainable practices. More recently, at the beginning of the year, the strategy expanded to marketing with major brands, and directors from Zara and Levi Strauss & Co. were in the Midwest on field visits.

Cotton takes the lead in 30 years

Overtake the United States? “It could happen in two or three years, but we don’t have that as a goal. Our objective, both as an exporter and producer, is to increase our participation in each market, offer increasingly higher quality and consolidate the brand of our cotton in all markets. Leadership will be a consequence of this work”, says Faus.

It doesn’t even seem like we’re talking about the same country that 30 years ago was struggling in cotton production, decimated by the boll weevil plague, low productivity and the opening of the market to subsidized cotton from the United States. Interestingly, as a report from the People’s Gazette, was the “soy king” of the 80s, Olacyr de Moraes, who bet on the potential of cotton for the Central-West, in technological and large-scale ways. Soybeans, corn, millet, sorghum and brachiaria continue to interact with cotton in the crop rotation system. And so “double crop” of soybeans and cotton, in the same season, is an inaccessible difference for countries with cold climates, and can only be practiced below the Equator.