Why are there mountains of corn in the open air in the interior of Brazil

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Largest grain harvest in history and low soybean and corn prices result in crowded warehouses and tons of corn exposed to high temperatures, the possibility of rain and attacks by insects and rodents. Storage deficit in the country reaches 118 million tons – also a record. Largest grain harvest in history and low prices for soybeans and corn result in crowded warehouses and tons of corn exposed to high temperatures, possible rain and attacks by insects and rodents COOAVIL/ Disclosure The images taken with a drone are impressive: a mountain golden tree rises next to a set of gigantic grain storage silos. Next to the pile, a grain truck looks like a toy truck and a man in a helmet becomes an almost imperceptible dot. The mountain of corn in the open air, recorded at Cooavil (Cooperativa Agropecuária Terra Viva) in Sorriso, Mato Grosso, is one of many that accumulate in the interior of Brazil, amidst the harvest of the largest corn crop in the country’s history. According to Conab (Companhia Nacional de Abastecimento), in data released on Thursday (13/7), Brazil should produce 128 million tons of corn, adding the three harvests of the 2022/2023 cycle — a growth of 13% in compared to the previous cycle, which had already been a record. The giant harvest has helped to reduce inflation in the country by lowering animal feed and the cost of producing meat, which have already accumulated a price drop of almost 6% in the year, according to the IBGE (Brazilian Institute of Geography and Statistics). The crop has also contributed to a GDP (Gross Domestic Product) higher than expected this year and to record surpluses in the Brazilian trade balance, with the country on track to displace the United States as the world’s largest corn exporter. LISTEN 🎧: Where does corn come from UNDERSTAND 🤔: g1 teaches you how to choose the right corn by hair QUIZ ✔️: Where does corn come from? Test your knowledge But the record corn crop, right after a record soybean crop, in addition to the low prices of both grains, resulted in crowded warehouses and tons of corn stored outdoors, exposed to high temperatures, the possibility of rain and attacks by insects and rodents. The problem has already happened in previous years, but in 2023 it is more serious, according to agribusiness representatives interviewed by BBC News Brasil. According to the Grain Storage Sectorial Chamber of the Brazilian Machinery and Equipment Industry Association (CSEAG-Abimaq), the grain storage deficit in Brazil grew from 83 million tons in 2022 to 118 million tons this year — also a record . The photo quoted at the beginning of the text was given to BBC News Brasil by Cooavil itself. The report also tried to hear a spokesperson for the cooperative, but it was not possible due to scheduling issues. A chronic and growing problem Paulo Bertolini, director of Abramilho (Brazilian Association of Miho Producers), explains that the storage deficit is a chronic problem in Brazilian agribusiness, but it has been getting worse year after year. This is because Brazilian grain production has grown at an average of 9.4 million tons per year, while storage capacity grows by almost half of that: at a rate of 4.8 million tons per year, according to data from Conab and from Abimaq. Thus, with two years in a row of record harvest, the storage of corn in the open air in the second harvest this year happens in unprecedented volume. “It is much more than in previous years and the problem of lack of storage space happened here in Paraná already in the first harvest, for the first time in history”, reports Bertolini. By way of comparison, while the first crop (harvested between January and February) totaled 27 million tons, the second crop (currently in the harvesting phase) should reach 98 million tons, with a growth in volume of 14% compared to to last year’s second harvest, according to Conab. Formerly called “safrinha”, the second Brazilian corn crop exceeds the first since the 2011/2012 cycle, reaching twice the volume in the 2017/2018 period and more than triple in the 2022/2023 cycle. “Now the second harvest is coming in, with quite a large volume of production, and she found the warehouses still full of soybeans. So it is a chronic problem, but this year it got worse substantially”, says the director of Abramilho. “The one who suffers the most is corn, because it has a lower added value than soybeans — a sack of corn is worth less than half that of soybeans”, he adds. “And it produces two and a half times more per hectare, so it occupies two and a half times more space than soybeans would and takes twice as long to dry. So the situation with corn is more serious, in a scenario where Brazil does not has the capacity to process its entire production.” Initial plugin text Low prices In addition to the record harvest, the drop in grain prices also explains the large volume of corn stored in the open this year, says Sadi Beledelli, president of the Rural Union of Sorriso (MT). “Since not only has the price of corn dropped, but the price of soybeans has dropped, many producers have not traded soybeans yet, they are keeping soybeans in storage [à espera de melhores preços]. So it is taking away the space that would be occupied by corn during this period”, he says. “We don’t have enough warehouses in the region to store the two crops, so many warehouses are putting corn in the open, outside.” Beledelli explains that this is possible in Mato Grosso because rains are rare in the region at this time of year. But from September, when the waters return, it will be necessary to put all this corn somewhere, he says. Corn stored in the open in the cooperative’s yard C.Vale, in the São Luiz Gonzaga community, 70 km from Sorriso (MT) Sadi Beledelli via BBC João Pedro Lopes, market intelligence analyst at StoneX, recalls that 2021 and 2022 were years of high prices for grains. account of a combination of crops damaged by climate issues in Brazil and the world; inflationary effects of the covid-19 pandemic; currency devaluation here; and the war between Russia and Ukraine, starting in February 2022, which affected the shipment of Ukrainian grains and the price of agricultural inputs such as fertilizers. In 2023, however, prices show a sharp downward trend, due to the expectation of strong production in Brazil, high supply also in the United States and, more recently, the appreciation of the real, which makes Brazilian exports less attractive. Thus, soybeans, which were traded at the port of Paranaguá (PR) above R$ 200 per 60 kg bag in March 2022, are currently quoted at R$ 145 – a devaluation of 30% compared to the peak, according to data from Cepea/USP (Center for Advanced Studies in Applied Economics, University of São Paulo). Corn, on the other hand, reached R$ 104 per 60 kg bag in March last year, and is currently trading at R$ 55, a 47% devaluation compared to the peak, according to the Esalq/BM&FBovespa index. Corn was quoted at BRL 104 a bag in March 2022, and is currently trading at BRL 55 — a devaluation of 47% in just over a year GETTY IMAGES via BBC And the lack of storage space puts even more pressure on the prices, says Bertolini, from Abramilho. “When cooperatives run out of space to receive the production of their members, the farmer who has not yet sold the production that is about to harvest forces the market, because he needs to get rid of the production that nobody wants to receive, causing prices to collapse”, reports. The loss to producers due to the lack of structure for processing and storing grains is estimated at R$ 30.5 billion in the 2022/2023 harvest, according to a calculation by Carlos Cogo, from the consultancy Cogo Intelligence in Agribusiness, cited by the director of Abramilho. “In our region of Campos Gerais in Paraná, the past corn harvest came to R$ 100 a bag, today it is around R$ 40. This value does not remunerate production costs and the activity starts to operate in the red”, says Bertolini. “It is a loss to the farmer and a disincentive for the next crop, when there will probably be a reduction in the planting area.” ‘Lack of State policy’ According to Abimaq’s estimate, R$ 15 billion in investments per year would be needed to curb the increase in the deficit in storage. “What Brazil lacks is resources for financing compatible with the type of investment required”, assesses Bertolini. He defends the need for more funds for the PCA of the BNDES (Program for Construction and Expansion of Warehouses of the National Bank for Economic and Social Development) and for financing for investment in storage to reach farmers at the end. Corn stored outdoors at Fazenda Felicidade, in Porto Alegre do Norte, Mato Grosso Grupo Ouro Verde/ Publicity In 2022, only 15% of grain storage capacity in Brazil was on farms, while 85% were in urban and industrial areas , managed mostly by cooperatives and traders (large companies dedicated to the global trading of commodities). In the US, by comparison, more than 60% of storage capacity is on farms. The country has the capacity to store the equivalent of one and a half harvests, cites the Abramilho director, based on data from Abimaq. When contacted, the Ministry of Agriculture and Livestock (Mapa) reported that, for the 2023/2024 harvest, R$ 6.65 billion were allocated to the PCA. “There are BRL 2.85 billion to finance warehouses with a capacity of up to 6 thousand tons, which corresponds to 80.9% more resources compared to the 2022/2023 harvest, and BRL 3.80 billion to finance warehouses with capacity above 6,000 tons, or 60.8% above what was programmed in the last harvest”, informed the folder. “In addition, there are other measures to help the producer face the lag, such as the BNDES dollarized line that offers resources with no limit on volume and storage size so that the producer does not have to sell a crop at low prices to place another in the market. storage.” The BNDES, on the other hand, stated in a note that “attentive to the behavior of demand and the needs of the sector, it keeps the BNDES Rural Credit product permanently open”. “It is also worth noting that to meet the segment’s storage projects, in addition to PCA resources, the BNDES also carries out operations in the direct modality, where the bank assumes the credit risk”, said the development bank, citing the lines BNDES Finem and Finame Direct. For Beledelli, from the Rural Union of Sorriso, just increasing the volume of financing is not enough. “A government policy regarding storage has to be implemented urgently in the country”, defends the ruralist. According to the sector representative, a State policy is also needed for the logistical issue, with the improvement of transport conditions, mainly through railroads, and the increase in the capacity of Brazilian ports. He also defends the need for reducing bureaucracy so that the private sector can make this happen. Where does what I eat come from: Corn

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