Soya out of favour as maize gains in Brazilian popularity stakes

The Public Ledger -- Soybeans are falling out of favour in Brazil with the banning of purchases from deforested parts of the Amazon Basin and maize becoming increasingly attractive proposition for farmers given recent price rises due to the washed-out US crop.

Brazil's new environment minister reached an agreement with the grain processing industry to ban purchases of soya from deforested Amazon until July 2009, winning praise from environmentalists.

They called environment minister Carlos Minc's initiative essential to the protection of the world's largest rainforest. Deforestation in the region quickened in the past months as world grain prices continue to set record highs.

The moratorium is a commitment by the local Vegetable Oils Industry Association, which includes big crushers such as Cargill, Bunge, ADM and Louis Dreyfus, and the Grain Exporters Association to extend the expiring, one-year ban that began in July of 2006.

"The decision today is very important as it shows a leading sector in Brazilian agribusiness can guarantee food production without the need to cut down one more hectare of Amazon," Paulo Adario, Greenpeace Amazon campaign director, said in a note.

Deforestation of the Amazon is on course to rise after three years of declines, with figures for April released earlier this month showing a startling 434 square miles (1,123 sq km) of trees lost in the month.

Maize is becoming just as attractive as soy to farmers in the Brazilian state of Parana, said Anderson Galvao Gomes, anagribusiness consultant at Celeres.

"Maize will be a barrier to soya expansion in Parana, without a doubt," he said.

"It's not necessarily the price that's going to be the deciding factor though," he added, citing better maize than soya returns in Parana these days.

Last year, because of competition from maize and sugarcane, Parana soya expansion was less than 1%, according to government estimates from the agriculture ministry.

"Farmers will have to consider credit availability and warehousing space. But right now the market is favouring both soya and maize and Parana doesn't have the farm land available to expand both," he said. Normally, farmers sell two bags (of 60 kg each) of maize for what they can get for one bag of soyabeans. But in May, that fell to 1.9 bags of maize per bag of soyabeans.

Maize is Brazil's No. 2 crop behind soyabeans, of which Brazil is the world's second-largest producer behind the U.S.

Maize competes with soy for cropland in Brazil's south and is positive in the western central region. However, "I don't see maize competing in Mato Grosso," Mr Gomes said of the No. 1 soya-producing state in the nation.