BRAZILIAN APPROACH TO REDUCING PRODUCTION COSTS 1

Transcription

1 BRAZILIAN APPROACH TO REDUCING PRODUCTION COSTS 1 Eleusio Curvelo Freire Cotton Consultant, Brazil Ziany Neiva Brandão Precision Agriculture Specialist, Brazil 1. Factors that had induced the continuous increase of production costs in Brazil In the last decade, Brazilian cotton producers modernized and extended the planted area with high level of productivity. They also improved the quality of the produced cotton. As a result, the country returned to the fourth position of fiber cotton exporting. With an annual production higher than one million tons of plume/year, has been possible to supply the Brazilian industries and to export more than 4 thousand tons/year, being generated surplus to the Brazilian trade balance (Figures 1e 2). Involved in this effort and remunerated for international good prices, but still without access to new transgenic cultivars, the producers saw their production costs become higher, harvest after harvest. If in the end of the last century, the Brazilian cotton had low costs and high competitiveness, this situation was moving to each harvest, until the point of the 23/4 harvest, when the costs surpass the average cotton costs production of the United States (Figure 3). On the other hand, the values gotten in 24/5 and 25/6 harvests were the lowest in the last six harvests (Figure 4), what forced the producers to use strategies to reduce production costs. Analyzing the components that had resulted in the steady rise of the cotton production costs in the savannah of the Center-West of Brazil, many factors have contributed for this situation. Some of them are listed below: 1) Preferential use of cultivars with high fiber productivity, but with susceptibility to viruses, that result in the continue rise of the insecticides applications against transmitter plagues of viruses. 2) Gradual expansion of the cotton boll weevil plague (Anthomonus grandis), in the not colonized areas of savannahs that had induced the increase of insecticide use. 3) Continue growing of fertilizer doses giving proportional returns of productivity. 4) Introduction of cultivars with high income of plume, but sensitive to leaf diseases, which had induced to increase the fungicide use. 5) Unavailability for national producers of transgenic cultivars and generic defensives. 6) The politics of high interests that induced to strong cambial discrepancy, resulting in low remuneration to the Brazilian exporters. 7) The components of production costs not associated to the dollar (salaries, taxes, fuel and freights), that had their prices continuously increased for the Brazil internal politics. 1 Trabalho apresentado na 65ª.Reunião Plenária do Comitê Consultivo Internacional do Algodão Goiânia, Go- 14 de setembro de 26

2 8) The labour and environmental legislation, which had forced the farm administrations to raise its costs. 9) Aggravation of phytosanitary problems and; 1) Exporter requirements, which led to the producers invest in peasants training, technological advice and, in modernization of the implements and ginning Área-1 ha Produção-1 t Produtividade-kg/ha Figure 1 - Evolution of the area, production and productivity of plume: from 198 to 25 (Source: Conab) ESTIM 25 Importação Exportação Saldo Figure 2 - Brazil Cotton in Plume - Remainder of the trade balance: from 1996 until 25 (Source: Conab)

3 R$/HA Years ROND-DEF ROND-CT CS-DEF CS-CT EUA-DEF EUA-CT Figure 3 - Comparative production costs of defensives (DEF) and total costs/ha (CT), in the regions of Rondonópolis-MT (ROND) and South Chapadão (CS), from 1997 to 26 (Source: Adaptation of Conab and Economic Research Service-USDA) R$/lp 2,6 2,52 2,44 2,36 2,28 2,2 2,12 2,4 1,96 1,88 1,8 1,72 1,64 1,56 1,48 1,4 1,32 1,24 1,16 1,8 1, Cepea/Esalq Indicator (credit: 8 days) Comparasion 2 to 26 - monthly average- deflated January February March April May June July August September October November December Figures deflated by IGP-DI Brazil, Based value on May/26 = 1. Figure 4 - Prices achieved with cotton in Brazil, period of Source: CEPEA-ESALQ.

4 2. Strategies used for the producers to reducing of production costs The main strategies used for the savannah cotton producers to reduce the cotton production costs in Brazil are the following ones: 2.1 Farm Strategies Implantation of a crop rotation program as the main strategy for the traditional cotton producing areas, that present high infestations of Eutinobrothus brasiliensis and fusariumnematodes complex, to save insecticides and fungicides; Implantation of no tillage system especially in the cotton-soy bean-maize intercropping that provides an yield 17% higher than any other combination, as well as an economy of diesel oil and machine hours, leading to less mechanized operations; Agriculture-Cattle Raising integration, especially in the cotton-soy-maize+brachiaria intercropping that promotes reduction in the use of herbicides and fungicides, besides an additional income provided by cattle raising; Substitution of viruses sensitive cultivars for resistant cultivars, that reduces in 2% the costs of plagues control and in 1% the total costs of production; Substitution of longer cycle cultivars for average cycle cultivars in the conditions of dry land and average cycle for precocious cultivars in the irrigated conditions, as an strategy for attainment of higher productivity and costs reduction to control the boll weevil plague; Increase of the capacity and efficiency of the soil preparation equipments, planting, harvest and crop residual destruction, also to make possible the use of the cotton in the system of no tillage, has reduced the producing costs in 3% and the working expenditures; Using of more rational level of fertilizations based on historical of area and focusing the necessities of the main system culture, has reduced fertilization costs, that reached 18% of the total costs; Rationalization of all activities (phytosanitary control, planting, harvest), looking for to carry through them in the more adjusted phases implies in lesser uses of the supplies and less losses, including rework; Use of generic defensives in applications focusing the plague or disease that reached the control level, instead of usingproduct combinations, has contributed to reduce the defensive costs that arrive to be greater than 3% of the production costs; With the use of transgenic cultivar simultaneously resistant to larval and herbicides, is obtained 4,1% of reduction to the total costs on crop management, comprising payments of royalties and licensing; Use of owner seeds, although highly questionable, has reduced in 5% the cost of seeds, saving 1.5% of the total cost; Use of biodiesel (renewable energy) in substitution to diesel will be able to reduce 5% of fuel costs that correspond to 8% of the farming costs. In other words, it is an economy of US$6./ha Organization Strategies Organization of the producers in cooperatives for acquisition of supplies, exportation and HVI analyzes, have obtained reductions up to 3% in the supply acquirement, in addition to exemption or reduction of taxes like PIS or Confins; Cooperatives organization for cotton biodiesel production (R$,712 in the Northeast to R$,975 in the Center West), or soy bean biodiesel (R$,952 in NE and CW), negotiating part of the production for use of the people cooperated; Request of tax reduction in diesel and biodiesel for use in the agro-business, as well as importation release of the generic defensives from MERCOSUL, without taxes;

5 Request to accelerate researches and commercial releases of transgenics and generic for production and commercialization in Brazil; Requesting reduction of the interest taxes (currently 14% on the average) and elimination of the cambial imbalance that is 22.7% below of the correct quotation; Demanding changes for approval of commercial releases in the CTNBIO, with simple majority. Current legislation makes commercial releases unfeasible and burdens the costs of the Brazilian producers; Continue the claim for one more just international trade, with reduction of the agricultural subsidies; Improvement of logistic for reduction of the exportation costs, including the roads, railroads and ports.

6 Brazil: Last Century Crisis BRAZILIAN APPROACH TO REDUCING PRODUCTION COSTS Eleusio Curvelo Freire Cotton Consultoria Ziany Neiva Brandão Precision Agriculture Engineer Cotton Embrapa Gradual expansion of the cotton boll weevil plague ; Reduced of planted area 75%; Internal supplying insufficient 6%; Cotton importation was above 5 thousand ton/year; Lost about 1 million jobs in the field and 5 thousand at the industry; Commercial deficit over US$ 1,1 billion in 1967 Plant Localização Production da produção Location em in ha Cotton Grown Changes in the last 1 years Enhancement of cotton grown at the Brazil savanah (85% of production); Producers improvement and specialization; Generation and transference of technology US$6,6 million/year Cotton productivity changes from 419 kg/ha to 2.96 kg/ha over than 69%; Intensive uses of equipments, agrochemicals and workers; Insufficient farm industrialization, with 193 cotton ginning replaced; Annual exportation reached 39. tons of plume/year; Commercial Trade with US$ 4 thousand/year; Grown potential to 4 mil de of hectares. Plant Localização Production da produção Location em in 25 Evolution of the area, production and productivity of plume: from 198 to 25 (Source: Conab) ha Área-1 ha Produção-1 t Produtividade-kg/ha 1

7 Brazil Cotton in Plume - Remainder of the trade balance: from 1996 until 25 (Source: Conab) ESTIM 25 Importação Exportação Saldo BRAZIL SAVANNAH TRANSFERENCE OF TECNOLOGY EVENTS Center-East plant grown overview 24/5 Brazil savannah harvest Brazil savannah farms 2

8 DIFICULTIES TO PRODUCE COTTON IN BRAZIL 1-CONTINUE RAISE OF PRODUCTION COSTS; Preferential use of cultivars with high fiber productivity, but with susceptibility to viruses; Increase of insecticide and fungicide use; Continue growing of fertilizer doses; 2- BRAZIL COST RAISE US$2./ha: Due to lack of the use of transgenic cultivars raise over US$13./ha Transportation to peer (price, time and risks) => raise US$25./ton Piled on taxes (ICMS, IPI, etc) Boll weevil control + US$ 45./ha 3 - Unavailability for national producers of transgenic cultivars and generic defensives; 4 - The politics of high interests that induced to strong cambial discrepancy; 5 - The components of costs production not associated to the dollar (salaries, taxes, fuel and freights), that had their prices continuously increased for the Brazil internal politics. R$/lp 2,6 2,52 2,44 2,36 2,28 2,2 2,12 2,4 1,96 1,88 1,8 1,72 1,64 1,56 1,48 1,4 1,32 1,24 1,16 1,8 1, Prices achieved with cotton in Brazil, period of 2-26.Source: CEPEA-ESALQ.. January Cepea/Esalq Indicator (credit: 8 days) Comparasion 2 to 26 - monthly average- deflated February Figures deflated by IGP-DI Brazil, Based value on May/26 = 1. March April May June July August September October November December R$/HA Comparative production costs of defensives (DEF) and total costs/ha (CT), in the regions of Rondonópolis-MT (ROND) and South Chapadão (CS), from 1997 to ANOS ROND-DEF ROND-CT CS-DEF CS-CT EUA-DEF EUA-CT Strategies used for the producers to reducing of production costs Farm Strategies: Implantation of a crop rotation program as the main strategy for the traditional cotton producing areas Implantation of no tillage system especially in the cotton-soy bean-maize intercropping +17% Agriculture-Cattle Raising integration, especially in the cottonsoy-maize+brachiaria intercropping ; Rationalization of all activities (level of fertilizations, phytosanitary control, planting, harvest) ; Use of transgenic cultivar 4,1%; Increase of the capacity and efficiency of the soil preparation equipments, planting, harvest and crop residual destruction ; Biodiesel use 4%; Substitution of viruses sensitive cultivars for resistant cultivars - 1%; Use of generic defensives. Strategies used for the producers to reducing of production costs Organization Strategies : Organization of the producers in cooperatives for acquisition of supplies, exportation and HVI analyzes - reductions up to 3% in the supply ; Cooperatives organization for cotton biodiesel production ; Request of tax reduction in diesel and biodiesel for use in the agrobusiness, as well as importation release of the generic defensives from MERCOSUL ; Request to accelerate researches and commercial releases of transgenics and generic for production and commercialization in Brazil ; Demanding changes for approval of commercial releases in the CTNBIO, with simple majority. Requesting reduction of the interest taxes (currently 14% on the average) and elimination of the cambial imbalance that is 22.7% below of the correct quotation; Continue the claim for one more just international trade, with reduction of the agricultural subsidies; Improvement of logistic for reduction of the exportation costs, including the roads, railroads and ports Planted areas in 24/5 and forecast to 29/1 Área 1. ha Area 25 e projeção para 21 MT BA GO MS SP PR MG TO,MA,PI,DF NORDESTE Estados produtores

9 Thank you 4