Crop rotation increases profitability in Sao Paulo

Farmers in Brazil's main sugarcane producing state, Sao Paulo, are rotating more soybean crops into fallow land during the offseason, boosting profitability and increasing phosphate use.

Sugarcane is still the main crop in the state, occupying 71pc of the entire agricultural area, but it has lost share to soybeans, whose area grew from 8.4pc to 11.8pc between 2013 and 2017, according to data from the Brazilian Institute of Geography and Statistics (IBGE). The area planted with soybeans in Sao Paulo has increased by 55pc in the last four years, to 946,540ha in 2017, while sugarcane grew only 5pc to 5.7mn ha.

In general, farmers let 15-20pc of sugarcane acreage lay fallow every year to increase the predictability and profitability of the crop. Sugarcane's life cycle is five years.

But now farmers are allowing independent companies to plant soybeans on that typically-fallow acreage in the off-season, which runs from November through March.

According to an Argus survey, the farms have started to yield an average of 8.3 bags of soybeans/ha because of crop rotation, equivalent to R500-R584/ha ($130-$150/ha) at current prices in December 2018. The sugarcane plantations have begun to farm an average of 480-700ha of soybeans at each renewal phase, with an average yield of around 71 bags of soybeans/ha.

"The trend in planting soybeans in the sugarcane off-season is stronger among small and medium-sized farmers who can diversify their operations for financial gain without the bureaucratic hurdles faced by companies with vertical operations," says a sugarcane production and processing group.

In addition to supplementing farmers' income, soybeans increase the availability of essential nutrients for sugarcane in the soil, as the oilseed fixes nitrogen in the soil.

As for the demand for phosphates, sugarcane and soybeans have similar seasonal requirements. Soybeans get NPK blends with over 18pc P2O5 before planting, in the final quarter of each year. Sugarcane plantations require blends with 20-25pc P2O5 in the same period, with subsequent applications of nitrogen and potash throughout the cane cutting cycles.

The rotation of soybeans and sugarcane is expected to increase in the coming years, but the preference for sugarcane should prevail, given the financial attractiveness of the crop.

"Sao Paulo farmers will not make soybeans a priority as Sao Paulo soil is not ideal for the grain, unlike Mato Grosso and other traditional soybean-producing states," says a blender.