To increase profits, some farmers change what they grow. But some farmers in the American Midwest are changing where they grow.
The Midwest is the traditional center of American agriculture. Yet some farmers from Iowa have recently made news by moving to Brazil. And not only from Iowa, it seems. Why such a big move?
In Brazil, undeveloped land can cost US$ 240 a hectare, or less. That is a little more than one-tenth the cost of land in the Midwest.
Some of the farmers see low-cost land in Brazil as a way to expand their operations. And it may serve other purposes. It may help keep farming in the family, by letting other family members have their own farm.
Crops like soybeans and cotton grow well in Brazil’s climate. The South American country has grown into a major agricultural exporter. It is the second largest exporter of soybeans after the United States.
In the last five years, millions of hectares have been newly planted in Brazil. Growth has been especially high in central states with grassland known as cerrado [pronounced ser-HAH-due]. It usually gets rain in summer and is dry in winter.
A company based in Iowa called Brazil Iowa Farms helps American investors and farmers invest in Brazil. David Kruse is the company president. He says it makes sense to invest in Brazil, and to do it with money borrowed in the United States. He says farming in Brazil is more profitable than in the Midwest, but borrowing costs in Brazil are high.
John Zulk is chief financial officer of Brazil Iowa Farms. Mister Zulk says that his company has 300 investors. But he says he knows of only about 10 or 12 American families that have moved to Brazil to start farms.
Farming in undeveloped areas is not easy. Many areas lack roads and railways to transport crops. Plus, laws and customs are different in Brazil. And the Portuguese language can be a barrier.
American farmers must also consider other issues. Changes in the exchange rate of the Brazilian real can shrink profits. Also, while Brazil is open to foreign investors, in most cases they must have a local partner. And farmers will not have the government protections or price supports they might have in the United States.
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