John Block Reports from Washington

Here I am in Brazil on a farm, not just any old farm. This farm goes on-and-on as far as the eye can see -- 62,000 acres. Thirty thousand acres of soybeans, 22,000 acres of cotton, and 10,000 acres of corn. The farm is all in one rectangular chunk. The cotton is ready to harvest, the soybeans are already in the bin and the corn nearly ready to pick. The farm has 70 employees, 90 combines, 37 cotton pickers, 227 tractors and 133 planters.

Compared to our standards the farm appears to be over equipped. But labor is cheap here. Certainly machinery is not. The cotton looks good to me, but I'm no expert on cotton. Although the soybeans have already been harvested, yielding 53 bushels per acre -- not bad. However, the corn doesn't look good at all. It won't yield 100 bushels. Their soil is pretty thin. They said they must use 3 times as much fertilizer as we do. Their labor force turnover is 20 to 40 percent per year.

Here are my observations -- when you talk about farm commodities, we are in a global market. Brazil still has a vast frontier of land to bring into production. Progressive farmers from many countries including U.S. are streaming into Brazil because they see opportunities. As a competitor to the U.S., Brazil is going to be tough. The farm land there is much less expensive. That probably is the primary competitive advantage Brazil has. Brazilian agriculture has some disadvantages including high cost of fertilizer and lime, and transport costs are out of sight. They are so envious of our river system, roads and rail in the U.S.

Since we live in a global economy, in due time, everythjng will balance out. The cost of land in Brazil will continue to go up. Perhaps ours will come down some, but not necessarily. Does Brazil have a comparative advantage over us now? I'm not sure, but the market place will be the great equalizer.

I believe that demand for the basic commodities -- for food, fiber, and fuel will grow just as fast as new production comes on line.

Until next week, I am John Block on a farm in Brazil.