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May 22, 2025
By Jacquie Holland, ASA Economist, and Katelyn Klawinsky, ASA Economics Intern
There has been no shortage of media attention on Brazilian soybean production after the U.S. implemented new tariff actions in April. A common – and even recurrent – headline is “Brazil looks like a winner in the global trade war.”
While this forecast is accurate, it is a broad strokes statement that makes it difficult for U.S. farmers to accurately compare their management strategies to their Brazilian counterparts. Understanding the farm-level dynamics of how Brazilian farmers can capture increasing export market share will be critical to U.S. farmers as they strive to regain a cost advantage in this new tariff era.
This study focused solely on farm-level production costs between the U.S. and Brazil on a per acre basis. A comprehensive analysis between production cost estimates in Mato Grosso published by IMEA and Senar Mato Grosso, and U.S. production costs calculated by the American Soybean Association using data from the University of Missouri, USDA-AMS and USDA-NASS, allowed for farm-level comparisons.
The U.S. and Brazil are the world’s largest soybean producers by a wide margin. Brazil’s 2024/25 crop of 169 million metric tonnes (MMT) is expected to account for nearly 40% of global production. During that same period, the U.S. harvest of nearly 119MMT accounted for 28% of the global soybean harvest. Combined, both countries grew 68% of the world’s total soybean crop in marketing year 2024/25.I
Prior to MY 2012/13, the U.S. held the crown of world’s largest soybean producing and exporting country. However, a drought that year decimated yields and forced global buyers to turn to Brazilian production, pushing Brazil into the top spot of the world’s largest soybean exporter.
Acreage expanded in Brazil as China continued to be a competitive soy buyer while actively investing in Brazilian soy infrastructure. By 2017, Brazil overtook the U.S. as the world’s largest soybean producer and has held that position ever since.
Brazil’s availability of arable land has been a key factor in its growth in the global soybean export market. Brazilian pastureland provides a pool that has been drawn from to expand cropland. Brazil has approximately 112 million hectares (277 million acres) of pastureland. The University of Illinois estimates that there are 69.14 million acres of potential crop expansion in Brazil based on degraded pastureland. As a result, USDA calculated an average annual gain in harvested Brazilian soybean acreage of 5% per year over the past five marketing years (2020-2024).
Annual soybean acreage growth in the U.S. has occurred at a slower rate. Over the past five years, acreage growth rates have only averaged 2.9% per year with average planted acreage totaling 85.7 million acres per year. Upcoming 2025 U.S. planted soybean acreage estimates are likely to see a 4.1% annual decline to a five-year low of 83.5 million acres amid lower profit forecasts. Production growth in the U.S. is dependent on improved yields or a shift from other crops to soybeans, due to a constraint of available farmland. In fact, total U.S. crop area has fallen by over 9 million acres over the past 10 years.
Shifting dynamics from China, the top global soybean buyer and consumer, has also played a critical role in the divergence between the U.S. and Brazil as top global soybean producers. USDA forecasts China will import 109MMT of soybeans in the 2024/25 marketing year, just a few MMT less than its record-setting import volume of 112MMT the year prior.
In 1995, U.S. soybeans accounted for 49% of Chinese soybean imports, with soybeans sourced from Brazil only totaling 2%. Over several calendar years in the late 1990’s and early 2000’s, the U.S. supplied 50% or more of China’s soybean imports.
The 2012 U.S. drought kicked off a massive rise in Chinese imports of Brazilian soybeans. By 2024, 71% of China’s soybean imports were sourced from Brazil, with a mere 21% sourced from the U.S.
As China purchased more soybeans from Brazil, growers expanded acreage to meet export demand. The 2018 trade war shifted more soybean production to Brazil at the expense of U.S. acreage. On the precipice of another trade war in early 2025, a comparison of costs to understand this expansion is in order.
Annual soybean production costs for Brazilian farmers in Mato Grosso totaled an estimated $476.35/acre for MY2023/24. Fertilizers comprise the largest cost for Mato Grosso soybean producers, accounting for 31% of annual expenditures. Crop protection was the next largest expense, making up 22% of total costs.
Fertilizer and crop protection inputs account for 53% of an average producer’s annual expenses in Mato Grosso. While other expenses are important to Brazilian producers’ operational success, costs of critical inputs like seed (10%) and land (9%) are noticeably lower than their American counterparts.
In the U.S., the opportunity cost of land is the largest per acre expense for soybean producers, making up approximately 34% of annual crop budgets for soybeans grown in Missouri, according to University of Missouri 2023/24 crop budgets. Fertilizer and biological inputs are the next largest expense, eating up 20% of annual budgets, followed by seed expenses (14%).
Mato Grosso soybean producers spend a significantly larger portion of their annual crop budgets on fertilizer (31%) and crop protection (22%) products than their Missouri counterparts, who spend approximately 20% and 12%, respectively. But U.S. producers face a significantly higher opportunity cost of land (34%) relative to Mato Grosso land opportunity costs (9%).
From a cost standpoint, U.S. soybean producers hold an advantage over their Brazilian counterparts with cheaper fertilizer and pesticide products. In 2023, U.S. producers in Missouri spent approximately $105.26/acre on fertilizers, while Mato Grosso producers spent $146.19/acre.
Brazil is heavily dependent upon foreign sources for fertilizer, importing 85% of fertilizers used for crop production. The cost of international procurement and transportation from seaports to key growing regions reduces Brazil’s fertilizer advantage over the U.S. Additionally, low soil nutrient contents in Center-West soils and pest prevalence increase the volumes of fertilizer required to sustain yields, adding another layer of fertilizer expenses for Brazilian producers.
Differences in fertilizer application rates also distinguish U.S. soybean production from Brazil. In 2022, Brazilian agricultural producers applied 4.6 times more potash volumes to cropland per acre than in the United States. During that time, Brazilian phosphate applications surged 3.8 times higher than the U.S. while Brazilian nitrogen applications were 1.6 times greater than U.S. nitrogen application rates.
Brazil’s tropical climate required 1.7 times more investment in pesticide products compared to the U.S. in 2023. Because key soybean growing regions in Brazil do not endure freeze spells that reduce pest issues in the winter months, additional pest protection is necessary to minimize yield damage to crops.
The lower input volume required by U.S. growers provides sustainability options for end users. In contrast, Brazilian growers would struggle to justify an equal sustainability rating based on current practices requiring more input volumes to be transported and applied.
U.S. producers also enjoy lower interest rates relative to Brazil, providing another cost advantage for U.S. producers in financing situations. In 2023, U.S. producers only spent $10.88/acre compared to $30.47/acre shelled out by Brazilian producers. Brazil's inflation rate tends to run higher than that of the U.S., boosting Brazilian interest rates higher than those in the United States.
Cheaper post-production costs, including storage, marketing, et cetera, provide another advantage to U.S. producers over their Brazilian counterparts. Storage capacity has not kept up with the rapid production growth in Brazil over the past two decades, unlike in the U.S., providing little ability for Brazilian farmers to sell outside of the peak post-harvest export window. As a result, Brazilian producers paid $11.92/acre for post-production costs, compared to $4.00/acre for their U.S. counterparts.
Due to the higher moisture content of Brazilian soybeans and the humid local climate, those producers incur higher drying expenses than their American counterparts. Wood is the primary source of drying fuel for grains in Brazil because of its affordability and availability relative to other fuel sources. Natural gas is a secondary drying source, though some of that supply is imported from the United States.
Both U.S. and Brazilian farmers reported similar machinery and labor expenses in 2023. While Brazilian farmers held a slight advantage over the U.S. with machinery costs ($68.56/acre vs. $70.72/acre), U.S. producers had a slim lead over Brazilian counterparts with labor expenses ($18.19/acre vs. $19.27/acre).
The two major budget areas in which Brazilian producers have a competitive advantage over U.S. growers are seed and land costs. In 2023, Brazilian soybean growers only paid $49.41/acre for seed, compared to $75.93/acre in the U.S.
Brazilian farmers are legally allowed to produce their own seeds, avoiding the need to buy new seeds from a seed company each year. Producers are supposed to pay a royalty for these seeds at the elevator. However, pirated seeds gained by trading the prior year’s surplus seeds with other producers allow some Brazilian growers to skirt paying the royalties. Pirated seeds are estimated to account for 29% of seeds used for production.
Seeding rates in the U.S. have declined since the turn of the century, due to improved yield technology and structural changes in U.S. seed market pricing as growers reduced seeding rates. U.S. growers also face more rigid purchase contracts with seed manufacturers, especially compared to the royalty system implemented in Brazil.
Finally – and perhaps most importantly – Brazil’s wide availability of arable land is the largest factor favoring lower total Brazilian soybean costs. In Brazil, the opportunity cost of land was $44.58/acre in 2023, compared to $182/acre in the U.S. for the states examined.
While farmland values in both countries have appreciated over the past decade due to growing global demand and rising commodity prices, constraints on U.S. farm ground due to urbanization, renewable energy generation, competition from other crops and a single growing season limit the area from which more soybean acreage can be created.
Alternatively, Brazil’s abundance of pastureland creates additional acreage opportunities for Brazilian soybean producers to continue growing their acreages. Brazil’s tropical environment provides optimal year-round growing temperatures for crops, enabling more growing season opportunities than growers further north of the equator in the United States. While soybeans are typically only grown for one season in Brazil, the chance to plant multiple crops throughout a growing season provides more – and more frequent – revenue options to cover land and input expenses in the areas of the country with an extended growing season.
Additionally, currency exchange rate dynamics have heavily favored profitability prospects for Brazilian producers over the past two decades, providing the returns necessary to be reinvested into additional acreage. Brazilian farmers sell soybeans in U.S. dollars (USD) while paying most of their costs in local Brazilian reals (BRL). Over the past 20 years, the BRL has generally maintained weakness relative to the US dollar due to less economic stability in Brazil. When the BRL depreciates against the dollar, Brazilian soybean producers earn more revenue through increased BRL per dollar.
While the currency dynamics tend to benefit Brazilian producers on the revenue end, growers are susceptible to greater cost volatility on the expense end if the BRL is too weak and inputs denominated in USD, like fertilizer, machinery and natural gas, increase in price.
There have been fewer than a handful of growing seasons over the last two decades when the BRL strengthened relative to the dollar. These currency dynamics have allowed Brazilian soybean producers to enjoy profitable margins and expand acreage for 19 consecutive years.
While farm-level Brazilian production is more expensive than in the U.S., the lower land costs in Brazil relative to U.S. farm ground enable Brazilian producers to gain ground in foreign soybean markets.
In the U.S., available farmland for production is a fixed resource constrained by commercial and urban development as well as competition from other crops and livestock production. Brazilian soybean producers face less constraints to their crop ground. The opportunity cost for using their land for crop production is lower because there is more area available.
Land costs provide Brazilian producers with the most significant competitive advantage over U.S. producers, even though Brazilian farmers face higher operating costs for other inputs. Brazil’s seed costs, which are nearly half as much as their U.S. counterparts, provide a lesser but still critical competitive advantage for Brazilian soybean production over the United States. Seed technology advances are largely developed in the U.S., but the U.S. soybean producer is at a cost disadvantage if other countries are paying lower prices for similar technology.
One competitive advantage the U.S. retains, though outside the scope of this farm-level analysis, is in efficiencies. The U.S. river and rail system allows cost-effective sourcing from multiple origins to adequately and affordably meet international demand.
In the U.S., soybean growers can produce soybeans at a cheaper operating cost, using fewer inputs and creating less environmental externalities than their Brazilian counterparts. Sustainability concerns remain a critical consideration for global soybean buyers, particularly as the implementation dates for the European Union Deforestation Regulations (EUDR) approach at the end of 2025. While it is beyond the scope of this article, these production differences contribute to U.S. soybean production’s higher level of sustainability compared to Brazil.
Land costs are the most significant driver of cost differentiation between U.S. and Brazilian soybean production and are likely to play a role in Brazilian soybean expansion if the U.S. continues to exacerbate trade tensions with its key soybean buyers. International and domestic policies to bridge the gap between soybean production costs for the U.S. and Brazil will keep U.S. soybeans competitive on the global market.
