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Ron Trostle USDA, Economic Research Service

Impact of Soybean Rust Disease on Crop Production and Trade: USA and Brazil. Ad Hoc World Outlook Conference 2004 Sao Paulo, Brasil. Ron Trostle USDA, Economic Research Service. Outline of Presentation. Soybean Rust ( SBR ) { Phakopsora pachyrhizi }

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Ron Trostle USDA, Economic Research Service

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  1. Impact of Soybean Rust Disease on Crop Production and Trade:USA and Brazil Ad Hoc World Outlook Conference 2004Sao Paulo, Brasil Ron Trostle USDA, Economic Research Service

  2. Outline of Presentation • Soybean Rust (SBR) {Phakopsora pachyrhizi } • Impact of potential SBR outbreak in the United States (summary of report by ERS) • Impact of SBR in Brazil (Issues for discussion) • Conclusions: adapatability of the agricultural sectors in the USA and Brazil Soybean Rust: USA & Brazil. May 2004

  3. Characteristics of Soybean Rust:Phakopsora pachyrhizi • Can disperse naturally (wind-borne) over long distances and rapidly infect large production regions • Optimal conditions include: • high humidity • long periods of leaf wetness • frost free zone • temperatures of 55 to 80 degrees F; (13 - 27 C) • year-around live vegetation Soybean Rust: USA & Brazil. May 2004

  4. Potential Economic Implications • Lower yields if not effectively treated • Higher production costs when treated • Increased surveillance and management skills • Change in cropping patterns • Impact on livestock sector Soybean Rust: USA & Brazil. May 2004

  5. Potential Impact in the USA Analysis by the Economic Research Service Potential Economic and Policy Implications of the Wind-Borne Entry of Asian Soybean Rust into the United States by Mike Livingston, Rob Johansson, Stan Daberkow, Michael Roberts, Mark Ash, and Vince Breneman full report available at http://ers.usda.gov/Features/SoyBeanRust/ Soybean Rust: USA & Brazil. May 2004

  6. Soybean Rust: USA & Brazil. May 2004

  7. Potential Impact of a Soybean Rust Outbreak in the USA Assumptions underlying the impact analysis of SBR Assumption Medium-term impact • Fungicide cost ($/ac) $25 • Yield impacts -9.5%; -4.3%; +0.9% • Regional susceptibility to post-establishment Regional climate of rust outbreaks suitability factor • Regional extent scenarios 6 regions of the USA • Market adjustments simulated Prices, cropping decisions, livestock production • Economic model (spatial equilibrium, math-prog): USMP Soybean Rust: USA & Brazil. May 2004

  8. Medium-term Economic Impacts on the Soybean Sector, changes from baseline projections Additional Price Production Exports Acres Net returns fungicide costs ($/bu) (mil. bu.) (mil. bu.) (mil.) ($mil.) ($mil.) 2008 baseline 0.00 4.99 3,150 1,055 74.2 5,776 ----------------- Percent change ----------------- Scenarios: High spread $961 +6.0 -10.2 -5.6 -5.5 -21.0 Medium spread $779 +2.8 -4.7 -2.6 -3.2 -14.3 Low spread $246 +0.7 -1.1 -0.6 -1.9 -2.8 Soybean Rust: USA & Brazil. May 2004

  9. Medium-term Economic Impacts of Soybean Rust Outbreak, changes from baseline projections Soybean Livestock Other crop Consumers Total net producers producers producers change 2008 baseline ($ million) 5,776 33,000 18,904 340,233 397,913 - - - - - - - - Percent change from baseline - - - - - - - - - - Scenarios: High spread -21.1 -0.4 +0.1 -0.2 -0.5 Medium spread -14.3 -1.2 +0.03 -0.08 -0.29 Low spread -2.8 -0.03 -0.1 -0.02 -0.06 Soybean Rust: USA & Brazil. May 2004

  10. Factors Reducing Impact on U.S. Ag Sector • Availability of substitute crops in regions where SBR rust most likely to be severe • Availability of alternatives to soybeans and its derivative products for consumption as soybean prices increase • Availability of inputs and technologies to limit economic losses • There will be winners and lossers: • Most adverse effects in regions where SBR breaks out • Soybean producers in other regions may benefit from higher prices • Producers of other crops also benefit Soybean Rust: USA & Brazil. May 2004

  11. Soybean Rust in Brazil • First introduced into Brazil in 2001 • By 2001/02 crop, infestations found in 60% of soybean area • For 2002/03 crop (a particularly wet season) SBR found in 95% of soybean producing areas • “Center West” region has most favorable climate for SBR Soybean Rust: USA & Brazil. May 2004

  12. Soybean Rust: USA & Brazil. May 2004

  13. Soybean Producers Adjusted Quickly • Brazilian producers quickly adapted to SBR with modest increases in production costs and small country-wide yield declines • But, there are few field crops that can be raised in Brazil as profitably as soybeans • Corn and cotton offer most potential for substitution. In some areas most affected by SBR there is considerable potential for substitution: • of corn, as feed demand for corn increases • of cotton, as the MFA phaseout enables Brazil to be more competitive in export markets Soybean Rust: USA & Brazil. May 2004

  14. Soybean Rust: USA & Brazil. May 2004

  15. Comparisons: Brazil and the United States • Brazil is actual experience; U.S. is potential • More of Brazil’s soybean production area is climatically susceptible to SBR infestation • Some of Brazil’s SB production area has more limited cropping alternatives: fewer a/o less profitable crop alternatives • Both countries have market-oriented agricultural sectors: • fungicides are available and farmers have or can quickly learn how to use them effectively • Farmers are free to make adjustments to cropping patterns and practices Soybean Rust: USA & Brazil. May 2004

  16. Impact of Soybean Rust Disease on Crop Production and Trade:USA and Brasil Ad Hoc World Outlook Conference 2004Sao Paulo, Brasil Ron Trostle USDA, Economic Research Service

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