Business opportunities for wheat producers

Wheat farming, especially in the south of Brazil, is a consolidated and fundamental activity for the sustainability of grain production systems or systems that integrate crops with livestock. Although soybeans are the main economic crop in this region, wheat and other winter crops represent an important partnership for the composition of diversified systems. Sometimes the direct impacts of wheat are not recognized, as the margins of economic gain are smaller than those of soybeans and in some cases can be negative. However, the technical gains provided by wheat must be taken into account, which range from the production of straw and adequate soil coverage, contributing to the reduction of erosion and the improvement of its quality, through assistance in combating difficult-to-control weeds. , until the cycle of pests and diseases is broken.

In addition to technical gains, there are currently business opportunities that can provide greater liquidity and/or profitability to wheat farming, increasing the possibility of wheat farming adding value to the production systems in which it is inserted (Figure 1). To understand these opportunities, it is important to analyze some factors such as the supply of technologies for the diversification of production and business models with wheat; the environmental offers/climatic risks inherent to each producing region; the priority demands of internal and external markets and the relationships between production potential, ease of obtaining the required technological quality, production cost and revenue obtained.

There is a supply of cultivars and specific management practices that enable the production of wheat for different purposes (Figure 1): dual-purpose use – DP (forage and grain production); wheat production with different commercial classes (improver, bread, domestic, basic and other uses); with special characteristics such as whitening wheat and for biscuit production; use in models intended for export (with priority for Asia and Africa); and use in the composition of feed for pigs and poultry.

When it comes to cultivars, Embrapa has materials that can be used for different purposes. For example, BRS Tarumã and BRS Pastoreio, for grazing and grains; BRS Reponte, for export/feed; BRS Marcante, from the Bread Class; BRS 327, for the production of whitening flour; BRS 374, for biscuit production; and BRS Belajoia, for profitability/lower production costs.

The environmental conditions and use of technology in the country's main producing region must also be considered, as they impose difficulties or a greater probability of production in relation to the productive potential and technological quality. For example, in the North of Paraná, it is expected, in most harvests, to obtain wheat from the Melhorador and Bread classes. In turn, in Rio Grande do Sul this may be rarer, despite technological advances that have occurred in recent decades and have increased this probability. Therefore, producers in each of these regions already start, when planning their crops, from a history that is more or less favorable to obtaining wheat with certain technological specifications and, consequently, with different opportunities as a business model. Understanding these different realities (and today there is a lot of knowledge about this), it is possible to choose the option(s) with the greatest chance of success for each case. 

The demand from the national wheat industry is greater for Bread class wheat and they can source this product from both Brazilian wheat farmers and those from other countries, particularly Argentina. The problem is that, in many situations, it is stated that the national product has not reached the standard demanded by the national industry and there is no other way of marketing it, resulting in its devaluation. Exporting and meeting other internal demands, therefore, emerge as alternatives for commercialization, if not for greater profitability, at least serving to improve liquidity.

An example of these possibilities are systems intended for export. Some countries, especially in Asia and Africa, demand wheat with technological quality compatible with the production possibilities (with greater security) in some regions of southern Brazil, especially Rio Grande do Sul and parts of Santa Catarina and Paraná. For three years, Embrapa, the Federation of Cooperatives of Rio Grande do Sul and some cooperatives from Rio Grande do Sul developed studies to validate a production system with a focus on exports. This system is based on the use of cultivars with high productive potential, the lowest possible production cost with the best technology and obtaining technological quality compatible with the demand of the target countries. The work, carried out through Validation Units, conducted by participants in different production realities representative of the producing region of Rio Grande do Sul, presented promising results. The comparison of export systems with the management system used by most producers in each location provided profitability gains in most cases (Figure 2) with wheat production compatible with the characteristics desired by importing countries (more based on percentage of protein than in gluten strength). This issue seems contradictory, exporting wheat, with Brazil being one of the main importing countries. But it's important to understand the context. Production in Brazil is far from the main consumer centers and transportation makes the product more expensive. The national industry does not absorb all wheat production, especially in Rio Grande do Sul. And, therefore, this surplus production (with potential for increasing area and production) needs other forms of disposal/use. It is necessary to change the long-held concept of national wheat, which focused on ensuring the country's self-sufficiency, towards production aimed at national and international markets, which seeks to contribute to the technical and economic viability of the properties where the wheat is located. , removing the exclusive focus of domestic supply from Brazilian triticulture.

Another interesting opportunity is to absorb part of the production in the region itself. Santa Catarina and Rio Grande do Sul are large producers of pigs and poultry and the reduction in corn production in these states has created the opportunity to use other sources in the composition of feed. Some studies have shown that wheat, from a nutritional point of view, is compatible with the nutritional needs of these animals. Also contributing to this opportunity is the fact that the quality characteristics of this type of wheat are more easily obtained even with the climate variability inherent to southern Brazil. As the main quality indicator required, the protein content in the grains can be cited (as a reference, the value of 12% as the lower limit). In the same way as the use for export, this alternative is based on the use of cultivars with high yield potential and low production costs. Different cooperative initiatives, mainly in Santa Catarina, have emerged in recent years, in association with animal protein industries and the state government, encouraging the sowing of wheat/triticale for this purpose.

The wheat market for biscuit production represents around 15% to 20% in Brazil. This is a segment of the flour market in the country that requires specific technological quality characteristics. Many cooperatives receive grain from these materials with an additional price differential.

Wheats from the Bread and Improver classes represent the largest percentage of national demand for the cereal and may have greater liquidity and/or bonus. Currently, cultivars recommended for cultivation present varied combinations of the baking profile with different agronomic attributes, be they high grain yield potential, different type of plant, association with tolerance/resistance to different biotic and abiotic stresses. Obviously, due to the climatic conditions of the southern region of Brazil, especially Rio Grande do Sul, Santa Catarina and Southern Paraná, the technological quality profile of some cultivars does not always reach the standard of these classes.

Whitening wheats represent a highly valued and highly liquid market niche. By definition, cultivars in which the color of the flour is so white that it is capable of being mixed with other batches of wheat to whiten them, in order to meet the demands of the consumer market, fall into this group. Many cooperatives have valued the production of these cultivars with an additional price of 20% compared to a non-bleaching cultivar.

DP wheats represent an excellent alternative for the composition of the production and economic system in regions characteristic of dairy production and, mainly, on small properties. Embrapa was a pioneer in the development of this technology, starting research more than 30 years ago. DP wheat cultivars can be sown 30 days to 40 days before normal cycle cultivars. This possibility causes the autumn void to be filled right after the harvest of the summer crop, protecting the soil and offering pasture to the animal in a period of low supply. DP cultivars can be grazed and, with appropriate management, used for grain production. DP wheat can also be used for silage. 

João Leonardo F. Pires
Eduardo Caierão
Embrapa Wheat researchers