Costs, Land, and Productivity Shape U.S.–Brazil Soybean Competition

The rapid increase in Brazilian soybean production for global markets raises concerns about U.S. farmer competitiveness. A new report from Purdue University compared farm-level production costs between the U.S. and Brazil, finding differences like land values and input costs are major drivers of competitiveness.

Together, the two countries dominate global soybean markets, accounting for around 70% of production and 84% of exports. Researchers examined data from 2020 through 2024 on representative farms in Iowa and Mato Grosso, Brazil’s top soybean-producing state. 

Joana Colussi, an author of the report as well as an agricultural economist with Purdue University, said farmer concerns increased recently because of U.S. trade policy creating market opportunities for Brazil.

She pointed to a recent Ag Economy Barometer Survey,  which showed 36 percent of U.S. farmers said they were “concerned” while 44 percent said they were “very concerned.”

Major Competition in Costs

In 2018, Brazil surpassed the United States as the world’s largest soybean producer. It has steadily expanded its export presence since then. By 2025, Brazil exported over 103 million metric tons of soybeans, nearly twice as much as the U.S. 

Studying competitiveness between the two countries, Colussi said one factor was clear. “The cost of production is one of the reasons explaining why Brazil is gaining so much ground in the soybean global market in recent years, especially in the last decade,” she explained.

A major difference, Colussi found, involves production costs researchers separate into three categories: direct, operating, and overhead. While operating costs are similar between Brazil and the United States, Brazilian farms tend to have higher direct costs, while U.S. farms face significantly higher overhead costs.

Brazil vs. United States in Soybeans Direct Versus Overhead Costs

Some of the largest producing areas of Brazil are in tropical regions, meaning they lack annual freezes or winterkill, natural pesticides that benefit many U.S. farmers.

Additionally, Colussi pointed out much of the soil in Brazil has nutrient deficiencies and needs more soil inputs. On average, the report showed 60% of the cost of production in Brazil comes from direct costs.

Meanwhile, half of U.S. production costs are tied to overhead expenses, mainly because of higher land costs according to Colussi.  “We know that there is a limitation on new land and also there is competition with other investments here in the U.S. in terms of land. So, all these factors helped raise the land values in the U.S,” Colussi said.

This relates to another overhead cost. Colussi said that nearly 70% of Midwestern farmland is rented, while 80% of Brazilian farmland is owned. 

Additionally, Colussi said there is more opportunity for new farm acreage in Brazil. “Not necessarily new areas in terms of native vegetation, but new areas for agriculture like degraded pastureland,” Colussi said. “So, most of these lands represent one opportunity for Brazilian farmers to increase their crop production.”

Brazil vs. United States in Soybeans Productivity Gains

With limited opportunities to expand acreage, U.S. farmers must consider other options. Colussi said yield gains will be a major factor for cost and risk management.

As far as strategy goes, Colussi said, “Apply nitrogen based on technical recommendations to try to reduce costs. Pay attention to crop protection decisions. Consider reducing tillage, so doing no-till, also consider some non-commodity production.”

Ultimately, Colussi said farmers should avoid relying on a single source of revenue. Looking at the last few years, most of the positive results U.S. farmers saw were due to government payments.

She added without those payments, most farmers would have been in the red.