Bags of seed sold by Sementes Monica, the seed producing arm of the Grupo Monica holding company in Rondonopolis in north central Brazil, carry a small green logo with two small soybean leaves.

By this time next year, those bags may also carry a small RR or whatever the initials are for Roundup Ready in Portuguese. After years of an official ban on transgenic crops, Brazil's government is expected to finally give formal approval to the planting of Roundup Ready soybeans by the end of 2005.

Melhem Naim, director of Grupo Monica in Mato Grosso state, expects Sementes Monica to begin offering new soybean varieties containing the Roundup Ready gene as soon as the government gives the final OK for transgenic crops.

“We entered into an agreement with Monsanto two years ago,” says Melhem. “We are taking the Roundup Ready gene and producing our seed with their technology.”

Melhem, whose family migrated to Mato Grosso from Parana in southern Brazil in the 1970s, says the conservative view is that about 300,000 hectares of Mato Grosso's 5.4 million hectares of soybeans are planted to transgenic varieties.

Although Brazil has forbidden the planting of GMO crops since their introduction in the late 1990s, farmers have bootlegged Roundup Ready seed from Argentina and Paraguay for years. Some say as much as one-third of Brazil's soybeans could be Roundup Ready.

Sementes Monica has been breeding its own varieties at research facilities in Mato Grosso and Londrina in Parana for a number of years. Some varieties are developed in cooperation with Fundacao MT (Foundation Mato Grosso), a private organization dedicated to improving the quality of life in the state.

“Some of our breeders came to Foundation MT from EMBRAPBA (the Brazilian government's research arm) in Parana,” says Melhem. “They've been able to develop new varieties that are better suited to the climate in this part of Brazil.”

He says that about 20 percent of Fazenda Santa Monica's 17,000 hectares (42,000 acres) of soybeans are devoted to seed production to ensure that the best are sold under the Sementes Monica brand.

Representatives of Valent USA Corp. and several farm supply dealerships and consultant firms toured a portion of the Fazenda Santa Monica operation Melhem oversees just outside Rondonopolis.

“We have about 22 seed producers in a cooperative associated with Foundation MT,” says Melhem. “These 22 receive new foundation seed and test them to see which are best adapted for their area. These are then offered for sale.”

Besides the sizable acres of soybeans, Grupo Monica grows 4,000 hectares (10,000 acres) of cotton and corn on land in the Rondonopolis area and in the newer soybean area north of Cuiaba, the capitol of Mato Grosso.

Grupo Monica has 145 full-time employees. Some are seasonal and live in Rondonopolis while others live in housing on the farm. “We have to have more employees these days because of our expansion into cotton,” Melhem says. “Cotton requires more labor.”

Soybean yields at Fazenda Santa Monica have averaged about 3,200 kilograms per hectare (51 bushels per acre) for several years.

“The center east area of Brazil typically have had the highest yields in Brazil, but we are continually working to improve our production,” says Melhem.

The visitors from the United States stopped at a field of soybeans not far from the Fazenda's headquarters that looked like they would have done any U.S. producer proud. The field had received two applications of a new fungicide that could be registered for control of Asian soybean rust in time for the 2005 use season in the United States.

Grupo Monica was once a much larger operation. Melhem's father-in-law and his brother owned a total of 110,000 hectares (275,000 acres). Fourteen years ago, they decided to separate their operations.

Part of the remaining operation, Fazenda Santa Monica is located around Rondonopolis in southeast Mato Grosso and another portion near Brasnorte in the new farming area in the north of Mato Grosso.

Melhem's operation produces not only soybeans, cotton and corn but also breeds and sells Brahma cattle through a division called Agropecuaria Monica. The Brahma breed, which originated in India, was brought to Brazil because it was thought to be better adapted for the region's savannah climate.

Grupo Monica also operates grain storage and elevator facilities, cotton gins and a flying service at its locations in Mat Grosso.

Melhem's visitors from the United States were intrigued by the fuel he uses in his grain drying operation — wood. Officials in Mato Grosso are attempting to complete a natural gas pipeline from Bolivia into the state. Until that is completed, many of the grain dryers and even crushing facilities operate on wood.

Grupo Monica uses fast-growing eucalyptus trees to fuel its driers. The Santa Monica farm plants 20 hectares of the trees each year to meet its drying needs.

Farmers like Melhem often use Mato Grosso's Savannah climate (six months of rain and six months of dry) to harvest two crops in one season. Growers plant short season soybeans during the rainy season in October and harvest them in January. Then they plant cotton or corn in February and start harvesting those crops in July when it's dry.

Melhem expects to harvest 90,000 metric tons of soybeans and corn on Fazenda Santa Monica during the 2004-05 season.

He and other Mato Grosso farmers must haul those beans and corn and cotton to a port or manufacturing facility over some of the poorest roads know to man.

Blairo Maggi, Mato Grosso's governor and the owner of the largest soybean operation in Brazil, if not the world, has made improving the region's infrastructure a top priority. He pushed for the opening of a barge channel on the Madeira River to the Amazon in the late 1990s and for a railroad from the port of Santos on the Atlantic Ocean to the interior.

But all of Mato Grosso's grain still has to be transported over the roads to the channel or the railhead or several hundred kilometers to other ports along the Atlantic. Depending on the distance, transportation costs can have a major impact on a Brazilian farmer's bottom line.

Melhem says Brazilian farmers are already feeling the effects of this year's significantly lower soybean and cotton prices and the growing weakness of the Brazilian real vs. the U.S. dollar.

“The U.S. dollar has fallen 20 to 30 percent compared to the real,” says Melhem. “When it was 3.3 to 3.4 reals to the dollar, it wasn't too bad, but 3.8 to the dollar is terrible. We export 80 percent of our cotton crop, and much of our soybeans, meal and oil.

“Last year, prices were good; this year, none of these crops is profitable.”

e-mail: flaws@primediabusiness.com