Brazil, Posted August 31, 2005 (L.A. Times, 8/22/05
via CropChoice): This Amazon nation's drive
to become the world's breadbasket hinges on farmers
such as Carlos Augustin, who grows cotton and soy in
an area that would cover more than half of the San Fernando
Augustin's giant agricultural complex houses a cotton
gin, dormitories for 300 migrant laborers and a $3-million
fleet of cotton harvesters.
Such complexes are designed with one goal: to outproduce
rivals from Australia to America. The strategy appears
to be working.
In the last five years, Augustin and other large farm
owners have turned their nation into an agricultural
superpower, making it the world's biggest exporter of
many agricultural products.
The South American nation now supplies sugar for Nigeria's
bakeries, chicken for Hong Kong's restaurants, tobacco
for Germany's smokers and coffee for Japan.
Growing staples for the world Agricultural products
make Brazil a key player worldwide
| Orange juice: 82%
||Soybean oil: 28%
|Soy meal: 34%
| Sugar: 29%
| Chicken: 29%
Soaring demand in China has fueled much of Brazil's
growth. More than 60% of China's orange juice imports
now come from Brazil, which also supplies a third
of the Asian nation's soybean and tobacco purchases.
Brazil exported $27.6 billion in agricultural products
last year and imported goods worth $3.2 billion. That
agricultural trade surplus of $24.4 billion was the
biggest in the world and is crucial to Brazil's efforts
to pay foreign debts and keep its economy humming.
"Agribusiness is a matter of survival for Brazil,"
said Carlo Lovatelli, president of the Brazilian Association
of Agribusiness in Sao Paulo.
Brazil's focus on creating large farms to grow crops
for export is not without cost. Many smaller farmers
are being pushed out of business. And some Brazilians
worry that the country is focusing too much on commodities
such as cotton and oilseeds for the global market, rather
than the "foodstuffs that can actually be consumed
by the local people," said Vicente Puhl, a leader
of a coalition of social organizations.
The agricultural boom also is responsible for much
of the deforestation occurring in the environmentally
sensitive Amazon region.
Government officials acknowledge that loggers, ranchers
and farmers gobbled up 10,088 square miles of Amazon
rain forest in the 12-month period ending last August,
an area about the size of Massachusetts.
"Their ambition is destroying nature," said
Jose Tadao, a representative of Brazil's Landless Workers
Movement and an advocate for small-scale farming.
Environmental groups such as Greenpeace are fighting
the expansion into the rain forest.
Others are arguing that deforestation could ultimately
limit Brazilian agriculture. Paulo Moutinho, research
coordinator for the Amazon Institute of Environmental
Studies, believes the deforestation could eventually
change Brazil's - and Earth's - climate, reducing rainfall
and the supply of water for irrigation.
Almost half of the deforestation is occurring north
of where Augustin farms, in the state of Mato Grosso,
the center of Brazil's agricultural expansion. In June,
Greenpeace bestowed its "Golden Chainsaw"
award, for the Brazilian voted most responsible for
Amazon destruction, on Blairo Maggi, the state's governor
and owner of a farming concern that controls nearly
500,000 acres of soy, cotton and corn plantings. Earlier
this year, Maggi's environmental chief was arrested
by Brazilian authorities investigating the relationship
between government officials and loggers.
Maggi, the world's largest soy producer, defends the
nation's emphasis on large agribusiness. "Small
properties in Mato Grosso don't have economic viability,"
Maggi said during a recent meeting with foreign journalists.
"You can only survive if you have large volume."
Brazil has always been rich in land and water, the
two key ingredients for farming, but it took a confluence
of events to turn the nation into an agricultural power.
It began with a change in economic policy in the 1990s,
repealing a tax that made most agricultural exports
a losing proposition, said Agriculture Minister Roberto
Import duties on farm equipment, seeds and fertilizer
also were slashed. Farmers now pay a 14% tariff compared
with 20% in 1998. And when the Brazilian currency, the
real, was devalued in 1999, the export market zoomed.
Agriculture accounted for about 31% of the nation's
gross domestic product last year.
"What really explains the growth of Brazilian
agriculture is entrepreneurship, good science, access
to good land and good weather," said Mario Jales,
senior researcher at ICONE, a Sao Paulo think tank.
Brazil is spending millions of dollars on research
to transform arid cerrado, or savanna scrubland, into
productive farmland. It is using the World Trade Organization
and other international trade agreements to challenge
U.S. and European subsidies and open up markets.
In a complaint brought by Brazil, the WTO ruled in
June 2004 that U.S. subsidies to cotton farmers distorted
world prices by encouraging overproduction. The U.S.
lost an appeal in March. The Bush administration is
now working with Congress to bring its farm policy into
compliance with the WTO.
And in April, a WTO panel agreed with Brazil, Thailand
and Australia that European Union nations illegally
export subsidized sugar, driving down prices on world
markets. Brazilian trade officials said they were considering
taking similar action against U.S. soy subsidies.
Previously, South American nations viewed industrialization
as the primary engine of economic development, said
economist Mailson da Nobrega, a former finance minister.
But now, "if you look at Australia, New Zealand,
Denmark, they are economic powers with strong agricultural
sectors, and we can do the same," he said.
There is plenty of room to grow. Da Nobrega estimates
that Brazil, which is the world's fifth- largest nation
by landmass, is using only about a third of its arable
real estate for farming.
And scale is the watchword here. Hundreds of farmers
control vast tracts. The family of Adilton Sachetti,
the mayor of Rondonopolis, farms more than 170,000 acres
of cotton, soy and corn. By comparison, soy farmer Ron
Heck is one of the larger growers in Perry, Iowa, but
his entire farm is 3,600 acres. Most of the growers
in Heck's region plant less than 3,000 acres.
"We produce a lot of soy, but none of us are on
the scale of the Brazilian growers," Heck said
in a telephone interview.
Some of Brazil's successes have adversely affected
U.S. farmers. On Wednesday, the U.S. slapped tariffs
of up to 60% on the price of orange juice concentrate
imports from Brazil. The move came after Florida growers
complained that Brazilian companies were selling concentrate
below fair market values.
U.S. cotton growers are upset that Brazil's WTO win
might cut their federal farm subsidies. And the only
reason American soy producers haven't complained about
the Brazilian government's low-interest loans and other
support for its industry is that demand for soy is growing
fast enough to absorb the output of both countries,
some U.S. farmers say.
The boom is changing Brazilian agriculture.
Some Brazilian families have gained control of vast
tracts of agricultural land, squeezing out thousands
of other small growers. About 4.3 million Brazilians
farm areas of 125 acres or less, said Luiz Vicente Facco,
spokesman for the National Confederation for Agricultural
"The small producers do not have the scale"
to participate in the global markets for soy, cotton
and sugar, Facco said. And as they struggle to earn
a living, "small farmers who are surrounded by
large farms will be pressured to sell," he said.
Maggi, the soy mogul and governor of Mato Grosso, says
he sees "little future" for small farmers
unless Brazil begins providing subsidies, which is unlikely
considering its WTO battle against U.S. and European
Union farm payments.
Even large farming operations face hurdles in competing
against producers in the United States who have the
advantage of better infrastructure, access to credit,
and modern technology.
"They have improved over in Brazil, but our yields
are still better and we can compete on quality,"
said Cannon Michael, co-owner of Bowles Farming Co.,
which farms 6,000 acres of cotton near Los Banos, Calif.
Lovatelli of the Brazilian Assn. of Agribusiness agrees
that "bad infrastructure" could limit Brazil's
growth. "The moment we have to take our crops to
the port, we have problems," he said.
The cost of transporting corn to the port, for example,
can consume as much as 25% of the value of the product.
Brazil has about 100 million tons of agricultural storage
capacity, about 40 million tons less than it needs to
reduce loss from spoilage and to take the best advantage
of price fluctuations, said economist Jose Vicente Caixeta
of the University of Sao Paulo's agricultural school.
Unlike in California, where multilane highways whisk
cotton and other farm products to the sophisticated
port complex at Los Angeles harbor, it's not unusual
for Brazilian farm commodities to travel 1,200 miles
or more on uneven and heavily congested roads to reach
the two main ports of Santos and Paranagua. Analysts
say Brazil will have to surmount these problems to protect
"The potential ... to be realized is enormous,"
said Jales of the Sao Paulo think tank.