South America: World’s New Breadbasket
By Larry Rohter
The New York Times
(New York, December 14, 2004) Almost
overnight, South America has taken the world on a historic shift in food
production that is turning the largely untapped frontier heartland of the
continent into the world's new breadbasket.
One of the last places on earth where large tracts are still available for
agriculture, the region, led by Brazil, has had an explosion of farm
exports over the past decade. The growth has been fueled by a combination
of market-friendly economic policies and advances in agronomy that have
brought formerly unusable tropical lands into production and increased
productivity levels beyond those in the United States and Europe,
challenging their traditional dominance of the global farm trade.
Sometime over the next decade or so, Brazil, which Secretary of State
Colin Powell described as "an agricultural superpower" during a
visit in October, hopes to pass the United States as the world's largest
agricultural producer. But the trend is far broader and can be felt also
in parts of Argentina, Bolivia, Paraguay and Uruguay, with a deep impact
on the region's economy and environment.
"There has been a silent revolution in the countryside" since
the 1990s, Brazil's minister of agriculture, Roberto Rodrigues, said in an
interview in the capital, Brasília.The past four or five years
especially, he said, have been "characterized by spectacular growth
and a huge increase in demand" abroad for foodstuffs, which has given
Brazil "the capacity to compete with anyone."
The global impact has been powerful. In June, the United States imported
more in farm products than it sold abroad, further evidence of its eroding
position. Alert to the challenge, the Iowa Farm Bureau Federation even has
a presentation for its members called "Should Brazil Give You
Heartburn?" The answer is a not-so-qualified yes.
The competition is personified in producers like Otaviano Pivetta, 45, and
Helmute Lawisch, 39. Less than 20 years ago, the two friends took turns
driving 2,400 kilometers, or 1,500 miles, over mostly bone-jarring roads
from their homes in Brazil's southernmost state to stake their claim in
this region, which was mostly jungle then, with little in the way of
electricity, sanitation or other public services.
In retrospect, it is clear that they were in the vanguard of a fundamental
transformation of global agriculture. Today, farmland stretches to the
horizon. With a climate that varies little the year round, it is not
unusual to have two or even three harvests a year and to see combines
clearing fields with planters sowing another crop in their wake. The two
men are now among the most successful producers in the region, and Pivetta
has twice been elected mayor of Lucas do Rio Verde. Each now cultivates
more than 40,500 hectares, or about 100,000 acres, sending soybeans,
cotton and pork to markets as distant as China, Russia and Pakistan.
With the Southern Hemisphere's spring planting season now complete, the
two farmers and scores of others in Mato Grosso state are looking forward
to another year of bumper crops. "With the great climate and fertile
soil we have here, I can't imagine any other place that gets the kind of
productivity that we do," said Pivetta, whose family now runs a
half-dozen farms here. "Not in Brazil or anywhere else are you going
to find two crops a year yielding three tons of grain an acre."
Indeed, agriculture is now a $150-billion-a-year business in Brazil,
accounting for more than 40 percent of the country's exports and creating
what Brazilians call the "green anchor" of their economy.
Already the world's biggest exporter of chickens, orange juice, sugar,
coffee and tobacco, according to Agriculture Ministry statistics, Brazil
soon hopes to add soybeans to the list, depending on what happens in that
volatile market.
With a grass-fed herd of 175 million cattle that is the world's largest,
it passed the United States as the world's largest exporter of beef last
year. During the first nine months of 2004, sales of Brazilian beef abroad
rose 77 percent over the same period last year, leading the government to
predict $2.5 billion in earnings from beef exports this year. Overall, the
agricultural bonanza, aided in part by avian flu in Asia and mad cow
disease in Europe, is likely to give Brazil a record trade surplus of over
$30 billion.
Brazil's advantages start with the availability of large amounts of cheap
land, especially here in this region of well-drained tropical savanna
known as the cerrado. Larger than the American grain-growing region but
dismissed as useless for farming until barely a quarter of a century ago,
the cerrado cuts across the heart of Brazil, and its vastness permits
economies of scale that are the envy of producers elsewhere.
"What's really driving this revolution is that the Brazilians
discovered how to use tropical and savanna soils that had always been
considered poor," said G. Edward Schuh, director of the Center for
International Economic Policy at the University of Minnesota. "They
learned that with modest applications of lime and phosphorus they can
quadruple and quintuple their yields, not just with soybeans but also with
maize, cotton and other commodities."
Changes in economic policies have also spurred the boom here. At the
beginning of the 1990s Brazil lifted long-standing import restrictions,
leading to a surge in purchases of tractors, combines, fertilizers,
pesticides and seeds. Another leap in exports came in 1999, when the
government devalued the currency and allowed the Brazilian real, which had
been trading at near par with the dollar, to float on the currency
exchange market. Today, the real trades at almost three to the dollar,
which means incomes for agricultural producers have nearly tripled.
The Brazilian bonanza has been eagerly welcomed by the main international
agricultural trading companies, which have been quick to seize new
opportunities. In this town of 30,000, Archer Daniels Midland, Bunge and
Cargill not only have built huge warehouses and silos along the main
highway, but have also provided credit to farmers on a scale far beyond
the means of the Brazilian government.
To counter the South American advances, the United States and Europe have
increased subsidies to their own beleaguered farmers. But in a pair of
landmark decisions, the World Trade Organization recently ruled that such
subsidies for cotton and sugar are illegal and must be phased out. All of
this clearly will have an increasing impact on agriculture in the United
States. Experts say some areas that are not competitive with South America
may have to move from one crop to another, while others will face pressure
to shift out of agriculture altogether.
Some American and European farmers already have, and are starting to buy
farmland here. Wolfgang Hudepohl, a real estate agent in Cuiabá, Mato
Grosso's state capital, estimates that he has sold 60 farms to foreigners
over the past few years. "Foreigners like not only the cheap prices,
but also the low production costs and the fact they are not tied down by
regulations," he said.
The real estate boom has not been without social tensions and other costs,
particularly to the environment, as the expansion of farm and grazing
lands has accelerated Amazon deforestation.
But for Brazil it is a success story of diversified exports, and reduced
economic vulnerability. |
