Brazil Becomes the New Food Superpower

LUCAS DO RIO VERDE, BRAZIL—Out here on this seemingly endless tropical savanna, it looks like more bumper crops are rising out of the ruddy earth. Verdant rows of corn and cotton stretch out toward the horizon—this just months after a record harvest of soybeans was cut from the same tracts.

A soybean harvest. Brazil has become the world's No. 1 soybean exporter.

Given the abundance here in the fields, it's hard to believe that these plains were once dismissed as sterile wastelands best left to the emus, armadillos, monkeys, anacondas, and the odd jaguar. The acidic soil was thought to rule out significant farming.

The Brazilians still call these lightly wooded plains the cerrado—or "closed" or "inaccessible" land. But nowadays the cerrado is very much open for business, its fertility a springboard from which the world's newest superpower in agriculture is emerging. "We have been able to transform wasteland into a bountiful land that is helping to feed Brazil and the world," says Silvio Crestana, head of the Brazilian government's agricultural research company, EMBRAPA.

With millions of people literally hungering for affordable food, Brazil's breakthroughs in tropical agriculture may prove to be the key to feeding a growing global population. If Saudi Arabia fills the world's gas stations, China assembles its consumer goods, and India vies to staff its office services, then it is Brazil that is stepping forward to stock its pantries. The rise of Brazil as an agricultural powerhouse may be the most important story of globalization that many Americans have never heard of.

With ample sun and fresh water and more available arable land than any other country, Brazil seems to be on a historic trajectory to becoming the next great global breadbasket. "Brazil can be No. 1 in the future in agricultural production," asserts André Nassar, a leading agricultural economist based in São Paulo. "I think we will exceed the U.S."

If that ambition pans out, Brazil may provide the supply cushion the world urgently needs to meet growing demands for food. China, India, Russia, and other countries are eating higher on the food chain; they want more of the grains and meat Brazil can provide. The same soaring commodity prices that have inflicted so much global pain are creating wealth in Brazil's fast-growing hinterlands. "The crisis is not bad for Brazil. It allows farmers to get a better price," says Derli Dossa, a strategic adviser in the Ministry of Agriculture.

Brazil has already achieved some eye-popping gains. It is now the top world exporter of beef, poultry, soybeans, sugar, coffee, and orange juice. It is rising in other categories. Soy yields this year here in the central-western state of Mato Grosso are the best ever, reaching levels seen in Iowa and Minnesota. And Brazil looks to widen its lead as the top global exporter of ethanol as a result of its low-cost processing of sugar cane.

The American farm sector has watched Brazil's climb with a mix of fear, fascination, and allure. A few years ago, an Iowa Farm Bureau Federation PowerPoint presentation asked, "Should Brazil Give You Heartburn?" The attitude now seems to have grown calmer. "The heart of the Midwest will compete very well with Brazil," argues Dave Miller, research director at the Iowa Farm Bureau. In southern Minnesota, soybean farmer Gary Joachim says the high commodity prices mean "good times for everybody."

American agribusiness has long seen Brazil as a source of profit and opportunity. Moline, Ill.-based equipment giant John Deere has 114 dealers and 140 stores in Brazil, with expansion to 200 stores planned by 2010, by one dealer's count. A state-of-the-art tractor factory opened last year in southern Brazil. At the airy John Deere store in the booming town of Sorriso, salesmen can move all of the big 310-horsepower tractors that Deere can provide. For Minneapolis-based Cargill, which entered Brazil in 1965, the country accounts for 25,000 employees—its largest contingent outside the United States—and about $7 billion of its $100 billion in sales last year.

Land galore. Yet it's only when the amount of available land is considered that Brazil's history-making potential becomes clear. Brazil could, in principle, triple its area under cultivation over time—without felling any more rain forest. The additional terrain for Brazilian crops could surpass all of the land now under cultivation in the European Union.