Brazil Becomes the New Food Superpower

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

Still, for all the dynamism here, Brazil's prospects for helping to feed the world are not unclouded. There is a reluctance in Brazil to talk about feeding the world. And though ag was consciously developed as the country's export star, elsewhere—in mostly urban Brazil—the attitude toward the farming juggernaut is mostly indifferent. Many would prefer to think of Brazil in terms of high tech and manufacturing. "Until recently, we have not been proud of it," explains Cristiano Romero, a Brasília-based columnist for the newspaper Valor Economico.

The producers themselves worry about fluctuating commodity prices, and soaring fertilizer and fuel prices are eating into profits needed to retire debts. Cheap credit can be hard to come by. Sporadic labor troubles and squatters, fights over land titles festering in court, and reports of official corruption all may hinder the coming Brazilian surge in food production. Farmers' subsidies and trade barriers in the United States and Europe also pose obstacles. Price supports and other assistance to American and European farmers foster overproduction there—and less here, say Brazilian officials and producers. They argue that when most ag subsidies were stripped away here, the farmers became more robust competitors.

Woeful infrastructure is a major problem, too. "We have the best weather in the world but the worst logistics," complains Clovis Picolo Filho, a grower and chemical dealer in Sorriso, north of Lucas. His farm is about 90 miles away, the last half off the asphalt. Getting grain and meat out of the Lucas area is a trial. Railroads in Mato Grosso are scarce, as are ports for barges. The seaports of Paranagua and Santos are some 1,200 bruising miles away—three days' drive. It is akin to trucking farm output from Des Moines all the way to New Orleans. The cost of shipping soy from Mato Grosso to the red-hot China market is 21/₂ times higher than what it is for Midwestern soy.

Though it already constitutes a strategic corridor for soy, corn, and cotton, the highway through the Mato Grosso farm belt is an object of scorn. A trip up the ostensibly paved BR 163 from the state capital, Cuiabá, provides hours of informal spine-adjustment therapy. Some call it the "Highway of Death." Slow and treacherous, the journey means constantly encountering menacing trucks hauling crops and supplies as they dodge potholes. Dense patches of truck and tire-repair shops attest to the dysfunctionality of the road. The failure is widely recognized, yet unremedied. "There's a bankruptcy in infrastructure," acknowledges Sérgio Guerra, a senator from the state of Pernambuco. Of current building plans, he says, "Nothing's really happened."

Imperiled rain forest. Brazil's food future will also be shaped by the collision of interests over the Amazon rain forest. There is considerable dispute over where the agricultural frontier should end and the rain forest begin. With high prices for beef and grain, speculators continue to find parts of the Amazon an attractive target. Environmentalists say the expansion of soy production is pushing cattle operations toward and into the Amazon. In four decades, forest equaling all of Texas has been lost, mostly to cattle ranching. After three years of environmental progress, the rate of deforestation re-ignited last year, Brazilian satellite analysis suggests. And the drier "burning season" is looming just ahead. "Local people used to say malarial mosquitoes and bad soil would keep agribusiness out," says Paulo Adario, the Amazon campaign director for the environmental group Greenpeace. "Not now."

The satellite findings are disputed by Mato Grosso's governor, Blairo Maggi, a top grower and landowner himself who has been dubbed the "King of Soy." But the warning of intensifying deforestation triggered an unprecedented government crackdown this year on illegal logging, with heavy fines and federal police prowling through remote areas. Separately, a temporary moratorium agreed to by multinational companies and ngos like Greenpeace bars buying soy from recently cleared Amazon land. Participants judge it a success, so far.