By ANDREW MARTIN
Chicago Tribune
CUIABA, Brazil - In this
muggy provincial capital
built on abandoned gold
mines, construction workers
are known to spend as much
time sifting dirt for stray
gold nuggets as putting up
new buildings.
But the popular governor
of the state of Mato Grosso
in west-central Brazil,
where Cuiaba is located, is
championing a different
moneymaker: Soybeans.
Spurred by new global
markets, soaring prices and
vast tracts of undeveloped
land, Brazil is poised to
surpass the United States as
the largest soybean producer
in the world, largely due to
the explosive growth of
farming in Mato Grosso.
Mato Grosso's success has
stirred waves of panic in
the American Midwest. Some
U.S. soybean farmers worry
that they can't compete with
Brazil's cheap labor and
land, divided into soybean
plantations that are
routinely 10,000 acres, far
larger than a typical U.S.
farm.
Environmentalists,
meanwhile, fret that
Brazil's soybean success is
accelerating deforestation
of the Amazon for new
farmland.
Mato Grosso's governor,
Blairo Maggi, gruffly
brushes off such criticism
and prefers to talk about
his state's tremendous
potential for agricultural
expansion.
Only 7 percent of the
land in Mato Grosso is used
for farming, and with twice
as much land as California,
Mato Grosso could see 10
percent annual growth in new
farms over the next decade,
the governor said.
Already, Mato Grosso -
"thick forest" in Portuguese
- has more acres devoted to
soybeans, 12.9 million, than
Illinois or Iowa, America's
biggest soybean states.
Illinois has 10.5 million
acres and Iowa 10.4 million
acres, according to a recent
U.S. Department of
Agriculture report for 2002.
"People have a lot of
fear of the unknown," said
Maggi, known locally as the
Soybean King because his
family owns the world's
biggest soybean farming
operation. "There is a lot
of room to enlarge."
SUBHED: A change of
fortunes
The emergence of Brazil
and Argentina as players in
the world soybean market is
unwelcome news to U.S.
soybean farmers, who faced
little competition for
decades.
In the 1960s, the United
States controlled 80 percent
of the global market for
soybeans, which are used
mostly as a protein source
in livestock feed. By the
turn of the century, that
market share shrunk to 34
percent, and Brazil and
Argentina together now
supply 50 percent of the
world's soybeans.
The pain has yet to be
felt by many Midwestern
farmers because of
government price supports
and increasing world demand,
primarily from China's
emerging middle class.
Indeed, Midwestern
soybean farmers are seeing
some of the best prices
ever. A drought in the
United States, along with
Asian soybean rust fungus in
South America, helped drive
up prices this year, past
$10 per bushel. Soybean
prices usually hover around
$5 or $6 a bushel, according
to the USDA.
But experts suggest that
U.S. soybean farmers should
enjoy the good times while
they last. The future, they
say, is clear: Brazil will
grow more soybeans and the
United States less.
"At this point, it has
been more talk than actual
impact," said Darrell Good,
an agricultural economist at
the University of Illinois
at Urbana-Champaign.
"Everyone who goes down to
South America comes back
with a scare story for the
American producer.
"It's much more
profitable to grow soybeans
in Brazil than it is here.
Over the next decade, we are
going to lose beans to South
America and switch to corn."
Recognizing the threat,
U.S. soybean associations
are busily working on
strategies to remain
competitive, such as
promoting U.S. advantages in
quality, tracing shipments
and transportation.
SUBHED: Transportation an
obstacle
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Because many soybeans are
transported by barge, U.S.
soybean growers are pushing
the government to improve
locks and dams along the
Mississippi River. They are
also promoting an energy
bill, now stalled in
Congress, that encourages
the use of soybeans to
produce diesel fuel.
In Illinois, a new
program called SoySelect
will allow farmers to
quickly deliver soybean
products that can be traced
from the store to the field
in which they were grown.
Such "traceability,"
officials hope, will make
U.S. soybeans more
attractive.
"We know that they
(Brazilians) are producing
lots of beans, more and more
all the time," said Sharon
Covert, a Tiskilwa, Ill.,
soybean farmer who heads the
Illinois Soybean Checkoff
Board, which uses farmers'
money for promotions. "You
just have to be ready for
that type of competition."
The potential of that
competition - as well as its
weaknesses - is evident on
the road north from Cuiaba.
BR 163 stretches 1,100
miles to the Amazonian port
city of Santarem, through an
immense stretch of largely
undeveloped land that
Maggi's government touts as
the world's last great
agricultural frontier.
Roberto Smeraldi,
director of the
environmental group Friends
of the Earth Brazil, said
soybean expansion is a
"powerful driver" of
deforestation.
Because land planted with
soybeans typically soars in
value, Smeraldi said
speculators are clearing
more and more territory in
the hopes that it becomes
the next cluster of huge
soybean plantations.
"It stimulates people to
open up the frontier,"
Smeraldi said. "Out of four
areas they open up, maybe
only one actually works for
soybeans ... but then the
damage is done."
Some of this wild land is
protected by Brazilian law.
While environmentalists
complain that the rain
forest is being wiped out,
farmers stress - or grouse -
that a good chunk of it is
off-limits to the plow.
The land near Cuiaba is a
scrubby savanna known as
cerrado that gives way to
lusher forests as BR 163
heads north toward the
Amazon River. Brazilian law
requires farmers to preserve
up to 50 percent of land
classified as cerrado or
transitional forest.
The rain forest covers
roughly half of Mato Grosso,
and only 20 percent of it
can be cultivated.
"It's very much discussed
that it's being deforested,"
Maggi said. "What I want to
say is that it's being
preserved."
But the biggest obstacle
for Brazilian soybean
farmers may be that rural
Brazil's transportation
system is in terrible
condition, particularly the
roads, which can make
driving inefficient and
terrifying.
BR 163 is no exception.
Jammed with trucks carrying
soybeans, logs and farm
equipment, the road is two
narrow lanes full of
kamikaze drivers and gaping
potholes.
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In the state of Para,
across Mato Grosso's
northern border, the main
transportation artery, BR
163, turns to dirt. It's
supposed to be paved in the
next few years, but for now,
soybean trucks must travel
twice as far as they
otherwise would, heading to
ports in southern Brazil,
where lines of trucks
waiting to unload their
cargo stretch for miles.
"This is a big problem we
are having," said Guilherme
Faria de Freitas, who
manages a soybean plant in
Mato Grosso for Cargill
Inc., the U.S. agribusiness
giant.
Faria de Freitas works in
the boomtown of Sinop, 310
miles north of Cuiaba.
"Once this paving is
done, it's another world,"
Faria de Freitas said.
"Nothing will keep us from
going."
Maggi said improving the
roads is a priority for his
government, but he is
partially reliant on federal
and local officials for
help. Optimistically, he
said, BR 163 would be fixed
in five years.
SUBHED: Prosperity on the
rise
Despite the challenges,
signs of new wealth are
everywhere in Sinop: Roads
and subdivisions are under
construction, a John Deere
showroom is packed with new
tractors, and the downtown
is lined with stores and
restaurants.
Founded only 24 years
ago, Sinop is now the
fourth-biggest city in Mato
Grosso, with 95,000
residents. Many of them come
originally from longtime
farming villages in southern
Brazil where land and
housing are more expensive.
Nelson Glucksburg was
among the first farmers to
settle in Sinop. Glucksburg
is an accountant from the
southern state of Parana who
moved for the cheap land and
the chance to make a
fortune.
Now 50, Glucksburg owns
12,355 acres outside of
town, where birds, monkeys
and an occasional jaguar
flit between the rows of
soybeans, rice and
sunflowers.
Glucksburg's farm, which
is of average size for Mato
Grosso, has 30 full-time
employees and another 30
part-time workers.
"It was very difficult
and complicated," Glucksburg
said of his early years of
farming. "The deforestation
is very expensive. It's a
very strong forest."
Idemio Machado hopes he,
too, can cash in on Brazil's
soybean boom. Machado, 33,
sold about 75 acres of land
in southern Brazil and
bought 1,235 acres in Para
because land is
substantially cheaper.
Machado said he is
working in a gold mine to
save money but plans to
plant soybeans on his farm,
which he hopes to expand to
about 6,200 acres.
"We came here to plant,
not for the gold," he said,
standing beside his wife,
Angelica. "But we have to
survive."