Brazil Tour: Food vs. Environment

By Mark Edelman and Barry Flinchbaugh

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ME. Professor, I just toured Brazil with a delegation of agricultural leaders hosted by state Secretaries of Agriculture from Iowa and Delaware. It was an amazing trip that showed some stark contrasts in impacts that can result when we mix global political pressure with sovereign preferences for economic growth to lift the standard of living.

BF. It is fitting that you visited Brazil since former President Luiz Inacio Lula da Silva won last year's World Food Prize for creating and implementing government policies that reduced hunger and poverty. In recent decades, Brazil emerged to become second in the world trade of soybeans and more recently Brazil has shown the world how to reduce reliance on imported oil by increasing ethanol production from its domestic crops.

ME. We flew in to Manaus, a metropolitan city in the middle of the Amazon rain forest and near where the world's rubber trade emanated from and flourished over a century ago until alternatives and synthetics emerged. It was a little unsettling to learn after we landed that to this day, the only way in or out of Manaus was by boat or plane. While a major highway is planned for completion in the next few years, today there is no major highway for this metro area with 2.2 million people in the middle of the jungle.

BF. Well that doesn't sound like a particularly progressive case study. I've heard that Brazil has been very aggressive in protecting the Amazon rain forest in response to the railings by the climate change zealots. If true, do you now see that “indirect land use theory” was an academic farce?

ME. Yes, sovereign policy decisions imposing conservation mandates have direct impact on rain forest conservation practices, whereas any indirect market effects from U.S. land use are immaterial at best, and junk science at worst. Rain forest conversion declined as U.S. biofuels production increased. Let me finish, there's more. We were told a quarter of the Manaus population lives in poverty. Yet, they are surrounded by rain forests. We toured a banana plantation carved out of the jungle across the river where the owner said those who buy and clear land must now set aside 80% of their land for a legal reserve. Historically, the legal reserve mandate for the rain forest region was 50%, but has been increased as a result of global political pressure initiated by environmental NGOs in response to climate change science. And yes up to now, government has mandated the legal reserve without incentive payments. Can you imagine, U.S. farmers being asked to set aside 80 out of every 100 acres owned in order to place 20 acres into production?

BF. No, I can't. Current farm bill debate suggests the U.S. Conservation Reserve Program incentives may be reduced due budget deficit concerns. There would likely be a farmer revolt like we have never seen before, if we had Brazil's policy. Even more, it sounds like the hunger among those who live in poverty across the river in Manaus can now be partly traced to impacts of the global environmental movement. Somehow, I'm not surprised that policies espoused by global “do gooders” end up with unexpected consequences. So, the predominant global issue for this century may well be “Food vs. Environment.” Are we willing to impose policies that may or may not affect climate change, while people starve across the river?

ME. One of our tour guides shared a similar view suggesting the science and jury may still be out on the benefits in reduced greenhouse gas (GHG) emissions provided by mature Amazon rain forests. Our delegation toured large tracts of farmer managed eucalyptus groves that were hypothesized to provide greater GHG benefits than the legal reserves of natural subtropical Cerritos land or more mature rain forests where significant biological decay is present. Scientific comparisons can be made so best practices emerge.

BF. Brazil is more than rain forests; it is the second largest world trader of soybeans. Forty percent of the economic growth in recent years has been due to growth in agriculture and agribusiness. I've heard a lot about their technology and size of farms and I still maintain that U.S. farmers are the most efficient and productive farmers in the world and no one is a more competitive or consistent supplier on the world market. Did you see anything that counters my claim?

ME. Well, next we flew to Brasilia and toured the farm in Bahia that Illinois farmer John Carroll started in 2003. Then we toured several farms as well as ethanol and bio-diesel plants in Mato Grosso. In this subtropical savanna woodland, the legal reserve for owning and clearing land is being increased from 20% to 35%. Talk about large and efficient. First, the growing season is longer and provides an opportunity for double and triple crops. Second, large scale equipment was the standard. Third, one could look every direction and see soybeans, corn, and cotton with maybe an occasional farm site. We were told that commercial farms in the area typically ranged from 5,000 to over 500,000 acres. Their land costs are currently lower. The inputs and machinery appeared similar to those used in the U.S., except these farms operated more like companies with a dozen or more hired workers who live on site.

BF. You didn't say anything about infrastructure. Part of what makes U.S. agriculture so competitive in world markets is that we have an efficient and competitive freight hauling system that includes highways, railroads, and river systems to access port destinations.

ME. Yes, Brazil is still behind, but catching up while our infrastructure may be eroding. Mato Grosso is 1,500 miles from the seaport near Sao Paulo with the only connection of a single highway. On this highway during soybean harvest, our tour bus had trouble finding a gap wide enough in the bumper to bumper grain truck caravan to cross traffic. Investments are being made. A railroad from near Sao Paulo in the South is near completion and will compete with trucking lanes to lower freight costs. Rail is being built from to the coastal ports in the north and east. Highway and river barge capacity is being built to the Northwest that will connect with the Amazon and world trade channels.

BF. With projected 50% growth in world population in 40 years, a food vs. environment debate in Brazil will likely become magnified, particularly if 20% to 80% of the land continues to be idled in a reserve arbitrarily set by policymakers who may be long gone.

* Edelman is a Professor of Economics at Iowa State University and Flinchbaugh is an Emeritus Professor of Agricultural Economics at Kansas State University.

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