Brazil eyes ethanol as fast track to power
Brazil aims to double its production of ethanol in 10 years as the high price of oil and growing concerns over climate change spark a demand for biofuels.
(Page 2 of 2)
"They cannot ignore us anymore, and that has given us power. You can't make decisions without the world's largest producer," says Pedro de Camargo Neto, a former official in the agriculture ministry in Brazil. "The byproduct is it makes us a political leader. Ethanol will help that."Skip to next paragraph
Subscribe Today to the Monitor
Brazil did its homework ...
Over the past couple of decades, Brazil – in a conscious decision to focus on agriculture instead of just industry – has invested billions of dollars into a premier research institute called Embrapa. It has, among other technological advances, figured out how to grow soy varieties in tropical climates.
Its agricultural exports to China grew by 22 percent between 2005 and 2006, according to Brazil's Agricultural Ministry. Exports of soybean to China alone rose to 11 million tons in 2006 from 7 million tons a year earlier.
"Brazil owes its [position] to long-lasting and continuous research efforts toward technology in growing tropical crops. With ethanol, it is the same," says Decio Zylbersztajn, an agricultural economist at the University of São Paulo.
Their success has irked some in the American farming industry, as Brazil gains market share in traditional American domains, such as soybeans. Perhaps the unease is best exemplified in a presentation by the Iowa Farm Bureau Federation. "Should Brazil Give You Heartburn?" the Power-Point presentation is titled – with 56 slides highlighting Brazil's advantages and then all its drawbacks.
... but its climb won't be easy
Chief among Brazil's challenges is a lack of infrastructure. A report from the Organization for Economic Cooperation and Development (OECD) showed that only 10 percent of the country's roads are paved. That contributes to high transport costs for soybean exports, for example – double what they are in the US, according to the US Department of Agriculture.
And while anxieties abroad abound, they do at home, too – particularly on the environmental front. Much of the deforestation in the past few years has taken place in the Mato Grosso, the heart of soybean production in Brazil. And as sugar production expands and moves to the cerrado, they worry that soy production will get pushed deeper into rainforest areas.
"Brazil needs to decide just how much it's willing to sacrifice of its natural resources to help other countries with their energy needs and with their soybean needs," says Randy Curtis, an expert in Latin America infrastructure at The Nature Conservancy.
Brazil's agribusiness sector accounted for 28 percent of the country's GDP, and employs 37 percent of the labor force, according to the USDA. Still, some wonder if the boom has benefited Brazil, or just big multinationals that swooped in after Brazil's economy opened in the 1990s. Many small, subsistence farmers have been displaced.
"It doesn't help Brazil, it helps the people who own the companies," says Dennis Keeney, a senior fellow with the Institute for Agriculture and Trade Policy. "It doesn't really filter down."
But Mr. Nassar says that while these questions are important, greater prosperity via agriculture will benefit all. "Many of these regions are very underdeveloped. Now there is new employment," he says. That is leveling the field between the wealthier coastal area and inland. "By developing the agriculture sector we are also developing the country."