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Corn+Soybean Digest

The World Eyeballs Brazil

Carnaval, Brazil's annual pre-Lent party, puts dancing and drinking on the world's television screens. Less colorful, but certainly more lucrative, agriculture has less ostentatiously been drawing the world's attention as well.

Transportation is one of the main topics of discussion, and not just among farmers. Bureaucrats are waking up to the fact that Brazil's rickety infrastructure must be fixed. About one third of the Brazilian economy depends on agribusiness. That's important for Brazil, which has a heavy debt burden. Brazil's bad infrastructure is one of the only major brakes on continued soybean expansion. Most of the soybeans get to port by roads that are in bad condition, which means delays. It also means exporters have to keep stocks on hand just in case anticipated loads don't make it in time.

Railways may be one solution. Farmers estimate implementation of the soybean railroad from the Port of Santos to the production areas of Mato Grosso state may have halved transportation costs, of both inputs in and soybeans out, for that region. In addition, there is talk of private sector funding for a new railway from Brazil to the Pacific Ocean, possibly at a Chilean port. The railway would link existing track in Brazil, Argentina, Bolivia and Chile so that soybeans and other goods from Brazil could cut out the long ship route to China via the Panama Canal. The Chinese have shown interest in the railway.

Foreigners have shown interest in Brazil over biotech soybeans, too. The government here has approved the planting and/or harvesting of Roundup Ready soybeans on a temporary basis three times. It has rewritten its basic biosafety legislation to effectively remove science as the basis of approving a given biotech product or not, which sounds a lot like Europe's approach to the issue. But in late January, Brazil's Ministry of Justice out-Europed even the Europeans. A regulation was issued demanding the labeling of all food, feed and even meat, milk and eggs made or fed with biotech.

Europe has also been paying attention to drawing up a free trade deal with Brazil and its partner countries in the Mercosur trade bloc (Argentina, Paraguay and Uruguay.) Both sides would like to get one signed ahead of any Free Trade Area of the Americas deal in 2005. And Brazil has been pushing for a separate deal with India. Both Europe and India are big consumers of U.S. soy. So far there has been a lot more talk than action, but both deals are worth keeping an eye on.

Brazil's farmers don't often get into the Carnaval spirit. They're too busy eyeing prices and checking for rust. And, as it turns out, they aren't the only ones interested in Brazil's soybeans.

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