Monday, April 12, 2004

The new octopus from Brazil Published in 1901, Frank Norris's The Octopus is a novel about the crushing of the American farmer by price manipulation by the railroad trust. Now, at the beginning of the next century, new forces form the Octopus. It's not the railroads anymore, but the major ag companies, the Cargills and the Archer Daniels Midlands and the Tysons that set the prices and hold the livelihood of US farmers in their hands. And now there is a new trend that will make the American farmer even more expendable. That trend is in Brazil. The vast interior region called the cerrado until now has been not a poor good agricultural area, simply because the native soils are so poor. That is, until recently, according to an eye-opening story by Kevin Diaz in the Sacramento Bee ("The World's Breadbasket", 3/15/2003). Two decades ago, the area was a tropical ranching backwater, too disease-ridden and acidic to plant major crops. The introduction of lime, pesticides and new seed varieties has changed all that. Its flat expanses make it every bit as suitable for mechanized crop production as Iowa or Kansas. But thanks to low wages and cheap land prices, the area is being converted into the largest supplier of cattle, corn, and soybeans in the world, eclipsing the breadbasket of the Midwest US. The soybean explosion is so great, according to the article that is now being called "soybean ground zero." "Brazil will be setting the price for soybeans in the future," said Seth Naeve, a soybean extension agronomist at the University of Minnesota. "You could think of them as OPEC" (the Organization of Petroleum Exporting Countries). As Brazil gobbles up more of the global export market, free-trade skeptics worry that it could become to farming what China is becoming to low-cost manufacturing, and what India is becoming to offshore information technology. And the beneficiaries are in part the people of Brazil. But the real winners are not small farmers but major agribusiness concerns owning vast fazendas. That's reinforced by the identity of the companies that have built a thousand-mile (toll) road to the region to facilitate the movement of this vast quantity of agricultural production to the ports: Cargill, Archer Daniels Midland, and Bunge. The first two are familiar presences, Bunge, a company headquartered in Bermuda, is the leading soybean and oilseed seller in the world. These companies buy, transport, and sell all the soybeans (and corn and cattle) that Brazil can produce. And American farmers will be forced to take steadily declining prices for their crops, a proverbial "race to the bottom". It should be noted that soybean prices are actually up somewhat this year, but then again, Brazil is just in the early stages of building a soy industry. Cargill, the article notes, already has established a major presence in Brazil. Already, the Minnesota-based multinational has more than 120 plants, warehouses, port terminals and farms in Brazil. It counts more than 90 buying stations and employs more than 5,000 people. In the end, the big winners will, as ever, be the agribusiness oligopoly that has already sewn up the race before it has hardly begun. Governments in Washington and Brasilia won't oppose them seriously, and, as the short-term benefactors of Brazil, they will be colonial powers in a way that no nation-state is allowed to be anymore. This octopus has even longer tentacles than the trusts in Norris's novel, and the ag oligopoly, like their predecessors, will pay "whatever the traffic will bear." Thanks to reader Bill Lazar for pointing this article out. 9:17:00 PM

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