SAO PAULO – As U.S. cornfields withered under drought conditions last summer, Brazils once-empty Cerrado region produced a bumper crop of the grain, helping feed livestock on U.S. farms and ease a drought-related spike in prices.
The U.S. imports of Brazilian corn were small by world standards. But they are rising fast, and they mark just one element of the increasingly complex and sometimes contentious relations between the worlds agricultural superpower and its fast-growing competitor amid shifts in the global economy.
Starting at zero in 2010, Brazilian corn exports to the United States are on pace to exceed $10 million this year and are bound to rise as farmers here expand planting and more corn is funneled to nonfood uses, such as ethanol production. Brazil is expected next year to dethrone the United States as the worlds largest producer of soybeans. With so much land available for cultivation, that status will probably become permanent.
With a heavy dose of U.S. capital and know-how, a massive agribusiness complex has been established here. Just as American firms have moved production to China to be close to potential consumers, the John Deere equipment trundling across Brazilian fields and the Kelloggs Corn Flakes found in Brazilian supermarkets come from local factories.
Despite what is described as intense cooperation between the two governments, there is a developing sense of competition as well. Brazil challenged U.S. cotton programs in the World Trade Organization in 2009, arguing that U.S. government support for domestic growers held down world prices and hurt cotton farmers in Brazil.
Brazil won, and it now receives about $17 million in monthly payments from U.S. taxpayers as a result – money being used to advance the Brazilian cotton industry with research on best practices, pest management and other issues. The Obama administration agreed to the payments as an alternative to either curbing government support for U.S. cotton growers or having Brazil slap import taxes on American goods to compensate for the loss to its farmers.
Battles over sugar, poultry and other products that are grown in plenty here were among the issues that stalled the Doha round of world trade talks.
We will surpass the U.S. in the future as Brazil brings massive reserves of open land into production and benefits from still-untapped potential to boost its yield per acre, said Ronaldo Spirlandelli de Oliveira, head of the Sao Paulo cotton growers association.
The Sao Paulo group recently received $500,000 in U.S. funds to train technicians in pest management. Under the cotton agreement with the United States, the money cant go directly to growers but is being funneled through a new agency to fund research, technical training and other programs for Brazils cotton industry.
The cotton case is just one example of the swagger Brazil is carrying into global agricultural markets.
State-backed research since the 1970s has turned the Cerrado – once considered unproductive scrubland – into a vast new farm belt. Still mostly unplanted, the Cerrado has become a new frontier in the green revolution.