Brazil, China, and Farming

There is an article worth looking at at the New York Times on China's growing need for Brazilian soy production, and the ties that is creating between the two states. The article is a little "old" (it appeared late last week, but I was out of town), but it offers some important insights into markets, trade relations, and even the impact of environmental degradation on the global economy.

The article does a fairly good job showing the role Brazil is playing in global trade among developing countries. It highlights the potential for economic growth between two countries as China expands its market and other developing-world countries (in this case, Brazil) form trade agreements beyond the U.S. What goes unsaid is how this relationship between Brazil and China is part of a broader effort on Brazil's part to reap strong economic relations between Brazil and other developing countries in Africa, Asia, and the Americas. The goal here has been to break depndency on American and European markets (which have generally cast aside Latin America when it is convenient, leaving the American economies to suffer severely). As with any buisness venture, such an approach has its risks, but the agreements the Brazilian government, particularly under Lula, have made promise much more profit than setback for Brazil, as well as the added incentive of not relying on the U.S. with its tariffs and with the World Bank and IMF dictating terms all the time.

As for the cons of the production, the article is a little...vague. Certainly, it is true that Brazil's soy production in the state of Mato Grosso (which, as the article says, is 1/3 of the country's production) have been plagued recently by drought, and the highway infrastructure here in Brazil....well, it isn't the U.S. interstate system. Farmers of course always run the risk of drought, and many may not have seen the profit they had hoped for, but it is also worth taking into account that the article only talks about Mato Grosso - I have no idea what the production status is of the other 2/3 of the country, but the article doesn't say, either.

More problematic is the complaint that sales of primary items like soy makes Brazil's economy too dependent on obtaining secondary items. Frankly, I think this argument rings a little hollow. It's true, Brazil is reaping a pretty good windfall from these sales, and if it were only soy that were driving Brazil's economy, that could cause problems. But it isn't. Brazil's secondary and tertiary production rates are growing rapidly too, so I think the complaint is a little too cautious in this regard. Additionally, while the article doesn't say exactly who is raising the critiques, there is no doubt opposition from some of the neo-liberal politicians (many of whom have a foundation in dependency theory from the 1970s-1980s), so it is definitely worth taking with a grain of salt.

Environmentally, it touches upon a few key items, too. First, there is the declining water resources in China, which are fueling its global expansion in trade. Erik has talked before about the role of water (or lack thereof) in China's (and India's) ability to continue growing and the article definitely hits upon that aspect rather throughly, with little I can add.

However, there are also important implications for the Brazilian environment here. Just because the article claims that Brazil can double its 175 million acres of production without touching the rainforest doesn't mean farmers won't leave the forest untouched. This is a particuarly dangerous area, for the vast increase of profits from soy production via trade with China may lead to soy-plantation-owners spreading into ecologically endangered areas, doing decades of damage to the forest for the proverbial quick buck. This doesn't mean they will encroach upon the forest for certain, but given the past, it is certainly an issue worth keeping an eye on.