competition, profit, price, agriculture

Brazil's ability to produce many agricultural products at low prices is making farmers in other countries stand up, notice, and start to fear the worst. Already the largest exporter of soybeans, Brazil is quickly becoming a world leader in production and export of sugar, coffee, orange juice and cattle products.

Brazil is blessed with abundant natural resources, including many acres of arable land on which to farm. As a result, Brazil's farmers are quickly becoming farmers to the rest of the world.

Part of the problem then rests with what firms will do with Brazil's abilities. Cargill imports sugar from Brazil to mix with corn from the US to produce ethanol. However, since ethanol can be made from almost anything organic that ferments, it can be produced anywhere. Cargill has been discussing importing ethanol from Brazil, a move that upsets farmers in the US. What's worse, the firm is attempting to circumvent US laws to do it. Current US laws impose a $0.54 per gallon tariff on imports of ethanol; this tariff allows U.S. farmers to remain competitive with low-cost imports. However, a Caribbean Basin Initiative allows 7% of the ethanol used in the U.S. to be exempt from the tariffs. Cargill proposes importing the ethanol through a new plant in El Salvador (part of the Caribbean Basin Initiative), which would allow the privately-held firm to import up to 230 million gallons of Brazilian ethanol tariff-free.

As Brazil clears land equal to the size of Maryland each year for agricultural production, Brazilian farmers' costs will continue to fall, and U.S. farmers will continue to worry-with good reason.

(Updated September, 2004)