Brazil's Answer to Global Hunger

Farm the Amazon. Soaring grain prices are giving soy producers an edge over environmentalists
Soybean harvest in the state of Mato Grosso Paulo Fridman/Corbis

Food and forest have long been at odds in Brazil's Amazon. While environmentalists have pushed for preservation of the lush rain forest, soy farmers have sought to fell trees and grow ever more beans. Now, with global grain prices skyrocketing, the farmers may be gaining the upper hand. On May 13, Environment Minister Marina Silva resigned, saying her efforts to protect the forest were losing traction. "For some time I've had difficulties advancing environmental policies," she said in a resignation letter.

In recent years, Brazil has become the world's pantry. It's the top exporter of soy, sugar, orange juice, coffee, beef, and poultry, and it's a growing producer of corn and rice. Last year it exported $58 billion in farm products, including $11 billion worth of soy. But an increasing share of that bounty comes from areas that were once rain forest or savannah, and many farmers believe that expanding production—and profits—will require clearing even more land.

Silva had earned a reputation as a staunch defender of the Amazon. A native of the region, she helped polish President Luiz Inácio Lula da Silva's eco-friendly image by levying stiff fines on farmers and ranchers who cut too many trees. In recent years, her efforts paid off in slowing rates of deforestation, but in January new satellite images showed a sharp increase. Silva cracked the whip, placing 1,400 farms and ranches on a blacklist that barred them from getting bank financing.

That drew fierce opposition from farmers who contended that they were being unfairly targeted. "A billion people around the world are going hungry," says Antonio Galvan, head of the Rural Union in Sinop, a soybean boom town on the southern edge of the rain forest. "Ask them if they want Brazil to stop expanding its farms."

Among Silva's adversaries was Blairo Maggi, governor of the western state of Mato Grosso and one of the world's biggest soy farmers. At an April meeting of governors, Maggi displayed photos shot by his state's environmental officials that seemed to show forest in areas that Silva had said were cut. In some cases, he contended, "newly cleared" areas had been legally logged many years ago. Others, he said, had been consumed by natural fires or ravaged by insects. More than 70% of blacklisted farms were exonerated, and Lula clipped Silva's wings, putting another official in charge of planning in the Amazon.


That job has fallen to Roberto Mangabeira Unger, Brazil's strategic affairs minister and a professor on leave from Harvard Law School. On May 8 he was appointed to oversee a new initiative: expand nature reserves in the Amazon while also developing the region with highways and railroads to create economic opportunities without cutting down trees. By converting ranch land to cultivation, he says, Brazil could double farming without touching a tree. "We reject the idea that in order to develop we need to destroy the Amazon," Unger says.

It'll be hard, though, to keep farmers from pushing deeper into the forest. Cost of land on the Amazon frontier can run just 15% the price of prime agricultural acreage in the developed Southeast. As oil prices have sharply boosted the cost of trucking grain 1,000-plus miles to Atlantic ports, soy producers are eyeing land that's closer to Amazon River shipping routes. And perhaps most important, farmers often regard the forest as little more than farmland awaiting development. "Around here it's nearly a natural law," says Nilfo Wandscheer, a small farmer in Mato Grosso. "Wherever a combine can go, soybeans will grow."

Before it's here, it's on the Bloomberg Terminal.