What Happened To Brazil?

[Burbert]

About a year or so ago, everyone was predicting that Brazil, growing 3 - 4 crops per year would dominate the food world. What happened? Hasn't the rain forest been cut down by now? Haven't the Brazilian land barons been able to produce, produce, produce? Did they go the way of exotic game farming, and decide to spend their millions/billions on other kinds of stuff!

[charliep]

An interesting question. Curiously enough the main topic around the Alberta Agriculture is competitiveness. The question I get asked is what happened to Canada.

On the topic of Brazil, it has been and continues to be the model for the biofuels industry. From a google search, here is a quote from a USDA publication.

Lessons From Brazil

Brazil has the world’s second largest ethanol program and is capitalizing on plentiful soybean supplies to expand into biodiesel. More than half of the nation’s sugarcane crop is processed into ethanol, which now accounts for about 20 percent of the country’s fuel supply.

Initiated in the 1970s after the OPEC oil embargo, Brazil’s policy program was designed to promote the nation’s energy independence and to create an alternative and value-added market for sugar producers. The government has spent billions to support sugarcane producers, develop distilleries, build up a distribution infrastructure, and promote production of pure-ethanol-burning and, later, flex-fuel vehicles (able to run on gasoline, ethanol-gasoline blends, or pure hydrous ethanol). Advocates contend that, while the costs were high, the program saved far more in foreign exchange from reduced petroleum imports.

In the mid- to late 1990s, Brazil eliminated direct subsidies and price setting for ethanol. It pursued a less intrusive approach with two main elements—a blending requirement (now about 25 percent) and tax incentives favoring ethanol use and the purchase of ethanol-using or flex-fuel vehicles. Today, more than 80 percent of Brazil’s newly produced automobiles have flexible fuel capability, up from 30 percent in 2004. With ethanol widely available at almost all of Brazil’s 32,000 gas stations, Brazilian consumers currently choose primarily between 100-percent hydrous ethanol and a 25-percent ethanol-gasoline blend on the basis of relative prices.

Approximately 20 percent of current fuel use (alcohol, gasoline, and diesel) in Brazil is ethanol, but it may be difficult to raise the share as Brazil’s fuel demand grows. Brazil is a middle-income economy with per capita energy consumption only 15 percent that of the United States and Canada. Current ethanol production levels in Brazil are not much higher than they were in the late 1990s. Production of domestic off- and on-shore petroleum resources has grown more rapidly than ethanol and accounts for a larger share of expanding fuel use than does ethanol in the last decade.

Web source: http://www.ers.usda.gov/AmberWaves/November07/Features/Biofuels.htm

[TOM4CWB]

Burbert,

Another BIG change has been the Brazilian Real currency value has shot up while the US dollar has dropped.

JUST LIKE CAnada... they are being squeezed on the cost side... many consumer products cost 20-40% more than in the US... yet the drop in our produce value has been directly proportional to the rise in our CDN/Real currencies.

Even though our income tax directly deducted is going down... it is a shell game because the more we pay for oil/input costs etc.... the more corporate tax and oil levies gov. collect...

SO net we are behind as consumers a very long way!

When CN/CP makes a billion $$$... the gov tax collection increase is massive... and so competitive industries are allowed to be traded in for monopolies... so gov. can feed the habit of ever increasing civil administration and influence on the 'private sector' economy!

[jensend]

inflation works for the government and not many others.

[charliep]

So your assumption is that governments find it easy to set policy/benefit from a world of higher inflation (impacting their constituents bottome lines and government costs of providing services) and a general slowing of the economy? Not tied to the original question but suspect Brazil would be no different than Canada.

[cottonpicken]

Elementray my dear jensend!Have you been following the yellow brick road?

[Burbert]

I heard recently that Brazil, has discovered a huge, huge, huge, offshore oil field. So I guess they got a lot in common with Canada. Wonderful ag sector and now lots of oil to sell to the US. Molson's sure screwed up trying to break into the Brazilian beer market, with their brew, lost millions. In the meantime Brazil has cracked the Canadian beer market, with Brahma, great beer at a good value. I pick Brahma each and every time cause it tastes better than the chemicals taste of Canadian, which is over priced and poor quality at best, makes a good hornet trap though!