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Farmer investment 'welcome' in Brazil

BRASILIA, Brazil (Agriculture.com)--There’s been a misunderstanding in Brazil, individual U.S. farmer investors are welcome, fund investors are not, according to Wagner Rossi, Brazil’s Minister of Agriculture.

This topic has swirled since recent Brazilian government legislation was passed that restricts foreign ownership of agricultural land.

“Foreign investment in Brazil is welcome. People are thinking that no foreign ownership can be involved in agriculture. But, that’s not how it really is,” Minister Rossi told the reporters, in an exclusive interview, along the Crop Expedition Wednesday.

As a result, the Brazilian government is developing new documents that spell out which kind of foreign investments are allowed and which are not. For the first time since taking office in May, Rossi spoke about the new documents.

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Brazilian Minister of Agriculture Wagner Rossi (photos by Hugo Harada).

“For instance, those big fund investors are not welcome in Brazil. They are only here to speculate by buying land and then trying to sell it at a much higher price. That is not welcome,” Minister Rossi says. “However, individual farmers that come from the U.S. or wherever are welcome. They help our agriculture grow, they build export potential, so this is all very welcome and we hope those types of investors keep coming to Brazil.

As you drive along BR-020 highway, south out of the Bahia state town of Luis Eduardo, you see farm signs reading, ‘FAZ Indiana’, ‘Group Iowa,' as well as Pioneer and Dekalb seed signs that line the fields.

Michael and Mark Gretter, along with Perry Sieren, are Iowans that farm along BR-020 highway, say they have always felt welcome. “We see it as Americans are guests here. Brazilian farmers are good neighbors and the people are nice,” Sieren says. “Because the U.S. ag industry has improved, and Brazil farmland prices have increased, the buzz of buying here has quieted. You don’t see as many ‘for sale’ signs.

However, Scott Shanks, Fazenda United’s general manager, a mostly U.S. dominated investment group based in western Brazil, says prospective traffic is still just as high as when he came here in 1999.

“We are still seeing U.S. farm groups and farmers come down here to show interest in investing,” Shanks says. “More money is needed now. So, the difference is the farmers are joining together to form a group vs. a smaller individual farmer trying to make a go at it.”

Iowa farmers Michael Gretter, Mark Gretter and Perry Sieren check one of their soybean fields in Brazil. "Brazilian farmers are good neighbors and the people are nice,” Sieren says.

Minister Sees Big Crop

The initial 2011 Crop Expedition estimates for this year’s Brazil soybean crop is 71.0 million metric tons. For corn, the estimate is pegged at 65.0 million metric tons.

“Though the official crop estimates are 70.0 million metric tons for soybeans, I personally agree this crop is above that. We just have to be careful with the estimate. The La Nina that was expected to keep us drier didn’t happen. The crops look great with the rains,” Minister Rossi says.

Harvest Logistics

With all of the rain, this year’s early soybean harvest in Parana and Mato Grosso has been delayed. This is causing worry that the early and late-planted soybeans will be harvested at the same time. In addition, higher prices have caused more-than-usual numbers of farmers selling new-crop ahead. Not to mention, this Brazil crop looks like a bin-buster. The question becomes can the infrastructure hold up in March?

“The transportation could be strained. But, the farmers and the government will have to work through this together,” Minister Rossi says. “We have been hitting export records in recent years. We can still operate with our system. Our problems are there but they won’t stop the growth in agriculture.”

Storage Not A Government Problem

In Brazil, only 2% of grain storage is owned by the government. On-farm storage is rare. Many believe this kind of storage would alleviate snarls in the transportation system at harvest time. But, for most farmers here, a 16% loan interest rate is too high to finance construction of storage units. As a result, farm groups believe the government should help with grain storage costs. The Minister sees it differently.

“Yes, the government should help those areas of Brazil just starting to build infrastructure. But, it’s the responsibilities of farmers, cooperatives and private companies to build storage. The government provides financial assistance to farmers for things like storage.”

Minister Rossi added, “The government should only get involved in storage when there are rationing issues.”

Railroad Construction

Currently, 70% of Brazil’s crops are transported by truck, with the remainder by rail or ship. This kind of infrastructure is old-thinking, and the country needs to embrace ideas for improved transportation going forward, Minister Rossi says. “We need to integrate road, river, and rail transportation. And that is what we need to work on. The farmer is proactive, not waiting for the government to do things. They (farmers) look for technical solutions and try to build things themselves.”

Environmental Law

Current legislation allows farmers to wait until June 11, 2011, to inform the federal government about the location of preservation areas. For each state, the dates vary.

The law requires farmers in the state of Parana to sign-up 20% of their acres for preservation, 50% in Mato Grosso, and 80% in the Amazon. So, there are different levels for each state. Since a bill is working its way through governmental legislation, farmers are holding off on signing up for the program.

Minister Rossi is willing to be patient with the farmers awaiting new legislation. “I hope the new bill gets approved quickly. It looks like the environmentalist and the rural sector are working together to get this issue settled. But, if the bill is not enacted before the environmental sign-up deadline, I will push for an extension. Farmers will not be fined.”

The environmental bill is expected to be passed by late March, Minister Rossi says.

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