segunda-feira, 25 de junho de 2007

Brazil, the new agricultural frontier

With India, China and Russia entering the capitalist system, 3 billion new consumers are all at once entering the world consumer markets. This is creating a surge in demand of a size never seen before for agricultural staples of all types. Soy, corn, sugar, meat, paper... all will have to be produced in quantities that are 2 or 3 times higher than the current world production.
On top of this, the western world is finally discovering the potential of ethanol and biodiesel as an efficient way to produce energy and to reduce the world's dependence on the handful of oil producing nations.
So the multi-billion dollar question is: where will all these products be produced?
Obviously, Europe, the US and Japan are already close to their production limits – not even to mention the high cost of land and labour which make farming hardly competitive with the developing countries.
Of course, it would be ideal to produce those crops in those new capitalist markets themselves. China and India have enormous space and cheap labour. But unfortunately, soil, water and climate conspire against them.
India, for instance, is a large producer of sugar cane – but it is already near its limits for production due to a lack of fertile soil and water. China is already struggling with huge environmental problems and lack of clean water – it is estimated that almost two thirds of its population does not have access to clean drinking water.
In contrast with those, Brazil has all the assets needed to become the farmhouse of the planet. Enormous reserves of uncultivated, but fertile land. A tropical to sub-tropical climate with lots of rain – and almost one third of the whole world's drinking water reserves. Land is cheap, labour is cheap, and production is higher.
As a result, Brazil is becoming the world's new agricultural frontier. Since around 2005, massive investments have started to flow to Brazil; the beginning of a boom that will undoubtedly grow over the next one or two decades.

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