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Betting The Farm
By Mr Ethanol | November 23, 2007
HoweStreet:
China’s last Emperor, Pu Yi, loved his soybeans. They were a staple of the Manchurian diet in Northern China. In the 1930s, a forward-thinking Brazilian friend asked Pu Yi if he could take some soybeans back to Brazil. Pu Yi, only a nominal regent by this point, complied. The beans eventually made their way to bustling Rio de Janeiro.
Of course, neither Pu Yi nor his friend could foretell the momentous role soybeans would play in Brazil’s future. Nor could he predict that investors one day would pine to own acreage in the sun-filled green lands of South America.
Up until that time, soybeans were unknown to Brazil. But in Brazil’s fertile soils, soybeans found a welcome new home. Over the ensuing decades, they would become one of Brazil’s most important crops. Today, soybeans are Brazil’s largest export.
Vignettes such as this, little odds and ends, make up so much of history’s important turning points. (I picked up the Pu Yi story from Robyn Meredith’s interesting new book, The Elephant and the Dragon: The Rise of India and China and What It Means for All of Us. ) It’s always fascinating to me how one person’s decision, sometimes even on just a whim, can have such enormous impact over the years. Perhaps soybeans would have eventually made it to Brazil anyway. But the world would surely look different depending on when and how.
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So there are historical roots for the boom in trade between China and South America. Trade between the countries has really surged in recent years. Argentina sells nearly 10% of its exports to China. Chile supplies nearly one-fifth of China’s imported copper. And China gets about one-third of its food supply from South America — with a good chunk of that from Brazil’s vast farmlands.
It’s a natural, too. Not just for China, but for the world. In Brazil and Argentina, you have one of the few places left in the world where you can acquire large tracts of land in temperate climates with plenty of rainfall to support large-scale agriculture. Already, the two countries produce about one-third of the world’s agricultural commodities. As China is the world’s workshop and India its back office, so has South America become its breadbasket.
Brazil is already the world’s largest producer of coffee, sugar cane, ethanol and fruit juice. It is also near the top in soybeans, beef, poultry and tobacco. Brazil’s agricultural sector alone has grown at a 5%-plus clip since 1999. That’s pretty good for such a big sector. Agriculture represents about 8% of the economy, employs one-quarter of its work force and supports some eight million enterprises. Read full article.
Topics: Biofuel, Brazil, Ethanol, Market |
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November 24th, 2007 at 6:26 pm
Putting your eggs in one basket seems the best way to keep an eye on all of them until the basket gets tiped and all the eggs break. Wonder if some countries have done that….hummm?
November 30th, 2007 at 2:07 pm
[…] Betting The FarmArgentina sells nearly 10% of its exports to China. Chile supplies nearly one-fifth of China’s imported copper. And China gets about one-third of its food supply from South America — with a good chunk of that from Brazil’s vast … […]