From China to America, monumental forces are driving global demand for food, feed and renewable fuel. Faced with a worldwide credit crunch, demand will probably take a breather, but the long-term trends are still strong.
Revving Up The Ag Machine Brazil and Argentina will not only compete with U.S. farmers to supply the world's growing appetite for food but also will likely become the top powerhouse.
By Kieran Gartlan
The North-South rail is under construction and expected to be finished by 2013. It stretches more than 2,000 miles from the northern port of Belem, in Para state, to the southern town of Panorama, in Sao Paulo state. The rail will cut through the center of the country and open a new agricultural frontier region, including Maranhao, Tocantins and Goias.
"The rail will make a huge difference," stresses Gustavo Lago, market superintendent for the Maranhao Port Administration Company, EMAP, which is in charge of the northern port of Itaqui. "Not only is it a cheaper and faster route to port, but it will carry merchandise to the north of the country, which is thousands of miles closer to European and Asian markets."
Another important rail project soon to be developed is the West-East rail line. It will stretch from Vilheta, in the western state of Rondonia, across Mato
Grosso and join up with the North-South line at Uruacu, in Goias state. Another stretch of rail will cut across Bahia state from Ilheus port to join the
North-South track at Alvorada, Tocantins. Work on both is expected to start next year and be completed by 2013.
Argentina Set to Grow
In neighboring Argentina, farmers have finally settled a long-standing dispute with the government over export taxes, which has created a positive mood again for future growth.
This season the country produced 48 million tons of soybeans and 21 million tons of corn. Analysts believe there’s potential to double output in coming years. Most of the growth will come from converting pasture to crops and developing the country’s remote northern regions.
“They have less space than us, but the soil there is much more fertile,” says Paulo Rocha, head of Tocantin’s State Farmers Association, FAET. “This is a big advantage now that fertilizer prices have risen sharply.”
Argentina also has much better infrastructure than Brazil, with good roads and modern port facilities. Nearly 80% of production is within 300 miles of the port and processing units. A weak local currency, at around 3.1 pesos to the dollar, also means Argentine farmers have a strong competitive edge on the international market.
“There is a lot of competition between Argentina and Brazil,” says FAET’s Rocha, “but that has helped us grow. Together, the region is now a significant player on the world market.”
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