Go south young man. U.S. Farmers in Brazil: Overview - 10/1/2007
LUIS EDUARDO MAGALHAES, Brazil (DTN) -- Financial wizard Warren Buffett once said if you can buy dollar bills at 40 cents, then buy all you can.
In Brazil land is selling at 10 cents on the dollar, compared with the U.S. Midwest, and a handful of adventurous American farmers have heeded Buffett's advice.
Most of these agro-pioneers moved down south four to five years ago during the height of Brazil's soy frenzy, which saw millions of acres of barren scrubland, called Cerrado, turned into thriving fields of soybeans almost overnight.
American farmers have chosen the dusty plateau of western Bahia as their new adopted home. The logistics are better than other frontier regions such as far-flung Mato Grosso and weather conditions are extremely suitable for cotton and soybean production.
It's not plush prairie land, but the wide-open scrubland is easy to clear and with enough lime and fertilizer, it can be made every bit as productive as land in the U.S. Midwest.
"The advantage here is that there are vast tracks of land available and it is amazingly flat," said American farmer Brian Willott, originally from St. Peters, Mo. "You can travel for miles with only a few feet difference in altitude. It's every farmer's dream."
The dream was initially cut short, though. In 2004 boom turned to bust and Brazil's soy bonanza came to an abrupt halt as a result of poor crops, low international prices and rising transport and input costs. Farmers also had to contend with a sharp rise in the local currency, which meant they received less for their dollar-quoted beans.
"Brazil is a great place to be when things are going well," Willott said. "But you are definitely on your own when things go sour. There are no safety nets like in the U.S."
Three years later, though, things are back on track with international soybean prices reaching record highs. Farmers are more apt at keeping diseases such as Asian soybean rust under control and the country's infrastructure is gradually improving.
"We weathered the storm and while we haven't made a lot of money over the past few years, we have gained valuable experience," Willott said.
FARMER PROFILE
There is no official data on how many American farmers are operating in Brazil. Even the U.S. agricultural attache in Brazil had no information on the subject. But after some extensive research, it seems there are no more than a few dozen owner-operated American farmers in Brazil.
Most are relative newcomers, but there is also a small Mennonite community, which came from Ohio and Georgia in the late 1960s and settled in soy-rich region of Rio Verde, Goias state in the center west of the country.
Of the most recent batch, some are corporate farms, such as Brazil Iowa, which owns and operates 22,500 acres of soybean and cotton land and Global Ag Investments, with a similar sized operation.
There are also a handful of expatriate farmers, like Willott, who came on their own or as part of a small investment pool.
"It's a mixed bunch, really. I have met everyone from broke to filthy rich," said Kory Melby, a 37-year-old farmer and consultant from Greenbush, Minn., who lives in Brazil and organizes farm tours for American visitors.
"They usually have a few things in common though -- they are all adventurous, entrepreneurial and global thinkers with a pioneering spirit."
In general, the owner-operated farms tend to be run by young farmers, recently graduated, coming from a good-sized family farm back home.
"They are frustrated by the lack of opportunity to expand in the U.S. and armed with some capital, they head south for a chance to make it on their own," said Phil Warnken, a former University of Missouri professor whose company AgBrazil organizes farm tours to Brazil.
He adds, however, that in recent months the profile of those taking part in his tours has shifted.
"We get very few enquiries these days from hands-on farmers. Now it's mostly Wall Street types and hedge funds interested in sugarcane," Warnken said. "U.S. agriculture is going through an incredibly positive period and that probably has a lot to do with it."
DIFFICULTIES
For those already down here, it hasn't been an easy ride. While there are plenty of pluses such as cheap land and labor and favorable weather, U.S. farmers have had lots of other issues to deal with.
Brazil is still a developing country with tangled bureaucracy, archaic laws and poor infrastructure. Bahia in particular is one of the country's poorer states where corruption and inefficiency are rife and the slow pace of business can be frustrating
However, the cultural differences and language barrier are probably the biggest obstacles American farmers have to face in Brazil.
"Learning a new language is a big challenge," said Scott Harker, a 29-year old farmer from Melba, Idaho, and one of the most recent U.S. arrivals in Bahia. "You often feel like a two-year-old fumbling for words trying to get your message across."
Farmers also have to get used to life without subsidies or federal crop insurance to help them out when things go wrong, and getting used to a foreign currency can be quiet an ordeal.
"The appreciation in the local currency has been the biggest factor for farmers over the past three years," said Jaqueline Bierhals, a grains analyst local consultancy FNP. "It's even more of an issue for American farmers who bring dollars into the country to buy land and who will be thinking of repatriating profits."
There is also the unfamiliar banking system and the different pace of conducting business here.
"You really have to learn patience; it's a difference pace of life here," Harker said. "But the people are friendly and you are made to feel welcome here."
This welcoming attitude has helped Luis Eduardo grow from a quiet dusty outpost with a few hundred homes two decades ago into a thriving community of more 35,000 people.
"We welcome everybody," said Oziel Oliveira, the town's first mayor. "We are probably the most cosmopolitan farming town in all of Brazil."
Kieran Gartlan can be contacted at kieran.gartlan@dtn.com.
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