Farm Futures
   Search Site:  Search Site Friday, April 25, 2014 | Bookmark This Site   
Skip Navigation Links
Farm Futures NOW!
Magazine Online
RSS News
About Us

Chinese Sourcing Brazilian Beans

South American Crop Watch

China and Brazil work toward mutually beneficial ag deals, but for how long?

Published on: September 6, 2011

I understand that every April there's a fundraising party for the upkeep of the Campos Cemetery, in upstate São Paulo, where the bones of the Dixie immigrants to Brazil lie. Brazilians arrive dressed in outfits copied from Gone with the Wind.

They're keeping up the resting place of Confederate Americans who came here after the U.S. Civil War at the invitation of the emperor of Brazil, which was one of the few countries that still had African slavery after 1865.

The emperor got what he wanted: American expertise in cotton production to help build agriculture in the then sparsely populated hinterlands. And the immigrants could produce cotton under slave power for a few more years.

Since the American dead were buried, the bulk of cotton production has moved to new frontiers like western Bahia and the state of Mato Grosso, and a new group of foreigners is eyeing Brazilian agricultural production, on a new ag frontier.  But the similarities may end there.

The new group is the Chinese, whose population is growing in both size and in wealth. What isn't growing is their production area. As a result, they need more corn and soybeans, fast.

Which may be why the country's largest privately-owned crusher, Sanhe  Hopefull Group, is pushing hard to seal deals with the Brazilians—deals that go straight to producers or their co-ops, and cut out the ABCs in the middle. And that's likely why Hopefull sent a proposal to the government of Brazil's Goiás state last week seeking to purchase 1.2 million tonnes of 2011-12 beans.

The Goiás ag secretary wrote back saying they'd be glad to get companies and co-ops together to try to come up with the beans, but that, in the end, any sales are strictly through private initiative - the government can't just fill an order. Even if it could, something like half of the state's 2011-12 beans have already been sold.

The governor of Goiás state may just hand deliver the note when he goes there this month. But he will arrive a couple of weeks after a delegation of Mato Grosso soybean farmers visited the company, which reportedly provides most of the soybean oil consumed in Beijing.

Long-term risk

But the head of the Mato Grosso Corn and Soybean Producers' association, Glauber Silveira, who just returned from China, says he sees a long-term risk in working with the Chinese. "The Chinese don't like to do long-term deals," he told a reporter. "It's all for tomorrow."

To aggravate maters, he told a reporter, the Chinese have pushed the exchange of beans for Chinese-manufactured equipment and fertilizer, which Silveira says, would hurt the Brazilian industry.

"Let's suppose we do a deal. We take down the domestic machinery and fertilizers industries. And if, tomorrow, they decide to invest in Africa and say 'we no longer want your soybeans?"

Meanwhile, Sanhe Hopefull has plans to invest about $7.5 billion in Goiás state production and assure the direct purchase of six million tonnes of that state's soybeans per year.

That's a lot of money, and that's a lot of beans. But is it, like the deal with the Confederates 150 years ago, a deal in which both sides get something they want? Or are the Chinese investing only opportunistically in Brazil? Will there be anyone, 150 years from now, dressing up in period Chinese garb for the upkeep of a Chinese Cemetery in, say, Goiás?

Post Tags:

Add Comment
  1. Anonymous says:

    Brazil was one of the chief producers of coffee & sugar. Thanks to Lula, sugar-cane harvest fell 8%, and coffee fell 12%, and now Brazil is importing coffee from China. Brazil produced enough wheat, now Brazil depends on wheat imported from Argentina, or there is no bread for Brazil. Several Argentinas fit within Brazil, but Brazil grains harvest is only 50% more than the harvest of Argentina.