China Turns to Brazil to Satisfy a Surmounting Hunger For Soybeans
For more than 2,000 years, the Chinese have turned soybeans into tofu, a staple of the country's diet.
But as its economy grows, so does China's appetite for pork, poultry and beef, which require higher volumes of soybeans as animal feed. Plagued by scarce water supplies, China is turning to a new trading partner 15,000 miles away — Brazil — to supply more protein-packed beans essential to a richer diet.
China's global scramble for natural resources is leading to a transformation of agricultural trading around the world. Vanishing cropland and diminishing water supplies are hampering China's ability to feed itself, and the increasing use of farmland in the United States to produce biofuels like ethanol is pushing China to seek more of its agricultural staples from South America, where land is still cheap and plentiful.
"China is out there beating the bushes," said Robert L. Thompson, a professor at the University of Illinois who is a former director of agricultural and rural development at the World Bank. The goal, he said, is "to ensure they have access to long-term contracts for minerals and energy and food."
The longer-term trends are emerging now. At the heart of the shift is the global competition for land to grow crops. Brazil, which currently farms about 175 million acres, has room to double its available cropland to equal the scale of the United States, analysts say, even without clearing any more of the Amazon rainforest.
"All of a sudden you have a global market for land, a competition between several different products for the same amount of land," said Sergio Barroso, president of the Brazil operations of Cargill, the biggest grain trader in the world. Brazil's soybean industry is losing acres to sugar cane for ethanol production in some areas, he said, and is competing with corn, cotton and cattle.
"If you put it all together between feed and food," Barroso said, "it is going to be a tremendous challenge."
Expectations ran high three years ago when Hu Jintao, the president of China, visited South America and toasted a "strategic partnership" with his Brazilian counterpart, Luiz Inacio Lula da Silva, predicting trade between the two countries would double to $20 billion. China pledged $10 billion in investments, mostly in infrastructure.
To some extent, Brazilians have been disappointed in the follow-up. The Chinese have struggled with red tape in Brazil and hesitated while waiting for Brazilian rules to activate public-private investments. "Very little has happened," said Pedro de Camargo Neto, a former official in the Agriculture Ministry in Brazil who is now an agribusiness consultant.
But China has continued its buying spree in Brazil. The soybean trade between the countries has exploded. Last year Brazil sent nearly 11 million tons of beans to China, a 50 percent increase from the previous year and nearly double the amount shipped in 2004. Early indications are that Brazil has produced yet another record crop and analysts expect that China will devour most of the increase.