Across America’s vast farm belt, the midsummer landscape is typically dominated by towering cornstalks, with yellow, plump, and ripe corn for harvest. But this year, amid the unrelenting drought, said to be the worst in half a century, corn cobs have shriveled up, looking brown and defeated. Far away in Brazil though, the cornstalks are standing tall and glorious — there, it is the crop’s season of abundance.
Ironically, America’s drought has proved to be a blessing for Brazil. The country is girding for its biggest ever export of corn this year, thanks to a record harvest of around 75 million tons after an unexpected bumper second crop. And, going by media reports published last month, Brazilian farmers already have a ready market for their surplus output, as major American meat companies are keen to buy their corn. This is the first ever instance of Brazil shipping corn to the U.S., which is not just the world’s largest exporter of corn but also a country that typically produces nearly six times more corn than Brazil. In fact, the situation is so unusual that a Bloomberg report has said it is akin to Saudi Arabia importing oil!
According to this report, the drought has destroyed nearly 88% of the U.S. corn crop. Therefore, firms such as Smithfield Foods, the world’s largest producer of pork, have been forced to import Brazilian corn to the East Coast. Sniffing a great opportunity here, Brazil too is making hay while the sun shines — it is offering these companies a discount of $12 per ton compared to the current price of U.S. corn.
The Brazilian agricultural consultancy, Agroconsult, has said Brazil’s corn exports may touch 15 million tons this year. Analysts believe a significant portion of this volume will likely reach the U.S. Next year, Brazil is projected to export 20 million tons of corn and a good part of this volume too may be sold to the U.S., as much of the land used for corn cultivation in America has been damaged by drought and is unlikely to revive soon.
The Latin American country is already the world’s largest exporter of sugar and coffee and the second largest producer of soybeans. In fact, soybeans have traditionally been given precedence over corn in Brazil, and not without reason. Owing to increasing demand for soy protein from China, Brazil’s soy exports soared 41% in 2011. But along with these staple exports, corn sales have become energy boosters for the Brazilian economy over the past decade, with much of the nation’s corn produce exported to the Middle East and Asia. According to figures from Brazil’s trade ministry, corn exports to Iran jumped 30% last year compared to 2010. And with America becoming a big buyer of Brazilian corn this year, the agricultural superpower is competing with Argentina and Ukraine for the spot of second-largest corn exporter in the world.
Brazil’s bountiful corn crop this year is the result of a mix of innovation, technology, and plain good luck. New varieties of corn have gone a long way in boosting productivity while investments in farming know-how have helped improve output. What’s more, unlike the U.S., Brazil received what agriculturists call “just the right amount of rain” in the beginning of this year, which enabled Brazilian farmers to grow a second corn crop or ‘safrinha’ after early soy harvests.
For Brazilian farmers though, there is a note of discord amid all the joy. They rightly fear that their country’s infamous infrastructure problems may prevent them from fully realizing their export potential this year. Indeed, even agricultural experts like Marcos Rubin of ‘Agroconsult’ have predicted that due to transportation issues the Latin American country’s overseas shipment of corn may eventually fall by 2 million tons compared to the projected export volume for 2012. Large swathes of Brazil’s roads are unpaved and those that are paved are clogged with traffic. Worse, there is a severe shortage of storage facilities. The heavy pressure on the port of Santos often slows down shipments and many ships are left stranded in the sea for days.
But both Brazil’s government and its people seem to be aware of the importance of tackling their logistical problems on a war footing. President Dilma Rousseff recently announced a series of concessions to attract global private investment in the transport sector. Though the actual improvements on the ground may be a long way off, measures are indeed being taken. Farmers are not sitting tight either. Bloomberg has reported that in one of Brazil’s largest corn producing states, they have come together to seek the help of private firms in overcoming the transport bottlenecks.
The Italian poet Torquato Tasso had once said: “The day of fortune is like a harvest day; we must be busy when the corn is ripe.” Brazil, it seems, knows this only too well.
Postcards from Around the World
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